NZ’s government may ask the public to underwrite the risk of fossil fuel exploration – this could be unlawful

After reversing the ban on new offshore oil and gas exploration permits, New Zealand’s coalition government is now considering whether to share the risks of exploration with the fossil fuel industry.

This could mean taxpayers would compensate corporations if exploration is unsuccessful. Resources Minister Shane Jones has stressed that no decision has been made yet, but the government accepts commercial exploration for new gas resources is unlikely without state support.

However, subsidising fossil fuel activities seems contrary to New Zealand’s recent international commitment to phase out incentives for the industry. It is also difficult to square with the government’s climate strategy to make clean energy abundant and affordable for everyone, announced last week as part of the second Emissions Reduction Plan for 2026–30.

Helping corporations potentially exploit new fossil fuel resources, thereby adding greenhouse gas emissions, may also be contrary to the government’s obligations under international human rights law.

International legal obligations

There is clear consensus that greenhouse gases drive global warming and that emissions must be cut to avoid the worst effects of climate change.

New Zealand’s government also acknowledges the effects of climate change are already being felt across communities and the economy.

Earlier this year, the Ministry of Health Manatū Hauora identified climate change as one of the leading threats to New Zealanders’ health in its Health National Adaptation Plan.

In international law, Aotearoa New Zealand also has human rights commitments relevant to decisions around new fossil fuel exploration. New Zealand ratified the International Covenant on Economic, Social and Cultural Rights (ICESCR) in 1978, and since then has been obliged to take steps to progressively realise the rights the covenant contains.

These include the right to an adequate standard of living and the right to the highest attainable standard of physical and mental health. Realising these rights requires continuous improvement of living conditions and improvement of “environmental hygiene”.

In 2022, a human right to a healthy environment was also adopted by the United Nations General Assembly, and supported by New Zealand.

Drafted in 1954, the ICESCR does not mention greenhouse emissions and climate change, or their links to health and living conditions. Despite this, the UN Human Rights Council asserts that states’ obligations under the covenant include the following:

• refrain from directly engaging in activities that cause environmental harm that interferes with the enjoyment of rights protected by the covenant

• take measures to safeguard the enjoyment of economic, social and cultural rights against environmental harm

• ensure environmental sustainability.

It is likely that facilitating or helping new fossil fuel exploration would run contrary to these obligations because it would undermine efforts to cut emissions. It also constitutes a regressive step (contrary to the principle of non-retrogression) in realising fundamental rights to health and healthy living conditions.

It may prove politically unpalatable to ask New Zealanders to invest in activities that may erode their human rights.

Clearer state obligations to come

It remains unclear in international law exactly what states are obliged to do in response to climate change. But that situation should soon improve.

Hearings are underway at the International Court of Justice as part of preparations for an advisory opinion on two burning questions: what are the obligations of states under international law to protect the climate and environment from greenhouse gas emissions, and what are the legal consequences for states that have caused significant harm to the climate and environment?

Expected in late 2025, answers to these questions from the world’s highest court could be important in galvanising more effective state action on climate change. But governments shouldn’t wait for this.

The Climate Change Commission’s newly released review of New Zealand’s 2050 emissions target provides a sobering warning.

It says the country’s current 2050 target (net zero for long-lived gases and methane emissions from livestock and waste down by 24–47%) is no longer enough because the severity of climate impacts is greater and faster than expected, and other comparable countries are already doing more.

Instead, the commission recommends a “net negative” target. This would see the removal of 20 million tonnes more carbon dioxide than New Zealand produces, and more ambitious cuts to methane.

The direction of travel should be clear. New Zealand needs greater and faster action to mitigate climate change impacts. On the international front, this should be signalled by a bold and ambitious new emissions reduction pledge under the Paris Agreement, and by more climate finance for Pacific nations.

For domestic energy needs, the government should be investing in community-based renewable electricity, not considering enabling speculative exploration for more fossil fuels.