Revealed: Billion-dollar trade partners worried about NZ’s climate backdowns

Thursday, 27 November 2025

The Government has cut its 2050 methane reduction targets from up to 47% to as low as 14%, saying it’s a practical move to protect farmers and rural communities. Critics say it could breach New Zealand’s climate commitments under the Paris Agreement.

New Zealand has entered into trade deals worth billions of dollars, on the basis that we continue to reduce emissions. But there are concerns being raised about whether we’re keeping that end of the bargain, as Glenn McConnell reports.

The Government has insisted that its rollback of climate change pledges, and funding for gas companies, won’t impact free trade deals, which rely on New Zealand tackling climate change. But foreign governments are not so sure.

Stuff can reveal that New Zealand’s trading partners have taken notice, and either have, or are planning to, raise direct concerns with our Government.

These trade deals, with the United Kingdom, European Union and other nations are worth billions of dollars to Kiwi exporters. Some of the deals also provide avenues for New Zealand to face sanctions if it fails to meet its climate change obligations.

While no trade partner has formally applied to sanction New Zealand, they have taken note of recent changes in Government policy. And the United Kingdom has, according to three of its ministers, asked New Zealand to explain its resumption of oil and gas exploration, and funding for gas companies.

Stuff understands the European Commission has also noted the recent changes to New Zealand’s climate policies.

The Government of the UK says it has discussed New Zealand’s oil and gas policies with New Zealand’s Government.

UK ministers, and High Commission, say concerns raised - despite Kiwi ministers’ denials

Trade Minister Todd McClay, Climate Minister Simon Watts and Prime Minister Christopher Luxon have repeatedly, this year, denied their climate change-related policies could impact free trade deal agreements that include climate commitments.

The controversial climate policies have included: Repealing a ban on new oil and gas exploration, financing companies looking to start gas ventures in New Zealand, and halving the country’s methane reduction target.

McClay continued, this week, to deny that these policy changes had caused any concern amongst New Zealand’s trading partners.

Asked if either the UK or European Union has raised concerns, a spokesperson replied: “The issues have not been raised with the Minister for Trade.”

But twice, this year, UK ministers have said that they have raised concerns about New Zealand’s commitment to tackling climate change.

Chris Bryant, the UK Minister of State, said in September: “The UK raised the issue of oil and gas developments with New Zealand on several occasions.”

Jenny Chapman, the UK Minister of State Development, also said there were concerns about how those developments could impact the NZ-UK Free Trade Agreement.

“The UK raised the issue of oil and gas developments with New Zealand during the Environment and Climate Change Sub-Committee meeting in May 2025,” she said.

Trade Minister Todd McClay says he hasn’t heard any concerns about New Zealand’s climate policies.

Douglas Alexander, the Secretary of State for Scotland, said he understood that the British High Commission in Wellington was closely monitoring this issue.

And yet McClay’s office claimed this week it was not aware of those concerns.

“The issues were not raised at the Environment and Climate Change Sub-Committee meeting in May 2025,” a spokesperson said.

The British High Commission, in Wellington, disagreed.

A spokesperson in Wellington told Stuff: “The UK raised the issue of oil and gas developments with New Zealand on several occasions, including following New Zealand's Budget 2025 announcements after the Environment and Climate Change Sub-Committee meeting in May 2025.”

Green Party coleaders accuse the Government of breaching climate clauses in trade deals with its $200m gas plan. Luxon says gas is needed to protect NZ’s energy security and reduce coal imports.

$200 million gas fund catches global attention

That Budget 2025 announcement included a $200 million commitment to finance gas exploration projects in New Zealand.

At the time, Green Party co-leader Chlöe Swarbrick and a group called Lawyers for Climate Action said that funding could constitute a breach of New Zealand’s free trade agreements. In multiple agreements, the Government had promised not to fund or subsidise the production of fossil fuels.

In November last year, McClay signed an agreement with Costa Rica, Iceland and Switzerland where he committed to “eliminating harmful fossil fuel subsidies”.

McClay argued that $200 million would be presented as a “loan” to finance gas companies, not as a subsidy - but Swarbrick said the fine print of those agreements made it clear there was no difference between government hand outs and government loans.

Criticism builds at international forums

Green MP Francisco Hernandez attended the COP30 international climate summit in Brazil last week and said New Zealand’s recent changes had caught global attention for all the wrong reasons.

Belem, Brazil hosted this year’s global COP climate summit.

“This Government has shown time and time again how untrustworthy it is on climate action. Our international partners and, frankly, the world is starting to notice,” he said.

“On day one, New Zealand was awarded ‘the fossil of the day’. This Government is increasingly damaging New Zealand’s reputation, and that’s jeopardising our trade deals as well,” he added.

Climate Action Network International, an activist group which attends COP, awarded New Zealand the first “fossil of the day” after the Government halved its target for methane reduction.

Methane makes up half of New Zealand’s overall emissions profile, yet Watts, when he halved the reduction target, insisted this would not put the net-zero 2050 goal at stake.

Green MP Francisco Hernandez attended the COP30 climate summit in Brazil.

“The Government remains committed to our domestic and international climate change commitments, including net-zero by 2050. And agriculture will continue to make an important and fair contribution,” he said.

But Hernandez said climate experts, and foreign governments, didn’t appear to be convinced that New Zealand was still on track.

“This Government’s regressive climate policies are not only torching the environment, but also New Zealand’s trade deals. Climate action and trade are intertwined,” he said.

Following the summit in Belem, Brazil, questions were raised at the European Parliament about whether New Zealand was in breach of its free trade agreement.

Saskia Bricmont, a member of the Greens/European Free Alliance, who was also a member of Europe’s delegation for relations with Australia and New Zealand, questioned if the new methane target should trigger trade sanctions.

“New Zealand sent a negative message by outlining plans to reduce methane emissions by between 14% and 24% by 2050 whereas the previous target was for a reduction of between 24% and 47%,” she said.

She asked whether the European Commission considered that a breach of the trade deal, and, if so, whether it could “trigger the state-to-state dispute settlement”.

The commission has not formally responded to Bricmont, but McClay’s office said that during an earlier visit from European Union Trade Commissioner Maroš Šefčovič, he was told that the policy change was “compatible” with the free trade agreement.