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Information release

CO (19) 8 Climate Implications of Policy Assessment Requirements

Issue date: 
Thursday, 5 December 2019
Issue status: 
Current
Version note: 

Intended for

  • All Ministers
  • All Chief Executives
  • All Senior Private Secretaries
  • All Private Secretaries
  • All officials involved in the preparation of Cabinet papers

Key points

1This circular sets out the new requirements for central government agencies to estimate and disclose the greenhouse gas emission implications when certain types of policy proposals are presented to Cabinet. 

2 A Climate Implications of Policy Assessment (CIPA) disclosure is likely to be needed for proposals for Cabinet in which decreasing greenhouse gas emissions has been identified as a key policy objective, or the direct emission impacts are at or over the average emissions threshold of 250,000 tonnes per annum.  

3Agencies should contact the Ministry for the Environment (MfE) early in the policy process, using the CIPA engagement form, if it is expected that a policy proposal will have significant emission impacts. The engagement form, CIPA toolkit, templates, and further guidance and support, are on the MfE website.

4 A statement is required to be included in relevant Cabinet papers (under a separate CIPA subheading in the Impact Analysis section), which contains a summary of the key findings of the analysis, and the quality assurance statement provided by the MfE CIPA team. The CIPA disclosure sheet should also be attached to the paper. Note that a CIPA does not replace a Regulatory Impact Statement, and a RIS will still need to be completed where a proposal has regulatory impacts. 

Objectives of the CIPA

5The primary objective of the CIPA is to ensure that Ministers are aware of the implications a decision may have for New Zealand’s future greenhouse gas emissions.

6Clear and consistent information will:

6.1help Ministers to make informed decisions; and

6.2support the development and monitoring of the policies and plans that will help New Zealand transition to a low emissions economy. This includes meeting greenhouse gas emission reduction targets and future emissions budgets under the Climate Change Response (Zero Carbon) Amendment Act 2019.

7Government agencies should contact MfE early in the policy process, where it is expected that a policy proposal will have significant emission impacts. Agencies may need to undertake some preliminary analysis in order to help the Ministry determine whether a CIPA disclosure will be required. To support this initial contact, agencies should complete the CIPA early engagement form available on the MfE website.

The relationship between CIPA and other policy analysis requirements

8The CIPA disclosure requirements are not intended to replace the need to include important greenhouse gas emission impacts in Regulatory Impact Statements, or better business case analysis in situations where these Cabinet requirements apply. Where the proposal is regulatory in nature, agencies will also need to complete an Impact Analysis process confirmation form. A document containing both the RIS form and the CIPA early engagement form can be found on the Treasury website.

9Government agency use of the calculation tool (which is included as part of the CIPA toolkit, explained further in paragraphs 20-22), should help to ensure that any emissions identified in those documents are more robustly estimated. CIPA disclosure sheets will complement the information in Regulatory Impact Statements and similar documents by highlighting the key emissions information that might otherwise be hard to find in the other documents.

Where the CIPA applies

10Many policy proposals presented to Cabinet will not require a CIPA disclosure. A CIPA disclosure is only required for those policy options or proposals where:

10.1decreasing greenhouse gas emissions has been identified as a key policy objective; or

10.2the direct emission impacts are at or over the average emissions threshold of 250,000 tonnes per annum.

Relevant gases and sectors

11Where a CIPA disclosure is required due to a proposal meeting the requirements referred to in paragraph 10 above, the disclosure must detail the particular greenhouse gases and sources of greenhouse gas emissions identified, defined and included in New Zealand’s Greenhouse Gas Inventory[1].

12The types of emissions, to be reported in terms of carbon dioxide equivalent, are:

12.1 carbon dioxide;

12.2 methane;

12.3 nitrous oxide; and

12.4 fluorinated gases.

13Disclosure should particularly be considered for proposals which involve the sectors below, as they will most likely meet the criteria in paragraph 10:

13.1 electricity;

13.2 transport;

13.3 industry;

13.4 agriculture;

13.5 waste; and

13.6 land use, land use change and forestry.

Notes

  1. [1] New Zealand’s Greenhouse Gas Inventory is the official annual estimate of all greenhouse gas emissions and removals generated in New Zealand by human activities, prepared and reported in accordance with the United Nations Framework Convention on Climate Change. Follow this link for more information: https://www.mfe.govt.nz/climate-change/state-of-our-atmosphere-and-climate/new-zealands-greenhouse-gas-inventory

Types of impacts

14At this stage, the required disclosure only needs to cover the expected direct emission impacts. Agencies may, nonetheless, choose to identify and calculate any further indirect impacts on emissions. MfE intends to work closely with a few selected agencies to trial the inclusion of indirect impacts on emissions, ahead of a proposed review of the CIPA requirements in 2020.

Direct impacts

15 “Direct” emission impacts result from the implementation of a proposed decision or policy. These emission impacts come from attributable and easily identifiable sources related to the policy or proposal. Direct emissions can be further categorised as:

15.1 embodied emissions: associated with the consumption of materials in the production process. For example, in the construction of infrastructure, embodied emissions result from manufacturing and the use of materials, such as steel and cement;

15.2 operational emissions: associated with the ongoing operation of a policy or investment proposal. For example, for the creation of new infrastructure, operational emissions span the design life of the building and include appliances such as heating and cooling (i.e. air conditioners, hot water systems, refrigeration, and lighting);

15.3 rebound emissions: these arise where changes in the cost or performance of a good or service lead directly to changes in the consumption of that particular good or service. The emissions should be included in the analysis only where they are clear and easy to estimate, and are likely to be of a significant scale. This will be most material to transport and stationary energy, for example in new road infrastructure projects that encourage further private car use.

Indirect impacts

16“Indirect” impacts arise as a second or third order effect of the implementation of the policy proposal. These emissions are likely to arise from long-term changes in behaviour or consumption. For example, the decision to create a new research and development fund may lead to increased innovation, which in turn could help to develop new lower emitting technologies.

17The activity data for indirect impacts will generally be too uncertain to calculate sufficiently accurate emissions projections. As such, a CIPA disclosure is not required for these impacts at this stage. MfE will work in consultation with select policies that will disclose indirect emission impacts in phase one, and the voluntary application of indirect impacts will be reviewed by Cabinet in 2020.

Timescales to report against

18 The disclosure sheet, available on the MfE website, enables central government agencies to report the emissions of proposed policies against emission budget time periods until 2050. The budget periods are set in place by the Climate Change Response (Zero Carbon) Amendment Act 2019.

19 Emissions will be reported as a cumulative figure within each of these time periods. Other ways of reporting emissions that help inform decisions may be developed over time and will appear in the guidance.

CIPA toolkit and guidance

20 The CIPA toolkit to help government agencies estimate the greenhouse gas emissions of policy options and proposals, and meet CIPA requirements, is on the MfE website. The toolkit will ensure that those emissions are estimated and presented in a clear and consistent way across government.

21 The CIPA toolkit contains:

21.1 an Excel calculation tool, which will help agencies calculate any relevant emission impacts in a robust and consistent way; and

21.2 a disclosure sheet template for reporting those estimated impacts, which is intended to be attached to the relevant Cabinet paper.

22 The toolkit also includes further guidance on:

22.1 additional detail in relation to relevant gases and sectors; appropriate emission factors, identifying direct and indirect emission impacts, and rebound effects; and impact thresholds for reporting on emissions;

22.2 the process for determining whether a CIPA disclosure is required, including forms to be used to support initial engagement with MfE;

22.3 addressing greenhouse gas emission impacts in Regulatory Impact Statements, or agency analysis required for budget spending or investment proposals; and

22.4 the quality assurance arrangements for the CIPA disclosure, including information on what happens if CIPA requirements have not been met.

Quality assurance arrangements

23The Climate Implications of Policy Assessment Team (CIPA Team) at MfE will provide quality assurance on all CIPA disclosures attached to Cabinet submissions.

What needs to be included with Cabinet submissions

24If the CIPA disclosure requirements apply (for a proposal which meets the criteria in paragraph 10), the following is required to be included with the relevant Cabinet paper:

24.1 a completed CIPA disclosure sheet (should be attached to the paper); and

24.2 under a Climate Implications of Policy Assessment subheading in the Impact Analysis section:

24.2.1   a summary of the key findings of the analysis;

24.2.2  a statement on whether a CIPA disclosure sheet is attached to the submission; and

24.2.3   the statement provided by the CIPA Team on the quality of the information set out in the CIPA disclosure. Note that this requirement is supplementary to any quality assurance assessment that might be required in relation to a Regulatory Impact Statement.

Publication of CIPA information

25 Any completed CIPA disclosure sheet attached to a Cabinet submission should be released together with the relevant Cabinet submission in accordance with the proactive release policy for Cabinet material, as set out in CO (18) 4 Proactive Release of Cabinet Material: Updated Requirements.

26 Where it relates to a legislative proposal, the CIPA disclosure should:

26.1 be published alongside the Regulatory Impact Statement or Supplementary Analysis Report (SAR); and

26.2 be identified and linked in any disclosure statement prepared for the relevant government Bill or Supplementary Order Paper.

Cabinet submissions with a missing or an inadequate CIPA disclosure

27 If the CIPA requirements apply, but have not been met, MfE may advise the Minister for Climate Change and Chair of the relevant Cabinet committee. If the submission proceeds to Cabinet discussion, the submission should acknowledge the deficiency and include a commitment on when a robust CIPA will be provided to Cabinet. Where applicable, it may be appropriate to seek this as part of a SAR, provided in accordance with Cabinet’s Impact Analysis requirements.

28 If the submission does not address these issues, the responsible Minister and Minister for Climate Change will jointly determine when and to whom the completed CIPA will be provided, on advice from officials.

Further information

29 The CIPA Team at MfE is available to provide further advice on the operation of the CIPA requirements and the estimation of emissions impacts of government policy proposals. See the MfE website for more detailed information about the matters in this circular.

30 A review of the operation of the CIPA requirements will be undertaken by the second half of 2020. The review will assess the appropriateness of the set emissions threshold, and also consider how the CIPA could be further developed to help capture significant indirect emission impacts.

Last updated: 
Tuesday, 21 January 2020

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