Last week the High Court ruled, on Lawyers for Climate Action NZ Incorporated v Minister of Climate Change*, that regulations made under the Climate Change Response Act 2002 (Act) were unlawful. They were found unlawful because the analysis relied on was insufficient to enable James Shaw, the Minister of Climate Change, to be satisfied the 2050 targets** (and other statutory considerations) could be met. On its face, this case is arguably a significant development in the climate change space, following a number of failed legal challenges. However, on closer inspection, and curiously, it endorses an agreement reached between the parties – so is not necessarily a precedent for future proceedings.

Most notably in this case, before the hearing, James Shaw, a Minister outside Cabinet, conceded he had insufficient analysis to support the regulations made. The Court’s decision reflects this concession, with the discussion in the judgment providing valuable insight into the potential tensions between Labour and the Greens on these issues. The central role of the Climate Change Commission is also highlighted. Some key points and potential implications are set out below.

What did the case involve?

The case concerned an amendment to regulations made under the CCR Act which set limits and price control settings for the ETS (Amendment Regulations). Lawyers for Climate Action issued judicial review proceedings, arguing the Amendment Regulations were unlawful because they were inconsistent with requirements in the Act. Relevantly, under the Act, the Minister must be satisfied the limits and price control setting are in accordance with: (a) the emissions budget and Nationally Determined Contribution (NDC) applying to the relevant period; (b) any emissions budget or NDC that has been set for the period after that for which the limits or price control settings are prescribed; and (c) the 2050 target.

Cabinet deviated from the Minister’s initial recommendations

The Minister’s initial recommendation to Cabinet on the Amended Regulations was consistent with recommendations from the Climate Change Commission (Commission), which the Commission makes as part of its statutory role. Cabinet departed from some of the Commission’s recommendations, adopting ‘not preferred options’. The Minister then recommended the Amended Regulations in accordance with Cabinet’s decision.

Unusually for judicial review challenges, before the hearing, the Minister accepted the Amended Regulations were ultra vires the Act. Specifically, he accepted that, on the materials he had regard to, he did not have reasonable grounds to be satisfied the combination of settings preferred by Cabinet (and then recommended by him) were in accordance with the 2050 target. Nor were they strictly in accordance with the emissions budget.

We are not privy to the reasons for the Minister’s admission, but for a Green Party Minister outside Cabinet, it may well reflect his frustration with Cabinet’s refusal to fully endorse recommendations initially made. At the very least, it is unlikely the Minister will be disappointed with the result which includes an order that the Amended Regulations must be reconsidered. Nor is it unhelpful that the outcome will be seen as a win by his support base.

Further observations

• Because errors where admitted, the case does not necessarily reflect a greater willingness by the Courts to have a closer look at analysis supporting climate change decisions. However, relief (here declaring the Amended Regulations ultra vires) is still at the discretion of the Court and the Court was satisfied the Regulations should be set aside for the reasons given.
• The relevant provision in the Act requires that the Minister “must be satisfied that the limits and price control settings are in accordance with” the various factors outlined. While the Minister must be subjectively satisfied, the parties agreed there must be an objective basis for, and analysis underpinning, the Minister’s conclusions. This necessarily involves ‘getting into the weeds” of how the analysis numbers stacked up – something Courts in judicial review are often reluctant to do, particularly where a Ministerial power has a subjective element. While the Court was reflecting the parties’ agreement on this point, as noted above, the approach was nevertheless endorsed.
• Because the ruling was based on deficiencies in analysis, we should see more fulsome analysis being undertaken by officials and sought by Ministers in the future on these regulations at least. It could also mean more challenges where there is a view by others that analysis underpinning considerations in the Act does not stack up.
• The recommendatory role of the Commission was clearly pivotal, here indicating its role as an independent Crown entity holding the Government in check is effective. A future Government may be less willing to depart from its recommendations.

* Lawyers for Climate Action NZ Incorporated v Minister of Climate Change [2023] NZHC 1835 [13 July 2023].

**The 2050 target is to reduce net greenhouse gas emissions (except for biogenic methane) to zero by 2050, and to reduce emissions of biogenic methane to 24–47 per cent below 2017 levels by 2050, including to 10 per cent below 2017 levels by 2030 (2050 Target). The analysis was also considered insufficient for to be satisfied that the regulations were in accordance with accordance the emissions budget and NDC.