As record heatwaves cause alarm across the planet, courts continue to hold governments around the globe to account for climate-related decisions.

Here in Aotearoa New Zealand, the High Court has recently ordered the Minister for Climate Change to revisit settings under the Emissions Trading Scheme. In a highly unusual turn of events, the judgment followed an admission by the Minister that he had failed to give adequate consideration to existing emissions budgets, New Zealand’s commitment to reduce emissions under the Paris Agreement and the 2050 net zero target. The decision is a first, with the Minister joining with the NGO suing him to seek orders from the court.

Facts of the case

The Climate Change Response Act 2002 obliges the Government to make annual settings relating to the volume and price of units available under the Emissions Trading Scheme. Those settings must be in accordance with New Zealand’s emissions budgets, its nationally determined contribution to global emissions (NDC) under the Paris Agreement and the 2050 net zero target in the Act.

The Climate Change Commission must make recommendations to the Minister as to the limits and price control settings. In 2022, the Commission's recommendations included reducing the number of units available and increasing the trigger price. The Government decided not to follow this advice, instead making a high volume of units available at low prices.

This prompted an application for judicial review by Lawyers for Climate Action NZ Inc (LCANZI), a charity made up of lawyers which has brought a number of high profile climate-related lawsuits in recent years. LCANZI claimed that the settings were unlawful because Cabinet had failed to adequately address whether they were in accordance with the emissions budgets and the NDC.

Faced with the review application, the Minister accepted that the decision was flawed and that it needed to be made again and the parties jointly sought orders from the Court to that effect. The Court agreed and directed the Minister to reconsider the unit limit and price control settings in accordance with the requirements of the Act.

Why is the decision significant?

The case is a good example of two key trends in climate-related litigation both in New Zealand and internationally:

• NGOs driving change: Nearly 90% of climate-related lawsuits filed outside the US since June 2022 have been brought by NGOs, individuals or both acting together. Globally, NGOs have had considerable success in achieving change, including in the landmark judgment that the Dutch government’s failure to reduce emissions was unlawful. NGOs are also instrumental in so-called strategic litigation - cases brought despite low prospects of success because they will shape debate and raise public awareness.

• Governments under scrutiny: Historically, the majority of climate cases have named governmental entities as defendants - judicial review being an obvious and well-established tool to attack decision-making. However, the scope of climate cases is fast expanding with corporates increasingly finding themselves the targets of claims ranging from green-washing to negligence.

Overall, the case is a reminder that as the effects of climate change are increasingly and dramatically obvious, all actors, whether public or private, need to take care in taking actions or decisions with climate consequences.

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