Last updated:
Friday, 10 July 2020
Key points
1This circular sets out the requirements for central government agencies to estimate and disclose the greenhouse gas emission implications when certain types of policy proposals are presented to Cabinet. It has been updated to reflect recent Cabinet decisions.
2A 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:
2.1the direct impact on greenhouse gas emissions is likely to be equal to or above 0.5 million tonnes CO2-e within the first ten years of the proposal period; or
2.2the direct impact on greenhouse gas emissions is likely to be equal to or above 3 million tonnes of CO2-e within the first 30 years of the proposal period for forestry related proposals.
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[1].
4For relevant proposals, 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[2].
9Government agency use of the calculation tool (which is included as part of the CIPA toolkit, explained further in paragraphs 21-23), 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 impact on greenhouse gas emissions is likely to be equal to or above 0.5 million tonnes CO2-e within the first ten years of the proposal period; or
10.3the direct impact on greenhouse gas emissions is likely to be equal to or above 3 million tonnes of CO2-e within the first 30 years of the proposal period for forestry related proposals.
11These emissions thresholds are lower than the emissions threshold that was applied for the first phase of CIPA of 250,000 tonnes of CO2-e per annum (from 1 November 2019 to 29 June 2020).
Relevant gases and sectors
12Where 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[3].
13The types of emissions, to be reported as carbon dioxide equivalent, are:
13.1carbon dioxide;
13.2methane;
13.3nitrous oxide; and
13.4fluorinated gases.
14Disclosure should particularly be considered for proposals which involve the sectors below, as they are more likely to meet the criteria in paragraph 10:
14.1electricity;
14.2transport;
14.3industry;
14.5agriculture;
14.5waste; and
14.6land use, land use change and forestry.
Notes
- [3] 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
15The required disclosure only needs to cover the expected direct emission impacts. However, agencies may choose to identify and calculate any further indirect impacts on emissions.
Direct impacts
16"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:
16.1embodied 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;
16.2operational 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);
16.3rebound 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
17"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.
18Indirect impacts tend to be more difficult to predict and subject to a high level of uncertainty. As such, a CIPA disclosure is not required for these types of impacts. Where appropriate, MfE will work with agencies to disclose indirect emission impacts on a voluntary basis.
Timescales to report against
19The 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.
20Emissions 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
21The 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.
22The CIPA toolkit contains:
22.1an Excel calculation tool, which will help agencies calculate any relevant emission impacts in a robust and consistent way; and
22.2a disclosure sheet template for reporting those estimated impacts, which is intended to be attached to the relevant Cabinet paper.
23The toolkit also includes further guidance on:
23.1additional 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;
23.2the process for determining whether a CIPA disclosure is required, including forms to be used to support initial engagement with MfE;
23.3addressing greenhouse gas emission impacts in Regulatory Impact Statements, or agency analysis required for budget spending or investment proposals; and
23.4the quality assurance arrangements for the CIPA disclosure, including information on what happens if CIPA requirements have not been met.
Quality assurance arrangements
24The 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
25If 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:
25.1a completed CIPA disclosure sheet (should be attached to the paper); and
25.2under a Climate Implications of Policy Assessment subheading in the Impact Analysis section:
25.2.1a summary of the key findings of the analysis;
25.2.2a statement on whether a CIPA disclosure sheet is attached to the submission; and
25.2.3the 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
26Any 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.
27Where it relates to a legislative proposal, the CIPA disclosure should:
27.1be published alongside the Regulatory Impact Statement or Supplementary Analysis Report (SAR); and
27.2be 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
28If 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.
29If 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.
30Under certain exceptional circumstances, the CIPA requirement will not apply. The Minister for Climate Change will consider any proposals that seek an exemption of the CIPA requirement due to exceptional circumstances and will grant these on a case-by-case basis.
Further information
31The 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.
Michael Webster
Secretary of the Cabinet
Enquiries:
Climate Implications of Policy Assessment Team at the Ministry for the Environment cipa@mfe.govt.nz
