Metals NZ CCO Second Emission Plan Submission – 20 June 2023

Climate Change Commission
PO Box 24448
Wellington 6142

Tēnā koe 

Consultation: Draft advice on the second emissions reduction plan (2026-2030)

  1. Thank you for the opportunity to share the New Zealand metals sector’s concerns, priorities and aspirations in helping shape the direction of policy needed to enable a thriving, climate-resilient and low emissions Aotearoa New Zealand.

About Metals New Zealand

  1. Metals New Zealand (MNZ) was established in 2011 to advocate for the New Zealand metals-related industry. It is committed to working with partners to deliver sustainable products for use in residential, commercial and infrastructure build projects and supporting the sector’s transition to a low emissions and circular economy future. MNZ represents a diverse range of large and medium-sized manufacturers who combined employ c. 25,000 people across New Zealand, with a strong presence in regional New Zealand. The sector contributes c. $3.3 billion annually to gross domestic product. 

Focus on key areas of sector insight 

  1. MNZ supports the over-arching intent of the draft plan and congratulates the Commission for its work and transparency in seeking feedback from a range of interested parties. MNZ supports policy aimed at aligning New Zealand’s manufacturing sector with lower emissions and circular economy principles. MNZ’s submission does not comment on all areas of the draft plan but rather focuses on areas of sector insight and desired outcomes.

In-principle support for proposed recommendations

  1. MNZ provides in-principle support for the proposed recommendations and puts forward the following additional information for consideration.

Chapter 3: A Path to Net Zero

  1. The metals sector shares the government’s objective of reducing carbon emissions in the building and construction sector. In doing so, we need to move away from calculations focused on embodied carbon and instead need to consider lifetime carbon emissions. 
  1. The ambiguity over the intended level of gross emissions reductions that the government is pursuing in the second and third budgets creates risks for the transition. Without a clear signal from the government, businesses will be required to know whether investments they could make are consistent with the path for gross emissions the government intends to follow. 
  1. In supporting future investment planning, it is critical for the government to set out an indicative range for the level of gross emissions it is intending for 2050, and the role it sees gross emissions reductions playing in achieving net zero emissions.
  1. In meeting the 2050 net zero target, MNZ supports the establishing of new native forests to build a long-term carbon sink to offset residual emissions from hard-to-abate sectors.
  1. In pursuing the path to net zero, we must ensure that we don’t lose critical industries offshore and, in doing so, further expose the economy to potential supply chain challenges as was the case during New Zealand’s response to Covid 19.

Metals sector committed to transitioning to a low-carbon future

  1. New Zealand steel and aluminium producers and manufacturers take their role in the transition to a low-carbon climate-resilient economy seriously, and collectively support the New Zealand Government’s goal for net-zero emissions by 2050.
  1. New Zealand Steel’s 21 May announcement that it will partner with the government to build a new $300 million Electric Arc Furnace (EAF) at its steelworks at Glenbrook within the next three years, as part of the country’s largest-ever emissions reduction project, is a game-changer. This significant investment will reduce Glenbrook’s carbon footprint by 800,000 tonnes from day one – the same as taking approximately 300,000 cars off the road permanently. That represents a reduction of over 45% in New Zealand Steel’s emissions – or a total of 1% of New Zealand’s total annual emissions. 
  1. Steel is infinitely recyclable and the EAF will allow scrap steel to be melted and reused. For example, vehicles at end-of-life won’t be shipped overseas but will become the raw material for other products – for likely reuse in the building and construction sector.
  1. Fletcher Steel has access to 100% recycled zero-emission steel and is currently considering market opportunities in New Zealand.
  1. Steel & Tube is undertaking a decarbonisation programme including freight optimisation and carbon abatement projects in the form of recycling and EV/LED lighting transition. 
  1. The Heavy Engineering Research Association (HERA) administers a zero carbon steel programme using robust carbon calculation rules developed by thinkstepANZ.

Harnessing hydrogen to drive down emissions

  1. New Zealand Steel, in partnership with MBIE and Victoria University of Wellington’s Robinson Research Institute, is evaluating a process that utilises hydrogen -instead of coal- in decarbonising primary steel making in New Zealand. The hydrogen reacts with iron ore to form only water vapour, and hence the process has zero CO2  emissions. Hydrogen can be generated from the electrolysis of water using ‘green’ electricity from wind, solar or geothermal sources. 

Chapter 4 Emissions Pricing

  1. The current structure of the ETS will likely result in extensive exotic afforestation, which could result in the unintended consequence of allowing gross emissions to continue largely unabated. The ETS should be amended to strengthen the incentive for gross emissions reductions and manage the amount of exotic forest planting it drives. 
  1. It is worth highlighting that increased emissions prices are already driving an increase in exotic forest planting. Over 60,000 ha of new exotic planting was intended for 2022. This is well above the 2022-2030 average of 32,000 ha per year projected by the government when setting emissions budgets.

Chapter 8: Built Environment

Repurposing existing buildings to reduce emissions

  1. MNZ notes the reference of a call for a pilot programme for residential building retrofits. MNZ supports the adaptive reuse for existing commercial and public buildings. Instead of taking a ‘knock-it- down and build-a- new-one approach’, repurposing buildings could be a cost-effective tool in helping reduce building and construction emissions. 
  1. The beauty of steel is that it is readily adaptable. Reusing steel means not having to add additional emissions, as they have already been accounted for in its original form.
  1. The redevelopment of Auckland’s Civic Administration Building (CAB), built in 1966, is a recent example of the repurposing of existing structural components.
  1. As one of the first structural steel-framed buildings in New Zealand, retention of the CAB’s 18-storey steel frame was fundamental to its successful refurbishment. Analysis showed the structure had good ‘bones’ and was well suited to its change of use to high end residential apartments. Notably, the steel was in excellent condition thanks to its protective fire and corrosion-resistant coatings, and the seismic-resisting steel frame meets today’s strict seismic requirements. 
  1. Reusing such a large portion of the building vastly reduced the project’s carbon footprint. The key to repurposing buildings is to identify new uses for old structures. Many older buildings have sufficient height and spacing of columns and beams to allow easy repurposing. Flexibility is pivotal and reusing the steel means less energy, less carbon and reduced projects costs. A real benefit of steel is the ease with which it can be altered – steel is readily adapted by welding, cutting or shaping.

Taking advantage of roof replacements

  1. Thousands of houses are re-roofed each year in New Zealand. During a roof replacement, roofing contractors usually strip the roofing down to the decking material. If the roof deck is in good condition it is kept as it is. Since the roof insulation is typically installed on the underside of the roof decking, home owners have the opportunity to have roof insulation installed or replaced. If a ceiling or roof has no insulation, you can lose around 40% of your cooling and heating energy. One of the simplest and most cost-effective ways to boost thermal performance is to increase roof insulation. However, when many homeowners re-roof, financial constraints can sometimes mean that only the new roof is budget for. 
  1. In attempting to provide a potential solution, MBIE could consider working with EECA to partner with The New Zealand Metal Roofing Manufacturers Association Inc to develop an incentive for homeowners to re-roof and insulate at the same time. This provides a double benefit of emissions reduction and, from c. 2026, the steel from the roof can be recycled into steel (for the next roof) using New Zealand Steel’s EAF.

Considering timber as a carbon-sequestering material remains a point of contention 

  1. Considering timber as a carbon-sequestering material is a point of contention among many construction industry experts, with debate largely revolving around varying forestry and harvesting practices and their effect on emissions, and the end-of-life considerations of the material. 
  1. It is therefore crucial to ensure that future demand for timber is met with sustainable forestry management practices. Otherwise, the broader use of timber as a building product could result in higher carbon emissions, less ecological diversity and post-harvest environmental damage.

Product use should ideally be driven by engineers, designers and specifiers

  1. Timber, concrete and steel all have a role to play in building and construction. Decisions regarding the use of building materials should ideally be driven by engineers, designers and specifiers on a project-by-project basis. We must not lose sight that the selection decision between steel and any elimination/replacement material is more than just carbon; design, cost and durability are also key decision-making factors.

Chapter 15: Circular Economy and Bioeconomy

Need to increase New Zealand’s recycling rates

  1. We pride ourselves on being a ‘clean and green’ country. However, the amount of waste we produce is a major problem and our recycling rates are relatively low compared to other countries with better systems in place. In 2020, we sent 3.38 million tonnes of waste to landfills. We estimate that nationally only 28 per cent of materials are recycled, and the other 72 per cent go to landfills. In contrast, Germany, Austria and Wales have the highest recycling rates in the world, with over 50 per cent of all waste recycled. 
  1. Currently, New Zealand’s economy predominantly uses resources in a manner consistent with the linear ‘extract-make-use-dispose’ model. In contrast, a circular economy maximises the circularity of resources and energy within production systems.
  1. Working in partnership with business and iwi, the government needs to formally commit to circular economy strategy development and implementation, as well as establishing the necessary resourcing, information, data and tools to reduce both production-based and consumption-based emissions.
  1. Recycling remains a necessary process as it enables the circulation of resources and exists as a tool to prevent waste. The important role of metals recycling from commercial construction and electronic waste is an example of this.
  1. In research done for HERA, approximately 85% of New Zealand’s building and construction steel waste is recycled or repurposed. This recycling is less carbon-intensive than newly produced steel, with around 1000 kilograms of avoided emissions per tonne of steel recycled.  Aluminium can be recycled indefinitely as reprocessing does not damage its structure. Increasing recycling rates would further lower emissions. 
  1. Zinc is the fourth most used metal and is an essential resource in renewable energy, vehicles and infrastructure. Its main uses are protecting steel and manufacturing bronze and brass. Recycling zinc is critical for preserving this resource for future generations.
  1. Unlike most recycled metals, recycled zinc has a larger CO2e footprint than if it was mined. Christchurch-based Zincovery is partnering with AW Fraser, Callaghan Innovation and the University of Canterbury in building an alternative to the current carbon intensive zinc recycling process. It aims to create the world’s first waste-free galvanising industry, further highlighting the metals sector’s bold sustainability aspirations. 
  1. Many technologies important in the transition to a more circular economy (including wind turbines, solar panels, and batteries) require metal inputs. Emissions reduction can therefore be achieved throughout a product’s life cycle, including its design, production, distribution, use and end of life reclamation and reuse.
  1. In exploring how New Zealand can accelerate the transition to a circular economy, making the economy more circular should become a ‘tier one’ national research priority. 
  1. If a product can’t be reduced, reused, repaired, rebuilt, refurbished, recycled or composted, then it should be restricted, redesigned, or removed from production.

Establishment of a Ministerial Advisory Group on the circular economy

  1. The government needs to give serious consideration to following Australia’s transitioning path to a circular economy. In November 2022, Australia’s Minister for the Environment Tanya Plibersek announced the establishment of a Ministerial Advisory Group on the Circular Economy. 
  1. This new expert group has been established to guide Australia as it transitions to a circular economy by 2030.  The group will look at how products are designed, manufactured and used across all sectors of the economy. It will identify meaningful and direct changes the government and industry can make to drive the transition to a circular economy. 

Thank you in advance for your consideration.

Nga mihi

Rick Osborne

Chief Executive

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