Lessons from New Zealand’s APEC Fossil Fuel Subsidy Reform Peer Review

49th 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 16-20 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.

Thank You