Lessons from New Zealand’s APEC Fossil Fuel Subsidy Reform Peer Review 49 th APEC EWG Gyeongju, Korea June 2015

Outline- New Zealand’s FFSR Peer Review Experience Background Benefits of peer reviews Objectives of New Zealand’s FFSR peer review Process Key Lessons Next steps

Background Economy driven Open and transparent process Seven person panel- 6 APEC volunteers + 1 OECD representative 8 measure reviewed Review took place in Wellington, NZ March 2015

Benefits of APEC Peer Reviews Increased transparency and accountability Facilitates policy dialogue to share experience and policy tools Opportunity to seek external expert advice Highlighting success and good practice Facilitating policy dialogue to share experience and policy tools.

Objectives of New Zealand’s FFSR Peer Review Test current policy settings against the APEC FFSR evaluation mechanism to evaluate their efficiency Promote transparency around fossil fuel support measures more broadly Promote ambition for reform of inefficient fossil fuel subsidies Build political awareness of the issues around reform Build confidence in the peer review process

Process: Measures selected for review Non-resident off-shore drilling rig and seismic ship tax exemption Three tax deductions for petroleum-mining expenditures Petroleum tax and royalty regime R&D funding for the oil industry Financial restructuring of Solid Energy Indemnity for mining land reclamation Motor spirit excise duty refund Funding of international treaty obligations to hold oil stocks

Process: Pre panel visit preparation steps Small dynamic cross-agency team tasked with arranging the peer review. Technical work: identification of measures to be evaluated undertaken by the Ministry of Business Innovation and Employment (MBIE) Logistics arranged by Ministry of Foreign Affairs & Trade Approximately 2 months to complete templates background material

Process: During the panel’s visit The panel met with: New Zealand’s Minister of Energy and Resources New Zealand’s Climate Change Ambassador Officials from;  Ministry of Transport  Ministry of Business Innovation & Employment  Inland Revenue Dept. (Tax)  Treasury  and Stakeholder- the Petroleum Exploration & Production Association of New Zealand (PEPANZ)  Academics and Independent tax experts were invited but declined

Key lessons Ensure there is participation from all stakeholders- engage them early Develop a small dynamic team of champions who will see the process through to the end Give plenty of time to collate technical data and complete the templates to give a comprehensive pre briefing pack Provide pre-briefing material in plain English Give the panel plenty of time to digest the information

Feedback from panel members Preparation of the pre briefing was vital for a smooth peer review to give panellist time to digest information A wide range of stakeholders gives balance and ensures a broad set of voices are heard Panels should meet with experts in subsidies and trade and climate change as well as energy and finance.

Feedback from panel members “NZ was well prepared, not only institutionally but also personally, to conduct the process. The issues were well defined and the persons in charge have full knowledge regarding the substances. More importantly, the process were conducted in open and transparent manner. The planning regarding the sequence of the process was excellent and the officials were really helpful and supportive. The data was always available to support the recommendations” -panel member

NZ’s Next steps on FFSR Present findings to Ministers Assist in developing capability around FFSRs through the workshop Deliver the Friends of FFSR communiqué at the Paris COP

The Friends of FFSR Communiqué Calls for governments and other actors to prioritise reform efforts. Launched on 17 April 2015 by the Friends of FFSR, together with the United States and France. Invite economies and other actors to endorse the Communiqué. The Communiqué Annex provides a high-level platform for countries to showcase their progress on FFSR domestically, and their international co-operation to support reforms. Will be presented at COP21 in Paris, in December 2015, to support efforts to reach a new global climate agreement.

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