James Shaw has wasted no time asserting his powers as Climate Change Minister.

His comments at the Climate Change and Business Conference in Auckland last Wednesday signal the Government’s intent on emissions.

Mr Shaw said the Government will focus on “actually cutting emissions” and his first carbon budgets may be “pretty shocking to a lot of people.” He added that the levers of carbon pricing, regulation and investment will all be pulled “pretty dramatically and in a very short period of time.”

Shaw’s ministerial portfolio gained sweeping new statutory powers in last year’s Zero Carbon amendment to the Climate Change Response Act.

The amendment legislated New Zealand’s target of net zero emissions by 2050 and established the Climate Change Commission, an independent advisory body. The bill passed with near unanimous support in Parliament with only David Seymour opposed.

But the amendment also established new powers to set emissions budgets and plans, with potentially far-reaching consequences.

Emissions budgets are five-year caps on national emissions, with a goal of providing certainty. The main features of emissions budgets are that they:

• Are set by the Minister, not the Climate Change Commission;
• Allow the Minister to depart from the Commission’s advice (although Shaw recently said he is “absolutely committed that we will follow [the Commission’s] advice;”
• Must be met “as far as possible” through domestic reductions and removals.

The legislation also emphasises public consultation when setting budgets.

Crucially, last year’s amendment also established a new planning regime which allows the Climate Change Minister to decide how and where emissions budgets will be met.

As I wrote at the time last year, the rules around plans are broad enough to allow almost any policy the Minister considers necessary, covering every sector of the economy, at any level of detail the Minister decides. And plans can be changed at any time.

The legislation only requires that the Minister’s policies are for a purpose of reducing emissions. But there is no requirement to check individual policies are working.

In other words, the Minister’s plan is more or less unconstrained.

Importantly, however, the Zero Carbon bill stopped just short of granting full powers to the Minister. It has no compliance mechanism. As it stands, the Minister must prepare budgets and plans yet he has no way to enforce compliance.

But the writing is on the wall.

It will only take a minor adjustment to introduce compliance and the Government has placed climate near the top of its term agenda.

Putting the puzzle pieces together – the Government’s preference for command and control over carbon pricing, the alignment between Labour and the Greens on climate and Shaw’s assertive language – it all seems to point towards an intent to introduce the means to enforce compliance with the Minister’s plans.

That would be worse than a shame, it would be a mistake.

The Government’s best path to large scale cuts in emissions is the Emissions Trading Scheme. Yet the Government seems more interested in its control over the economy than lower emissions.

Worryingly, the Climate Change Response Act does not require the Minister’s plans to cut emissions effectively. This combined with the Act’s broad scope means that, if the Act were tweaked to add the power to enforce plans, it is difficult to see what could prevent Shaw or a future Minister from using emissions plans to mount unprincipled attacks on disfavoured industries and technologies.

Before he sets his budget and writes his plan, the Minister should first explain what he wants to do about compliance and how he (and we) will find out which parts of his plans worked or need fixing.

Disclosure: Matt Burgess owns a small number of NZUs through the New Zealand SALT Fund.