In April 2018, the Government of New Zealand announced that no further offshore oil and gas exploration permits would be granted. This decision has the greatest impact on the Taranaki region in the west of New Zealand’s North Island. From the outset, the government has communicated a desire for a just transition–that is, a way to manage the process to support workers, maintain employment, and diversify and strengthen the economy to create a sustainable future for the whole region. This is a proactive approach in the sense that there is ample lead time to anticipate and plan for the transition. Key stakeholders at the regional and local levels have identified a roadmap to a low-emissions future. With support from the national government, they are working to implement transition action plans to determine how Taranaki can make a just transition to a low-carbon economy.

Context

The Government of New Zealand’s decision to stop issuing new permits for offshore oil and gas affects around a third of the country’s total active exploration permits¹. The oil and gas transition in New Zealand is phased: Existing offshore oil and gas exploration permits that have already been approved may operate until 2030 and existing producing fields can operate until 2050 (Government of New Zealand 2018b). There is no wholesale shift in the industry, and therefore time to plan for the transition ahead.

The phase out of new gas developments has the greatest impact in the Taranaki region where the majority of New Zealand’s offshore oil and gas investments are concentrated. Often called the “Texas of New Zealand,” Taranaki is a mountainous coastal region with a population of around 126,000 people. While the oil and gas sector directly employs only 750 people in the region (just over one per cent of total employment), the sector contributes an estimated 30 per cent of regional gross domestic product, which is why the region has the highest GDP per capita in the country (Ministry of Business, Innovation and Employment 2020; Parliamentary Commissioner for the Environment 2020)². As global demand for oil and gas declines in the low-carbon transition, the Taranaki region—its workers, communities, and economy—will be increasingly exposed to market volatility.

The decision to phase out oil and gas permits is part of the government’s broader climate commitments. In line with the 2015 Paris Agreement, New Zealand has committed to reducing net emissions by 50 per cent below gross 2005 levels by 2030³. Three sectoral shifts are important to realising these goals:

• electrifying end-uses (vehicles, buildings, industry) that currently burn fossil fuels across the economy;
• changing the structure and methods of agriculture production; and 
• reforestation (New Zealand Productivity Commission 2018).

The Cabinet has adopted a whole-of-government approach to climate change programs and just transition concepts are being incorporated into domestic legislation and policy (New Zealand Ministry for the Environment 2022a). For example, under the Climate Change Response Act (first published in 2002; updated in 2019), the government must take “into account the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities” (Government of New Zealand 2019). 

Independent Commissions such as the Productivity Commission and the He Pou a Rangi Climate Change Commission have provided recommendations to government on implementing and monitoring a just transition (Climate Change Commission 2022; New Zealand Productivity Commission 2018). New Zealand is also one of eight countries worldwide to have established a just transition commission or unit (Heffron 2021). In short, there is broad support for a just transition approach—the question is how to achieve it.

Policy response and transitions management

Having announced the oil and gas exploration phase out, the Government of New Zealand established a Just Transitions Unit (JTU) within the Ministry of Business, Innovation, and Employment in 2018 to support the transition process in the Taranaki region. The JTU has evolved over time, and presently has two teams—one focused on just transition partnerships for regional planning and another on understanding and modelling economy-wide transitions (e.g. transitions to a low-emissions economy and the future of work). The JTU forms a centre of expertise in government for managing transitions and forming partnerships.

The government also established a C$2.47 billion Provincial Growth Fund to support economic diversification and transition (Government of New Zealand 2018a) after announcing the phase out of oil and gas exploration. The Just Transitions Partnerships team helps coordinate with other government ministries to identify funding opportunities and fill in gaps where there are no other alternatives. They work on a case-by-case basis as needed to coordinate across the public service. 

Leading practices on just transition emphasize the importance of public engagement and social dialogue (Krawchenko 2020). The JTU approach was broadly consistent with this approach—facilitating a wide-ranging dialogue on how the region could manage the just transition to a low-carbon economy. The resulting Taranaki Roadmap 2050 was produced by Venture Taranaki, the local economic development agency, and was co-created with communities, iwi (Māori nation/peoples), local and central government, businesses, educators, unions, and workers. It was developed with input from 29 workshops on 12 transition topics, surveys and community outreach, a creative challenge, and youth engagement. Public consultation on the draft report included visits to more than 40 locations with over 1,000 people. Twenty volunteers led the process, and the final report was released in 2019. This process was more than engagement—it sought social consensus to galvanise action on implementation. 

The Roadmap identifies 12 Transition Pathways to diversify and strengthen the local/regional economy. Some pathways relate to sectors (e.g. tourism); some are enablers (e.g. the regulatory environment); and some are both (e.g. energy, infrastructure, and transport). The development of the Māori economy is one of the most significant and impactful pathways. There is an Action Plan for each Transition Pathway. The Roadmap and Action Plans were developed by volunteers and funded by the national government and the private sector. 

The Taranaki region’s just transition process is not without its detractors, however. While new offshore oil and gas exploration permits have been shelved, there remains an active on-shore industry. The Climate Action Tracker rates New Zealand’s actions so far as “highly insufficient”–on track for a greater than 4 Celsius world (Climate Action Tracker 2022). New Zealand continues to grant onshore oil and gas permits which make up two-thirds of their oil industry (Ministry of Business, Innovation and Employment 2022).

How will this broad regional dialogue on a just transition translate into implementation? This is yet to be seen as the implementation process is in its early stages. However, each Action Plan identifies a coordination network, the requisite resources, and specific projects for implementation. It includes corresponding budgetary requests to the central government for resources as it is supporting the Taranaki Roadmap through the Provincial Growth Fund. There is also an understanding that private sector funding will be leveraged.  

The Roadmap also identifies employee-oriented supports as being important, one of the most common elements of just transition policies in advanced economies (T. A. Krawchenko and Gordon 2021). While the overall just transition response to the oil and gas phase out in Taranaki has focused on economic diversification and regional development, there are specific supports for workers such as active labour market policies, particularly skills retraining programs. Some supports are funded through demand-led government services such as the tertiary education system, as well as active labour market programs, funded through the Ministry of Social Development. However, there have not yet been any substantial employment losses in the Taranaki region in the sector, so how this aspect of the transition will be managed and supported remains to be seen. The government, Business New Zealand (the national business association), and the New Zealand Council of Trade Unions (CTU) are jointly designing a Social Unemployment Insurance scheme that would support workers to retain about 80 per cent of their income for a period after they lose their jobs (Government of New Zealand 2022a). This is a possible pathway for support in the future. The approach is to strengthen and diversify the economy so that      displaced workers will find good employment and be able to maintain quality of life after the transition. 

Trade unions have been actively involved in just transition planning—both in the region and nationally.  For example, in the “People and Talent” pathway Action Plan, labour unions “have secured a focus on the support and empowerment of workers during transition, including job clustering, analysis of retraining opportunities and skills audits of the workforce” (International Trade Union Confederation 2021). The labour union E Tū is negotiating roles and responsibilities between government, employers, and employees for such supports and they are establishing multi-employer redeployment schemes (International Trade Union Confederation 2021).

Investments in energy development are also a central part of Taranaki’s future transformation and linked to a just transition. New developments in this sector have the potential to provide employment to former oil and gas workers and generate new employment opportunities for the region. Taranaki’s Energy Action Plan envisions a mix of renewable sources (Venture Taranaki 2019). At present, the Patea Hydro development is the largest renewable energy project in the Taranaki region, but there is limited potential for hydro expansion. Wind technology is commercially viable in New Zealand and two onshore wind farms are in development, but there are no offshore wind farms in New Zealand. There is limited use of small scale solar and grid-scale solar with some potential to scale these up alongside potential for wave, bioenergy, and geothermal energy. Unlike Denmark, which has focused solely on developing a wind industry, there is no single or clear direction for clean energy investments for Taranaki, rather, a range of technologies are being considered. Given this energy landscape, it is challenging to understand the employment and skills training needs of the future. 

To help develop and scale renewable energy investments, a centre for future energy development, Ara Ake, was established in 2020. The impetus for its creation stems from Taranaki’s regional development strategy (Tapuae Roa Strategy 2017) and the Taranaki Roadmap 2050. With NZ$27 million (C$23 million) in funding from the national government, the centre is leading research and the development of clean energy technologies such as wind and wave power, and geothermal and hydrogen-based energy, which will then be co-funded with the private sector and central government. It also forms a centre of expertise on diversifying land use to grow more crops, such as quinoa, and support reforestation. These actions align with national climate commitments and help the region to envision the economy of the future.

Progress to date

Taranaki is still in the early stages of phasing out offshore oil and gas. Yet the Action Plans lay out several principles for monitoring progress that align with the broader academic literature on just transition. It defines justice in distributional, recognitional, and procedural terms. Distributional justice is concerned with how different groups benefit or experience impacts from the transition; recognitional justice identifies stakeholders and rights holders who may be implicated; and procedural justice is concerned with elements of governance—who is included and how (Stevis and Felli 2014). The Taranaki Roadmap process has been careful to include recognitional and procedural elements of justice from the onset, and these will continue to be important for implementation. Distributional elements of justice can be challenging to capture and have a longer time frame. The Taranaki Roadmap’s robust monitoring and evaluation approach should help to understand and track distributional justice outcomes.

In addition, metrics and evaluation are baked into the Taranaki Roadmap process. They form the 12th Transition Pathway Action Plan and as such, have been a part of the same engagement and design processes. This is novel in the sense that the indicators of success have been designed upfront and from a variety of perspectives. Māori worldviews of well-being and success are integrated into the Taranaki 2050 metrics framework. Outcomes are assessed in annual public-facing updates and reviewed every two years, with a detailed review every five years. 

What has been achieved to date? Having been adopted in 2019, implementation of the Roadmap is in the early stages. A 2021 progress report showed that 85 actions are complete or underway, 38 are partly underway, and 43 actions remain (Tapuae Roa 2021). For example, on the energy front, a wind-to-hydrogen and green ammonia project has been developed as well as hydrogen production and refuelling stations at existing truck stops. On training and innovation, an iwi Trust (Te Kāhui Maru Trust) is creating an environmental workforce development training program, and the local technology institute is establishing new flexible courses to support workers in transition and programs on Māori enterprise. A wide range of actions related to diversifying and decarbonising the economy and preparing workers are underway. Of those that have been completed to date, the majority relate to tourism and infrastructure and transport. Longer term, there is a framework in place to measure and report on outcomes through specific metrics, well-being indicators, and alternate metrics such as self-reported job satisfaction. 

It is also unclear whether local and regional organizations are resourced well enough to implement the ambitious Action Plans. As the process moves on from consensus building, it increasingly needs to address costs and trade-offs, and will need public and private sector funding to accelerate actions. New Zealand is in the process of developing a National Emissions Reduction Plan and National Adaptation Plan which will include an Equitable Transitions Strategy (Government of New Zealand 2022b; New Zealand Ministry for the Environment 2022b). This process will expand the just transition approach across the national economy. 

Lessons for Canada

New Zealand is a unitary state (i.e. a centralized government) and often referred to as the world’s quickest legislators, with its single legislative body and elections every three years. Although the scale of the energy transition in New Zealand is, to date, relatively small, and it differs in many ways from Canada, there are leading practices relevant for our own oil and gas economies. 

• Proactive planning. Global transitions in the fossil fuel sector have often been reactive—with initiatives being put in place once an industry is already in decline. New Zealand’s phase out of oil and gas activities has been proactive and has a long lead time. There is also a dedicated government unit to support the process and co-ordinate across government, an approach that leads to the development of robust strategies.            
• Regional development. A key question in any region is what it will transition toward as global demand for fossil fuels declines. The place-based approach in Taranaki, grounded in understanding the local/regional economy, identifies assets and opportunities, and supports coalition-building for implementation. 
• Inclusive by design. Justice is about how rights holders and stakeholders are included and impacted by transitions. The Taranaki Roadmap’s seven “Pou” (pillars) framework engages communities, iwi (Māori tribes), local and central government, businesses, educators, unions and workers. Like Canada, New Zealand’s First Peoples—the Māori—are key rights holders for a just transition. Both the national government and labour unions recognise this. Active involvement of iwi and hapū (clan) is the first principle for a just transition in the various labour unions (New Zealand Council of Trade Unions 2017). While engagement with local iwi and the Māori economy were both key priorities in Taranaki’s transition, the process was not perfect—in particular, some of the early engagement needed deeper cultural competency. This is a learning that the New Zealand Government has taken on and is working to address (Ministry of Business, Innovation and Employment 2021). As iwi, hapū, and Māori organisations are regularly asked to contribute and engage, they need to be adequately resourced to take on this work. Many Māori-owned businesses are in transition-vulnerable sectors and more research is needed on Māori land, land use change, and social and cultural impacts (Whetu 2020).

Conclusion

The Taranaki region’s just transition planning process embraces many of the leading practices in the literature. It is consensus-seeking, grounded in the regional economy, inclusive, and future-oriented. The question remains, however, will it be enough? Will the initiatives deliver a diversified economy and good jobs, and will they effectively decarbonise the economy? Is the pace of the transition fast enough if global demand for oil and gas declines faster than expected? Delivering on the Taranaki Framework depends to a large extent on the network of regional organizations—local and regional governments, unions, businesses, educational institutions, non-profit organisations, and civil society more broadly. The national government is providing important supports, but local networks and people are leading actions and implementation and will collectively determine the region’s future. To date, the government’s commitments to phasing out oil and gas only pertain to the offshore oil and gas industry; onshore oil and gas production represents around two thirds of the industry. Concrete plans are needed to address onshore oil and gas phase outs in order to meet climate commitments and support a just transition. 

The author gratefully acknowledges Isabella Crawford and Nick Montague, Just Transitions Partnerships, and the New Zealand Ministry of Business, Innovation, and Employment, for providing content and review. All opinions, errors, and omissions are the sole responsibility of the author.

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¹ 71 per cent or 22 out of a total of 31 oil and gas permits.

² In total, around 4,700 people are directly employed by the oil and gas sector in New Zealand and it provides around $170 million in royalties to the government each year (Government of New Zealand 2018a).

³ This equates to a 41 per cent reduction on 2005 levels using what is known as an “emissions budget”      approach.