Treasury warns of $5 billion bill to meet 2030 Paris Agreement target

Thursday, 11 June 2026

Treasury modelling shows New Zealand could be on the hook for $5 billion to meet 2030 Paris Agreement targets.

The previous Labour government committed New Zealand to a 50% reduction in net greenhouse emissions by 2030 compared to 2005 levels.

The coalition Government has indicated it has no plans to meet that goal.

New modelling from Treasury shows that New Zealand could be on the hook for up to $5 billion if we were to meet our carbon reduction commitments under the Paris Agreement.

But according to the Prime Minster, Kiwis will not be fronting up the cash.

Under the international accord, the previous Labour government committed New Zealand to a 50% reduction in net greenhouse emissions (compared to 2005 levels) by 2030.

The current coalition Government issued an updated commitment last year. That promised a reduction of 51-55% by 2035.

The modelling from Treasury shows that meeting the first commitment could cost New Zealanders between $4.4 to $5 billion, due to the need to purchase offshore mitigation credits.

Meeting the 2035 target could cost anywhere from $0.2 billion (for a 51% reduction) to $1.6 billion (for a 55% reduction).

For context, just over $5 billion in increased funding was required in Budget 2026 to keep the health sector’s lights on over the next four years.

Speaking from Fieldays on Thursday, Christopher Luxon said New Zealand will not be sending billions of dollars offshore to meet the 2030 target.

“We’ve aligned our NDC 2035 goal to be aligned with our domestic commitment, which is net zero 2050,” he said.

As for the 2030 target, Luxon said “we’re going to give it a good go” so long as it doesn’t impact productivity or mean sending money offshore.

“I want to be clear, we’re not here to chase emissions reduction as the end goal. Our goal is growth in this economy and growth in this country,” he said.

“We do not have the luxury to turn off growth, which ends up meaning that people don’t have incomes and people lose jobs.”

Treasury’s modelling comes after secretary Iain Rennie told the finance select committee last year that he had “heard the public interest” and would “provide more transparency” around New Zealand’s fiscal risks.

To date, successive governments have held off accounting for the potential cost of offshore mitigation in their books because it was not yet recognised as a liability.

The modelling released on Thursday is not a calculation of liability, but an estimation of the potential fiscal costs.

Finance Minister Nicola Willis told the same select committee last year that she did not think Treasury needed to report the potential costs in the Government’s books because she has no intention to pay it.

But on Wednesday, Luxon acknowledged the reputational risk that could come with defaulting on the Paris Agreement.

“Our coalition government has decided to stay in Paris, because actually it would just penalise and punish our farmers tremendously,” he said. “Large multinational companies that we sell to, also our competitor countries, would love nothing worse than to kick New Zealand products off shelf, up and down supermarkets all around the world, and so for us it's in our interest to stay in Paris.”

Asked on Thursday if he was contradicting that position by prioritising growth over meeting the 2030 target, Luxon said he was not.

“We should try to meet all the obligations that we have internationally … Having said that, we’ll do everything we can, but I’m just acknowledging that we ain’t sending billions of dollars offshore, and we’re not going to make this country poorer as a consequence,” he said.