One of the world’s largest investment companies has committed $2 billion to a fund focused on making New Zealand the first country in the world with 100 per cent renewable electricity.
The Government, which is not contributing any funds all of which will be private, says having the capital available for major investments is critical to rapidly increasing renewable energy, and comes off the back of an expanded fast-track consenting process targeted at wind and solar farms.
Prime Minister Chris Hipkins today said that a deal had been reached with the United States multinational BlackRock to develop a climate infrastructure fund to support New Zealand businesses, help create more highly-skilled local jobs, and accelerate green energy options like solar, wind, green hydrogen and battery storage to fuel a low emissions economy.
Hipkins said “the first of its kind” net zero fund demonstrated the “huge economic potential of New Zealand being a climate leader and our goal of generating 100 per cent renewable electricity”.
“It proves again that we can grow our economy while we lower emissions,” he said.
“This fund is a massive opportunity for New Zealand innovators to develop and grow companies.
“I’m absolutely stoked about what this means for Kiwi ingenuity in renewable energy; it shows that our ambitious climate targets have the world’s attention, and that they are good for the climate, good for the economy, and will help create highly-skilled jobs.”
While technically the island nation of Tokelau is the first country in the world to produce all its electricity needs from renewable energy, it is still non-self-governing territory of New Zealand.
Hipkins said New Zealand was “well-positioned” to be a home for this investment, which was critically needed as impacts of climate change increased here and around the world.
“Cyclone Gabrielle and the Auckland floods were reminders we must speed up our own climate action, and the fund will supercharge investments in clean technology that might otherwise not have happened.”
Energy Minister Megan Woods said this would accelerate New Zealand’s emissions reductions.
“With record levels of renewable electricity generation in recent years, New Zealand is well-positioned to be one of the first countries in the world to deliver a fully-renewable electricity system,” Woods said.
“Investors in the green economy can see our potential and recognise our commitment to climate commitments and goals, such as our banning of further offshore oil and gas exploration.
“New Zealand is now an investment magnet for capital that will unlock technology such as battery storage, wind and solar generation, green hydrogen production and more electric vehicle chargers across New Zealand.”
The announcement follows other Government partnerships with major companies including New Zealand Steel and Fonterra to reduce emissions while retaining jobs.
“The New Zealand net zero fund will look to crowd in investment from Crown companies and entities, including superannuation funds and private sector funds to accelerate New Zealand’s transition to 100 per cent renewable electricity,” Woods said.
“This arrangement means we will get there faster, with opportunities for local investment in a low-emissions economy. That will be a significant selling point for New Zealand businesses as consumers demand more sustainable products and services.”
In March last year, former Prime Minister Jacinda Ardern visited BlackRock’s headquarters in New York, meeting with the company and the American Chamber of Commerce.
In a statement on LinkedIn, BlackRock CEO and chair Larry Fink said it was the largest single-country low-carbon transition investments BlackRock had created to date, and a model for how to scale up climate infrastructure steps.
“We are privileged to have been entrusted to manage the retirement savings of many New Zealanders for over a decade now. Today, we are taking an important step with the launch of a New Zealand-focused strategy that will target a raise of NZ$2 billion for investment in the country’s climate infrastructure,” Fink said.
“This is the largest single-country, low-carbon transition investment initiative BlackRock has created to date. It will enable New Zealand companies to access greater pools of capital to build out climate infrastructure across the country’s energy system, including in wind power, solar power, battery storage, electric vehicle charging, and natural capital projects.
“New Zealand doesn’t just have the ambition to build a more resilient energy system and be a leader in decarbonisation globally. It is already doing that today. As we approach Cop28 at the end of this year, the world is looking for models of co-operation between the private and public sectors to ensure an orderly, just, and fair energy transition. Building on BlackRock’s Climate Finance Partnership fund, announced at Cop26 in Glasgow, the New Zealand climate infrastructure strategy can be a model for how to scale and implement this vision.”
Speaking at the announcement, Andrew Landman, head of BlackRock Australasia, said it was the first time it had done a country-specific initiative like this.
“We’ve benefited over the last 10 years managing various retirement savings for New Zealand and I think through that engagement we’ve learnt so much about the innovation in New Zealand and also the institutional investors here, whether you feel it or not, in Auckland, are global leaders.
“They have really driven this idea very hard with us, and we’ve thought about it.”
BlackRock was one of the largest asset managers in the world and had chosen New Zealand as the innovation was “far greater in this country than we see elsewhere in clean tech”.
He pointed to the 83 per cent renewable energy currently and 2030 goal to hit 100 per cent.
“We firmly believe New Zealand could be the first country in the world to achieve the 100 percent target, and this initiative is one step closer.”
Asked about the company’s continued investments in oil and gas around the world, weapons investments and human rights issues with reports some investments in China are linked to exploitation of the Uyghur population, and whether this was an act of “greenwashing”, Landman said it simply reflected the fact their clients wanted to invest in green technology in New Zealand.
BlackRock Asia-Pacific head of climate infrastructure Charlie Reid said to get to net-zero by 2050 the world needed to invest $200 trillion of capital.
For New Zealand to reach 100 per cent about $42b of capital will be needed, he said.
Today’s initiative would see funds start to be unleashed before the end of the year and contribute to develop wind, solar, batteries, EV charging, green hydrogen, natural capital and other climate solutions.
“We truly believe that New Zealand is a leader in climate infrastructure globally.”
National Party leader Christopher Luxon said they welcomed the funding announcement but he felt a major barrier to unlocking the true potential of renewable energy was around consenting.
National has not adopted Labour’s commitment to have 100 per cent renewable electricity by 2030 but does have a policy to double the country’s renewable electricity capacity.
Non-governmental environmental organisations meanwhile have urged caution in relying on private money for green investments.
Greenpeace spokesperson Amanda Larsson said the deal ultimately meant there would be less public buy-in on projects.
Oxfam Aotearoa Climate justice lead Nick Henry said funding should instead be coming through taxing polluters.
“It’s important to remember that neither BlackRock, nor New Zealand, are by any means climate leaders. For every dollar committed today, BlackRock owns a tonne or so of thermal coal reserves.”