Climate News – Aotearoa New Zealand’s rate of emissions reduction needs to more than double

• Aotearoa New Zealand’s emissions are gradually falling, but progress stalled in 2024.
• The pace of emissions reductions needs to more than double over the next few years; and to get on track for that, action is needed within the next 12-24 months.
• Risks to Aotearoa New Zealand’s climate goals for the next decade have increased. The second and third emissions budgets are at high risk, and the 2030 biogenic methane target is unlikely to be met.
• The report highlights practical opportunities to reduce emissions and manage future costs, including low-emissions technologies that are already cheaper over time in some households and businesses uses.
• The Government has low-cost options to reduce barriers that are preventing businesses and households from choosing low emissions technologies.

Aotearoa New Zealand’s emissions are falling, but not fast enough to meet the country’s climate goals, according to the Climate Change Commission’s annual emissions monitoring report released today. The report finds progress stalled in 2024, and the rate of emissions reduction will need to more than double over the next few years to get back on track.

“This is a clear warning sign. Emissions are gradually falling but progress stalled in 2024, and current policy settings are not delivering at the pace needed. Government choices in the next 12-24 months will be critical to getting the country back on track,” says Jo Hendy, Chief Executive of the Climate Change Commission.

New Zealanders are already experiencing the impacts of a changing climate. Choices made now will affect how quickly the country cuts its own emissions, and how well households, businesses and communities are positioned to manage future shocks.

For some common household and business uses, low-emissions choices are already cheaper over time. Electric vehicles, solar and heat pumps can reduce running costs, lower exposure to volatile fuel prices, and make homes and businesses more resilient to future shocks.

The Commission’s report highlights practical examples where available low-emissions technologies can reduce costs. EVs are cheaper to run than petrol vehicles, and upfront costs have dropped. For comparable compact SUVs, EV owners can save about NZ$7,500 over five years. In parts of Australia (where about a third of households have solar), rooftop solar and battery systems are helping reduce regulated electricity prices by up to 10%. It’s now generally cheaper for businesses to buy and run a new industrial heat pump than continue running a fossil-fuel low-temperature boiler.

Separately, research released earlier this year by the Sustainable Business Council and Climate Leaders Coalition estimated that earlier decarbonisation could contribute NZ$22 billion per year to GDP in less than a decade.

“But roll-out in Aotearoa New Zealand is lagging. This isn’t just a missed opportunity to reduce emissions, it means that households and businesses may be paying higher energy costs than they need to. Slow or delayed action also restricts the country’s future options,” says Hendy.

People are missing out on savings and reducing their exposure to future energy risks because upfront costs and other barriers prevent households and businesses from switching away from fossil fuels.

The Government has low-cost options to address these barriers. These include targeted funding and financing mechanisms, stable investment signals for markets and consumers, and better information to support household and business decisions.

“The Government has already taken useful steps to reduce upfront cost barriers, including low-interest loans for EV charging and the gas transition loan scheme. The question now is how to build on them quickly enough to support the scale of change needed,” says Hendy.

“It’s not just about what the Government spends money on, but also the signals it gives. Clear and stable policy settings help households, businesses and investors make decisions with confidence. The goal should be to avoid getting locked into expensive long-run options. Infrastructure and other long-lived investments that support low-emissions choices are generally cheaper to get right early than to retrofit later,” says Hendy.

The 2026 report is available here, and the following summary resources are also available:

• Exec Summary – summary of our findings and recommendations, excerpted from the main report.
• One-page summary – overview of the 2026 key findings and recommendations
• Sector summaries – covering: energy, industry and buildings; transport; agriculture; waste and fluorinated gases; and forestry.
• Whakahekenga rehukino summary – covering key points for emissions reduction actions centred on iwi/Māori. Available in in te reo Māori and English.

These annual reports provide an evidence-based, impartial view of whether the country is on course to reach its goals of reducing and removing greenhouse gas emissions. They provide insights into the progress made, challenges experienced, and opportunities and risks that need to be considered.

The 2026 report uses the same approach and framework as previously. However, since the 2025 report, the Government has lowered the 2050 biogenic methane target and the Commission has updated its benchmark. This means that the factors that the report assessed against have changed.

Risks to Aotearoa New Zealand’s climate goals for the next decade have increased. The second and third emissions budgets are at high risk, and the 2030 biogenic methane target is unlikely to be met. Risks have increased especially for agriculture, electricity generation, and transport – this is also where some of the greatest opportunities for reductions can be found.

Recommendation 1: We recommend that the Government takes action to address market barriers and failures within the next year to ensure it can meet its emissions goals including:

• start determining how to incentivise further emissions reductions and removals in the 2030s given that the New Zealand Emissions Trading Scheme in its current form will struggle to do this.
• for the primary sector: immediately scale up support measures to meet the 2030 biogenic methane target; and reduce barriers for high-value, low-emissions agricultural products for long-term reductions and resilience 
• expand resource recovery facilities, services and planning, and extend landfill gas capture requirements to class 2 landfills
• encourage electric vehicle uptake through strong supply- and demand-side measures, and support greater shifts to public and active transport
• address upfront cost barriers to fuel-switching for households and businesses.

Recommendation 2: We recommend that the Government update its approach to emissions projections to ensure they provide a robust indication of likely future policy impact.

In some areas (agricultural technology, forestry on Crown-owned land and LFG capture), the assumptions underlying the projections do not appear to be driven by a realistic assessment of current policy. While scenarios provide useful information, there is a need for robust modelling based on evidence about how much different policies can reduce emissions.