Resources Minister Shane Jones said the crown would take 10-15 percent investment in new gasfields. Photo: RNZ / Samuel Rillstone
The Budget sets aside $200 million to invest in fossil fuel development at gasfields, reduces climate finance to the Pacific, and reduces funds for government agencies working on energy savings and climate change.
It also scraps $56 million specifically for electric buses.
Climate groups said it defied belief that the government wasn't helping businesses and households save money by saving power and switching to clean energy, instead handing subsidies to fossil fuel companies.
Last year, RNZ reported the oil and gas lobby had asked the government to underwrite the risk of fossil fuel exploration.
Resources Minister Shane Jones has now revealed the outcome - a contingency fund of $200 million over four years for co-investment in new gasfields.
Jones said the structure of investments was still being worked through, "but this signals a willingness, subject to cabinet consideration, for the crown to take a commercial stake of up to 10-15 percent in new gasfield developments that feed the domestic market to address sovereign risk".
"Natural gas will continue to be critical in delivering secure and affordable energy for New Zealanders for at least the next 20 years," he said. "We are already feeling the pain of constrained supply.
"To get through winter, we must be prepared to stand alongside our petroleum sector as a co-investor."
The Budget also halved future climate finance, mostly targeted towards the Pacific.
In 2021, the then-government committed $800 million over four years - $200 million a year - in international development funding to deliver on New Zealand's climate finance target under the Paris Agreement.
From this year on, Budget 2025 replaces this with $100 million a year to be focussed on the Pacific.
The funding will no longer be exclusively focused on climate finance, despite New Zealand joining other countries in signing up to a new ambitious climate finance goal last year, helping developing nations move away from using fossil fuels.
Bus fund gone
The Budget also confirmed the scrapping of a targeted fund for decarbonising public transport, saving $56 million over four years.
Transport authorities - including Auckland's - had waited for new applications to open, after the funding was reconfirmed for four years in last year's Budget, but details were never announced.
Asked about this in May, the Ministry of Transport refused to confirm that the fund had been scrapped, saying any announcements had to wait for the Budget.
The government said councils can still apply in certain circumstances, through the National Land Transport Fund.
The electric bus fund was one of the few transport decarbonisation initiatives or policies that had survived a cull that scrapped EV subsidies, weakened future tailpipe emissions standards and pivoted to pushing more funding towards roads, away from cycling.
The government also cut $56 million over four years from the Energy Efficiency and Conservation Authority (EECA), a body aimed at helping households and businesses save energy and cut emissions.
The government had previously intervened to appoint an oil and gas lobbyist to the EECA board, after he had spoken out about the body's clean energy subsidies.
That lobbyist - John Carnegie of Energy Resources Aotearoa - fronted the fossil fuel industry's successful push for the government to underwrite new oil and gasfields.
Swift reaction
The reaction to the Budget from climate-focussed groups was swift.
"This is far from a Budget that will set Aotearoa New Zealand up to become a thriving low-emissions economy," said Lawyers for Climate Action NZ. executive director Jessica Palairet. "This is a lost opportunity for New Zealand.
"As many of our international peers move away from fossil fuels, we're doing the opposite."
The Green Building Council said cutting funding for energy-saving champion EECA by more than $14 million a year was at odds with the government's own global commitments to work towards doubling energy efficiency and tripling renewable electricity.
"Rather than investing in solutions, this budget aims to subsidise new gasfields at a time when nations around the globe are transitioning away from it," said council chief executive Andrew Eagles.
"As Kiwis face sharply rising energy bills, businesses shut down or scale back production due to the energy crisis, and our nation entertains the thought of periods without power in the depths of winter, it defies belief that Budget 2025 fails to deliver adequate investment or action.
"Our neighbours in Australia are even banning new household gas connections and supporting alternative heating solutions, yet our government is actively trying to continue our reliance on fossil fuels."
The group said there was no support for businesses or households to decarbonise, or address the gap in emissions savings left by shaky plans for carbon capture and storage.
Campaign group 350 Aotearoa said not one of the government's 33 Budget media releases mentioned climate change and the phrase was also absent from the summary of the Budget's main points.
"This government has once again demonstrated that they do not understand that climate action isn't charity, it's basic infrastructure that saves lives, cleans our air and creates jobs that can be relied on for decades to come," said co-director Alva Feldmeier.
"Today, the government has done even worse than deny or delay climate action - they've actively chosen to pour gas on the fire," says Green Party co-leader Chlöe Swarbrick.
"The government is setting $200 million of our public money on fire to support fossil fuel executives' profit, handing a lifeline to a sunset industry, instead of investing in real, resilient, renewable energy," she said.
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