Introduction

Societies around the world have struggled to find consensus on how to respond to climate change. That struggle has increasingly, from Urgenda Foundation v State of the Netherlands [2015] HAZA C/09/00456689 (Netherlands) to Sharma and others v Minister for the Environment VID 389 of 2021; [2021] FCA 560; [2021] FCA 774; [2022] FCAFC 35; [2022] FCAFC 65 (Australia), manifested in litigation. New Zealand is no stranger to that trend, the latest iteration being the Court of Appeal’s decision in Lawyers for Climate Action NZ Incorporated v Climate Change Commission.

The substance of the decision, broadly, concerns competing methods of accounting for emissions. Interesting? Yes. Complicated?  Also, yes. While those core aspects of the decision are unlikely to have broader (in the legal sense) implications, aspects of the decision address principles of wider application.

Background

Lawyers for Climate Action NZ Incorporated (“LCANZI”) brought an unsuccessful judicial review against the Climate Change Commission (“Commission”) and the Minister for Climate Change (“Minister”). The challenge concerned aspects of the Commission’s first round of advice under the Climate Change Response Act 2002 (“Act”) regarding:

• New Zealand’s nationally determined contribution to reducing emissions under the Paris Agreement (“NDC”).
• The first three emissions budgets (“Budgets”).
• The rules that apply to measuring New Zealand progress towards meeting New Zealand’s 2050 target (set out in s 5Q of the Act) (“2050 Target”) and the Budgets (“Rules”).

Having been unsuccessful in the High Court, LCANZI appealed to the Court of Appeal.

Principles of general application

Before turning to the substance of the decision, it is worth noting two aspects of more general application, the amenability of the Commission (as an advisory body) to judicial review and the Court’s comments on variable intensity of review.

Amenability

We focus first on amenability. The Commission is, in essence, an advisory body. Under the Act, decision making is the preserve of the Minister, although the Minister is in some circumstances required to explain departures from the Commission’s advice. As a result, the Commission’s advice was arguably capable of being conceptualised as a mere process decision and, therefore, an unlikely candidate for judicial review.²

The Commission argued its decisions were not amendable to judicial review – its advice, it argued, was influential but only formed part of the Minister’s subsequent decision-making process and was therefore not reviewable. The Court rejected that argument.

The Court ruled that the Commission’s role (providing independent expert advice to the Government on mitigating, and adapting to, climate change) is more than just influential, it is critical to fulfilling what the Court considered to be the Act’s two main purposes:

• to provide a framework for the implementation of stable climate change policies that contribute to the global effort to limit the global average temperature increase to 1.5°C; and

• to enable New Zealand to meet its international obligations under the United Nations Framework Convention on Climate Change, the Kyoto Protocol and the Paris Agreement.

The Court found that the Commission’s advice on the emissions budgets (in particular) is not just one of the many factors the Minister must consider, but is crucial to fulfilling the Main Purposes. The cruciality of the Commission’s advice is evidenced, by the requirements, with respect to Budgets advice, for the Minister to provide a written response to the Commission’s advice and, in the event of a departure from the Commission’s advice, to explain the reasons for doing so and to decide whether further consultation is necessary.³

Tempering the willingness to engage in the Commission’s process, the Court noted judicial review was discretionary and that caution would need to be exercised where there was potential for the courts to pre-empt aspects of the statutory process – the Court will always need to consider the materiality of the Commission’s role on the Minister’s decision making.

Intensity of review

Variable intensity of review – that the intensity of review of administrative acts varies depending on the importance of the subject matter – has been the subject of judicial debate.⁴ In the High Court, Mallon J held that intensity varies with context and considered that, in the context of the matters in review, a more (than Wednesbury unreasonableness) exacting standard was required. The Court of Appeal, without deciding the issue, said clarification as to whether the intensity of review varied should await a “case where it matters”. It did, however, express the following views on intensity of review:

• It was not “particularly attracted” to the idea that intensity of review could vary. It preferred that legality always be the touchstone.
• It was prepared to accept that reasonable (in the Wednesbury sense) decisions may require “sufficient evidence”, but it was not convinced that administrative decisions needed to be “fully justified”. That, the Court said, would mean moving judicial review close to a merits review.

This aspect of the Court’s decision may foreshadow a retreat from variable intensity of review. However, certainty will have to wait for the right case. In this case, as the Court’s decisions on the other grounds (discussed below) effectively disposed of the reasoning under the unreasonableness ground, the Court did not regard the present appeal as appropriate for detailed consideration under this head.

The Substance

The Substance of the decision is profoundly technical. Consistent with how it ran its case in the High Court, LCANZI advanced four grounds on appeal, namely, that the Commission had:

• made a mathematical error in preparing its NDC advice;
• misinterpreted the statutory purpose of the Act in preparing its Budgets advice;
• wrongfully used a particular emissions accounting methodology in developing the Rules; and
• acted unreasonably and irrationally in giving the NDC and Budgets advice

Mathematical error

The first error, LCANZI argued, was that the Commission’s NDC advice was unlawful and irrational owing to a mathematical error. The alleged error had arisen because (broadly) in determining the net emissions reductions required under the NDC, the Commission had started with gross emissions (thus comparing apples with oranges according to LCANZI). LCANZI’s position was that, instead of the gross-net approach taken by the Commission, a net-net approach should be taken. The Commission’s approach, LCANZI said, would have an inappropriate anchoring effect, resulting in a lower NDC than might have otherwise been set.⁵

The Court agreed with the High Court and found that there was no mathematical error or error of logic in the formulation of the NDC advice, based on the gross-net approach. The reason for comparing modelled reductions in global net CO² emissions with New Zealand’s gross CO² emissions for the purposes of the NDC advice was a deliberate choice, was available to the Commission and was fully explained in its advice.⁶ The Commission’s approach was consistent with the Kyoto Protocol, and avoided the distorting effect on emissions of forestry cycles in New Zealand.  The Minister clearly understood the methodology that the Commission used, as illustrated by the clear explanation given in his paper to Cabinet

 

Misinterpretation of statutory purpose

The second error alleged by LCANZI was that the Commission had misinterpreted the Main Purposes in preparing its Budgets advice. LCANZI argued that the proposed Budgets would not contribute to the 1.5°C warming limit because they represented an increase in emissions and were not consistent with the Paris Agreement because they did not constitute sufficiently ambitious emissions reductions. LCANZI also contended that the Commission had erred by overly relying on consistency with the 2050 Target.

The Court agreed that the Commission was required to act in a manner consistent with the Main Purposes. While they must guide the decision-making process,⁷ they did not impose a substantive bottom line, as LCANZI suggested. The Court found that clear and express terms would have been required for the statutory purpose section (s 3) to impose a substantive bottom line. The Court noted that s 5W (the provision that sets out the purpose of the Budgets) uses the phrases “with a view” and “contributing” and observed that what may qualify as a contribution is not defined in the Paris Agreement or the Act.⁸

The Court concluded that the Commission had not misunderstood its task in preparing the Budgets advice in relation to how much weight needed to be given to the purpose.⁹ The Court expressly held that, given New Zealand’s distinct emissions profile, emissions could increase over a Budget period without being unlawful. The Commission was required to consider whether the Budgets that it proposed will put New Zealand on a path to meet the 2050 target and contribute to the 1.5°C goal.

LCANZI’s complaints that the Commission could have undertaken a more extensive analysis or recommended Budgets with a higher ambition were essentially arguments about the merits of the Commission’s advice, and not open to scrutiny in a judicial review.¹⁰

Inappropriate use of MAB accounting methodology

The third error alleged by LCANZI related to the Commission’s advice on the Rules, which it proposed would measure progress towards meeting emissions budgets and the 2050 Target. A subset of the emissions to be measured are land emissions. The choice made by the Commission as to how best to measure those emissions was LCANZI’s focus. The Commission had selected between the two methods used in New Zealand:

• The land-based approach measures all land-based emissions and removals at a point in time. The Commission had noted that it gives a “truer account of what the atmosphere sees”.
• The modified activity-based approach measures a small subset of activities and uses averaging to smooth “out the cyclical peaks and troughs in emissions due to harvesting of post-1989 exotic production forests”.

LCANZI contended that the Act mandated the land-based approach. In support, it directed the Court to references within the Act to net accounting (for example, in the 2050 Target). To LCANZI, the Commission was deciding what emissions needed to be counted and, in effect, was amending legislation through a delegated power without being clearly authorised to do so.

The Court disagreed. It gave three principal reasons:

• New Zealand had always set targets and measured progress on a gross-net basis (to account for the effects of forestry).
• The 2050 Target itself had been informed by an activity-based approach and adopting a land based approach would undermine the commitment to the 2050 Target.
• The legislative history showed that Parliament had intended for the Commission, as a specialist body, to decide on the appropriate accounting methodology.

Unreasonableness

Finally, LCANZI argued that the Commission acted outside its powers because the Budgets that it recommended are inconsistent with the purposes of the Act, on the basis that no reasonable decision maker in its position could have given the advice that it gave on the emissions budgets and the NDC.¹¹

As the Court found against LCANZI on each of the previous grounds, the unreasonableness claim largely fell away.¹² For completeness, the Court also held that the emissions budget advice and the NDC advice were within the scope of what a reasonable decision maker could have recommended.¹³

 

Conclusion

The decision is the first direct appellate challenge to the Commission and the consequences of amendments to the Act enacted by the Climate Change Response (Zero Carbon) Amendment Act 2019. The Court confirmed that the Commission is generally amenable to review. It also confirmed, in part, the breadth of the Commission’s recommendatory function. More broadly, the decision may foreshadow a move away from the concept of variable intensity of review.   

 

Endnotes

¹ Cornell Iral Haynes Jr “Hot in Herre” (2002) Universal.

² See, for example, the discussion in Trustpower Ltd v Electricity Authority [2016] NZHC 2914; [2017] 2 NZLR 253.

³ At [54].

⁴ See, in the climate context, Students for Climate Solutions Inc v Minister of Energy and Resources [2022] NZHC 2116 and Hauraki Coromandel Climate Action Inc v Thames-Coromandel District Council [2020] NZHC 3228; [2021] 3 NZLR 280.

⁵ At [87].

⁶ At [78].

⁷ At [103].

⁸ At [105].

⁹ At [115].

¹⁰ At [116].

¹¹ At [157].

¹² At [170].

¹³ At [176].