Government not ‘sending billions overseas’ if climate target not met, Finance Minister says

Tuesday, 2 December 2025

Nicola Willis, Minister of Finance talks to the finance select committee.

Finance Minister Nicola Willis has confirmed the Government has no intention to spend on overseas carbon offsets, if New Zealand fails to reduce emissions to the level agreed under the Paris Agreement.

Countries that signed up to the 2015 treaty agreed to keep global average temperatures to 2°C above pre-industrial levels, with the aim of keeping them to 1.5°C.

New Zealand - along with other signatories - has to submit action plans known as “nationally determined contributions” (NDCs) every five years. Our latest iteration promised to reduce net greenhouse emissions by 51-55% compared to 2005 levels by 2035.

This is different to our domestic target - which separates biogenic methane from all other emissions.

New Zealand’s Government insists rolling back climate commitments and supporting gas projects will not jeopardise free trade agreements. But concerns from key trading partners, revealed by Three News, suggest the policy shift is being scrutinised.

According to the UN’s recent emissions gap report, signatories’ NDCs collectively have the world on track to exceed 1.5°C within the decade.

The “net” in climate targets is important. If a country can’t reduce emissions to the level promised, it can offset the remainder by investing in projects that reduce or remove greenhouse gases around in the world.

To date, successive governments have held off accounting for this upcoming cost in their books.

Now, Willis has confirmed there is no plan to change this.

“It is the Government's position that the most important contribution that New Zealand can make to reducing global climate change is reducing our emissions here at home, and we are working to achieve that,” she told reporters after appearing in front of the finance select committee for Scrutiny Week.

“It is also the case that the NDC the previous government set for us was well beyond what was required. … We don't think New Zealanders … would thank us for sending billions of dollars offshore to meet that Paris obligation.”

Asked to clarify if this meant the Government would be comfortable defaulting on Paris Agreement obligations, Willis suggested they would be.

“Faced with the choice of sending billions of dollars of New Zealanders’ hard earned money offshore to meet James Shaw's performative statement, or, on the other hand, ensuring that we are continuing to reduce emissions here at home and making endeavours to reduce them more in the future, I would choose the latter.”

As climate change minister, Shaw led the development of New Zealand’s first NDC - which targeted a 50% emissions reduction compared to 2005 levels by 2030.

Green Party co-leader Chlöe Swarbrick questioned the Finance Minister on the Government’s commitment to the Paris Agreement.

However, the Paris Agreement was ratified under the fifth National government in 2016 and this government updated our NDC at the start of 2025.

All of this came just minutes after Willis responded to questions from Green co-leader Chlöe Swarbrick by saying that the Government remains committed to meeting the NDC.

“That remains our priority,” she told the finance select committee.

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.

“We are working very hard to ensure that our priority of domestic climate action is met. You will have seen that we have achieved both the first emissions budget, are on track to meet the second, and are making very good progress domestically.”

Swarbrick responded: “I would refer you to the Climate Change Commission’s hearing yesterday which puts all that in substantial doubt”.

Swarbrick has called on successive governments to include inevitable carbon offset purchases in their books.

We signed it, isn’t it compulsory?

Now, I know what you might be thinking - if we signed the agreement, isn’t it compulsory?

Well, not necessarily.

The Paris Agreement is just that - an agreement. There is no hard and fast enforcement mechanism to ensure countries stick to their commitments. NDCs are set and reviewed voluntarily by participating countries.

That said, defaulting could have widespread ramifications on our international relationships.

Advice that was mistakenly released by the Ministry for the Environment in August warned the Government that reneging on climate commitments could have a domino effect and give bigger countries, like China, an excuse to do less.

If the government decided not to meet New Zealand's target under the Paris Agreement, it could impact a 'delicate' hard-won global agreement and risk harming 'a number of our priority relationships', the paper warned.

There were also requirements under some of New Zealand’s free trading agreements to bear in mind.

As Stuff revealed last week, the Government has been made aware of concerns from trading partners who are worried that the country could be scaling back on climate action.

These agreements, namely with the UK and EU, include commitments from New Zealand to continue work to combat climate change.

If our partners think we have broken those commitments, the deals give them the ability to try and sanction New Zealand.

The British High Commission confirmed to Stuff that the UK has raised the issue of oil and gas developments on several occasions.