The Supreme Court has found that climate change is a mandatory consideration when the government considers opening up new blocks for exploration and extraction.
Photo: RNZ / Rebekah Parsons-King
The country’s highest court has found that governments must consider climate change when deciding whether to offer oil and gas blocks for tender.
Resources Minister Shane Jones said climate change considerations “do not trump the need for energy security and affordability” and he will be asking officials to look at the court decision closely.
He stopped short of saying whether the government would consider amending the law.
In its decision on Friday, the Supreme Court dismissed an appeal that former Energy and Resources Minister Megan Woods was required to take climate change into account when she granted on-shore exploration permits to two companies in 2021.
However, the court found that climate change is a mandatory consideration at the earlier stage of offering blocks for tender.
Climate change was “so obviously relevant” to a decision that could lead to the extraction and consumption of fossil fuels that it must be considered, the panel of five Supreme Court justices ruled.
“Climate change is a matter of pressing concern for New Zealand and its well-being both in the near and long term,” the justices wrote in their decision.
“Moreover, the Crown has entered into binding obligations on New Zealand’s behalf in connection with reducing greenhouse gas emissions.
“Petroleum extraction and consumption are major contributors to greenhouse gas emissions in New Zealand and internationally.”
The Crown Minerals Act’s aim was to “promote” prospecting, exploration and mining “for the benefit of New Zealand”.
The court found that ‘benefit’ was “not simply a recognition of the benefits that flow from mining”.
“Climate change is therefore a mandatory relevant consideration … when deciding whether to offer petroleum exploration permits for tender,” the decision said.
“This is because climate change is so obviously relevant to a decision to commence a process which is intended, if successful, to progress through to extraction of petroleum.”
Student group first took case in 2021
The case against the Energy and Resources minister was taken all the way to the Supreme Court by a group of Victoria University law students.
Students for Climate Solutions, now called Climate Clinic Aotearoa, first took the case in 2021.
The group argued that when then-Energy Minister Megan Woods made her decision to grant the permits, she did not properly consider the impacts of climate change, despite advice from the Climate Change Commission that the government should avoid locking in new fossil fuel assets.
The students argued that climate change should be considered at the point when a minister is deciding whether to grant a permit.
Friday’s judgment dismissed the students’ case, but on the basis that once a tender process had already been completed, going on to refuse a permit would undermine the intent of offering a block for tender.
The proper place to consider climate change and other mandatory considerations was at the earlier stage to offer blocks for tender in the first place, the court ruled.
Friday’s judgment found that even though she was not required to consider climate change at the permitting stage, Woods had adequately done so anyway.
She had received detailed advice from officials and was aware of other relevant matters, including policy work on a National Energy Strategy and a broader climate change work programme.
Current minister responds
Jones said the government would “take on board the dicta of the Supreme Court but we must never overlook the fact that the highest court in the land is Parliament”.
“I don’t want to support any climate change transition that worsens our ability to maintain our economic resilience and the ability of our energy system to not only deliver for industry but to be affordable for day-to-day Kiwis,” he said.
Asked if that meant the government would consider amending the law, he said he would ask officials to “take a comprehensive look” at the ruling.
“We have already overruled Supreme Court decisions in the area of the seabed and foreshore legislation,” he said.
“So I won’t jump to any conclusions, but I don’t want anyone doubting the seriousness with which we regard energy resilience security and affordability, and we need to ensure that climate change considerations do not triumph over affordability and security.”
Trying to find more gas to use as a transitional fuel was “a genuinely live issue, or we are going to have to burn more coal, which we’re doing anyhow”, Jones said.
He said he understood the students – most of whom have now graduated – wanting to challenge both society and the government, but his primary motivation was the security of New Zealand’s energy system.
“Society – if you were to rank energy security and affordability against New Zealand’s ability to affect climate change outcomes – I’m telling you they’ll vote with me before they vote with the teenagers that were jumping up in the Supreme Court.”
Asked whether the ruling might further put off oil and gas companies looking at exploration in New Zealand, he said the damage had already been done.
“We already have a reputation in New Zealand of policy uncertainty in respect of fossil fuels and climate change policies.”
Climate change could be a consideration for other law-making – lawyer group
Lawyers for Climate Action executive director Jess Palairet said although the Supreme Court had dismissed the appeal, the decision was “a win for the students and for the climate”.
“Although the court dismissed the appeal on the facts, the court unanimously agreed with the students on almost every argument they made on the law.”
Although it would affect how future decisions on oil and gas were made, there shouldn’t need to be a “legislative backlash” as a result of the decision.
“It doesn’t prevent the government from making petroleum exploration decisions, it just constrains how they might make those decisions,” Palairet said.
“It’s open for the government to change the law if they really don’t like it, but that’s actually a very reasonable thing, in my view, for a government to have to consider when making decisions that inevitably contribute to significant greenhouse gas emissions.”
The decision was also significant in the way it recognised climate change, she said.
It noted the effect of petroleum extraction and consumption on emissions, and New Zealand’s binding commitments to climate targets.
“It flows from that, that climate change has to be considered by ministers in that context – it’s a very significant judgment.”
The ruling also clarified a clause in the Climate Change Response Act that allows ministers and public agencies to take New Zealand’s emissions targets and budgets into account when carrying out their duties.
The court found that in some cases, not only could ministers take climate change into account – they should.
That could have implications for government decisions beyond the Crown Minerals Act, Palairet said.
“Whether or not that’s mandatory depends on the nature and subject matter of that decision.”
The court had not elaborated on any examples where that might apply, “but the fact that they’ve opened that door is really significant.”
Supreme Court decision at odds with earlier rulings
Friday’s ruling – even though it dismissed the case – went much further than previous courts on the question of how and when climate change should be considered by decision-makers.
The High Court earlier found against the students’ case, ruling that while no one could doubt the importance of climate change issues, the purpose of the Crown Minerals Act was to promote mining for fossil fuels.
“Such activity may be at the expense of climate change, but that is what the Act seeks to advance,” Justice Francis Cooke found.
On that account, the Energy Minister had acted in line with the law, he said.
The Court of Appeal also dismissed the students’ appeal, with a panel of three judges finding that there was no requirement for the minister to consider climate change when making permitting decisions.
However, one of the three appeal judges, Justice Jillian Mallon, found that climate change was a ‘permissive’ consideration – in other words, that the minister could factor it into her decision if she chose to.
Justice Mallon said in her judgment: “Given the accepted climate emergency, and that the combustion of fossil fuels is the main cause of climate change, it would be odd if the Minister responsible for petroleum exploration was precluded from taking into account these key components of New Zealand’s response to climate change, when Parliament has said in the Climate Change Response Act that those exercising powers may do so.”
As an example, she said if the country was on course to exceed one of its emissions budgets, “it would be odd (and potentially contrary to the benefit of New Zealand) if the Minister was precluded from taking into account any published advice from the Climate Change Commission about this in determining whether to grant a permit in furtherance of the purpose of the Act to promote further exploration or prospecting of petroleum ‘for the benefit of NZ”.
At the time Woods granted the two permits, the Climate Change Commission had advised the government it was not on track to meet its emissions targets.
Current projections show New Zealand is on track to meet it emissions budgets for 2022-25 and 2026-2030, but not the budget for 2031-35.
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