From the Three Waters programme, expectations of the Climate Commission, to uncertainty around the cost of projects and the repealing of the Resource Management Act 1991 (RMA), wholesale legislative change looms large for local councils. However, with their balance sheets stretched, their capacity to adapt remains low. For that reason, local authorities require clear guidance for dealing with greenhouse gases and climate change. Without it, New Zealand risks building long term infrastructure that is not in line with our climate change obligations.
The Three Waters programme is one of the most consequential pieces of reform in decades. The reforms involve the merging of 67 local government owned water service bodies into four independently governed entities. The model sets the platform for significant investment into our drinking water, wastewater, and stormwater networks. The entire programme, which comprises of 461 projects, is forecast to require as much as NZ$160b over the next 30 years.
The scale of the reform is enormous, so care must be taken to ensure that development is not stifled. From 31 December 2021, significant provisions of the Resource Management Amendment Act 2020 come into effect. These changes remove the prohibition (in sections 70A and 104E) on local authorities having to regard the effect of greenhouse gas discharges on climate change, during both planning and consenting. In other words, for consenting applications lodged after 31 December, they must factor in their actual and potential impact on climate change.
The RMA also requires local authorities to consider both emissions reduction and national adaptation plans when preparing policy statements, regional and district plans. The former may include policies and strategies for meeting emissions budgets that have been notified. Meanwhile, a national adaptation plan sets out the Government’s objectives for adapting to the effects of climate change, including how those objectives will be met. The Government was due to release an emissions reduction plan by December this year; however, that deadline has now been pushed back until May 2022. Operating in a policy vacuum will cause significant uncertainty and delay at a time that we need to be acting.
A two pronged challenge is now emerging: how does the sector respond to the effects of climate change while also delivering a reduction in greenhouse gas emissions? For councils, wastewater plants often rank as their biggest emitters. The Climate Change Commission recognises that certain industries are critical to the Three Waters programme, particularly steel and concrete. As it stands, both are irreplaceable cogs of the three waters upgrades. Nonetheless, if New Zealand is to meet its target of net-zero emissions by 2050, then industry is going to have to change its designs and the building material it uses. Although some low carbon alternatives exist right now, institutional barriers exist, such as price, the need for certification of new technologies (which is important for insurance and tender selection) and a need to implement innovations in the manufacturing process. From that, the real question is what can be done now and what can be delivered?
This requires flexibility and engagement with national and regional institutions responsible for a wide range of topics, including architecture, design, civil engineering, construction, certification processes, insurance, trades, and building code formation and enforcement.
Within local government, decisions on infrastructure are dictated by the levels of service they deliver to ratepayers. Councils have a legislated requirement to do so, be it for wastewater, rubbish collection or roads. To change those levels of service, councils must consult with ratepayers, meaning a balanced approach to decision making to manage (political) risks. Councils also largely work in the 'here and now'.
Despite having a 20 year investment horizon, the immediate imperatives are the annual and three year long term plans. The result is that, in many cases, councils’ default is to adopt a tried-and-true approach to infrastructure. Tried-and-true means that it works, has a track record of doing so and can be readily maintained. But, in many instances, the more carbon friendly alternatives can not only be uneconomic but also untried. Transactional simplicity and certainty (with reduced political risk and reduced cost) are critical drivers.
While the Climate Change Commission has signalled its support for innovation, there is still no clear guidance available for councils and key stakeholders. Then there are the capital costs, as the long term business case needs to be there to drive new investment in alternative materials. This is further complicated by work to repeal the RMA with the Natural and Built Environments Act (NBA), which the Environment Select Committee is due to report back on this month. As touched on in previous articles, it is imperative that the NBA be drafted in a way that encourages flexible land use and/or development within key environmental limits. Greater clarity must be provided on the strategic priorities themselves, and not leave that to the Minister or Courts to determine.
An enormous amount of investment is required to bring the Three Waters programme into being.
When substantive planning eventually commences, care needs to be taken to ensure that the economic and financial objectives align with New Zealand’s climate regulations and commitments. Without this alignment, New Zealand risks locking in long lived assets that trap us into old ways of doing things. Furthermore, as the regulatory environment becomes more prescriptive, there is also the risk of creating stranded assets that have low economic value in the future.
As a result, New Zealand cannot put its climate commitments on ice while the NBA systems and frameworks are developed. A flexible system is needed, one that effectively utilises existing systems, encourages innovation and new technologies, efficiently knits together existing plans and systems and offers infrastructure and process adaptability in the future.