Chair, Cabinet Environment, Energy and Climate Committee INTERIM CLIMATE CHANGE COMMITTEE TERMS OF REFERENCE AND APPOINTMENT

In Confidence Office of the Minister for Climate Change Chair, Cabinet Environment, Energy and Climate Committee INTERIM CLIMATE CHANGE COMMITTEE TERMS OF REFERENCE AND APPOINTMENT Proposal 1. I seek Cabinet agreement on the terms of reference for the Interim Climate Change Committee (Interim Committee). 2. I also: 2.1 provide further information on the process to appoint the Interim Committee membership and establish a cross-agency climate change board of public sector chief executives (the Chief Executives Board) 2.2 report back on the timing and sequencing of key government decisions on priority climate change policy matters. Executive summary 3. In December 2017, the Government signalled its intention to introduce a Zero Carbon Bill. The Bill will act as the enduring architecture for transitioning New Zealand to a net-zero emissions economy, by setting a new 2050 greenhouse gas emissions reduction target in law and establishing an independent Climate Change Commission (the Commission). 4. In order to make progress before the Bill becomes law, Cabinet also agreed to establish an Interim Climate Change Committee as a precursor to the Commission. The Interim Committee will develop evidence and analysis on the priority matters of agriculture and renewable electricity generation. It will not have decision-making authority or powers, but its findings will inform the recommendations of the Commission once it is established. 5. I now seek Cabinet agreement on the terms of reference for the Interim Committee (see Appendix 1). In keeping with Cabinet s agreed guiding principles for a just and effective transition, the Interim Committee terms of reference were developed in consultation with relevant central government agencies, Ministers of the Crown and parliamentary parties. 6. I intend to return to the Appointments and Honours (APH) Committee on 4 April 2018 to appoint the Interim Committee Chair, Deputy Chair and four other subject-matter experts. 7. Given the importance of embedding climate change policy into our broader economic strategy, I recommend that Cabinet agree to delegate the approval of the terms of reference for the Chief Executives Board to the Minister of Finance, Minister of Energy and Resources, Minister of Transport, Minister for the Environment and Economic Development, Minister of Agriculture, Minister of Forestry and Regional Economic Development and the Minister for Climate

Change, following the development of the terms of reference by the relevant chief executives, and consultation with the Minister of State Services, and other relevant ministers. Background In December 2017, we signalled our intention to introduce a Zero Carbon Bill (the Bill), which will set a new emissions target for 2050 and establish an independent Climate Change Commission. 8. Climate change is having, and will continue to have over many generations, significant impacts on people, the environment and the economy. We need to reduce greenhouse gas emissions and build New Zealand s resilience to climate change impacts. 9. On 18 December 2017, Cabinet agreed the 100-day plan for climate change and a process for introducing the Bill into Parliament. To progress this work, Cabinet invited the Minister for Climate Change to report back to Cabinet by 28 February 2018 on: 9.1. the terms of reference for the Interim Climate Change Committee; 9.2. the timing and sequencing of key government decisions on priority climate change policy matters; and 9.3. the terms of reference for the Chief Executives Board, with the Minister of State Services [CAB-17-MIN-0547.01 refers]. 10. I envisage that the Bill will: 10.1. set an ambitious net zero target for 2050; and 10.2. establish an independent Climate Change Commission to keep future Governments on track in meeting New Zealand s climate change goals. 11. Taking a transparent and participative approach is critical to the success of this Bill and the policies that underpin it. As signalled in December 2017, I intend to publicly consult in mid-2018 on the scope of the Bill, with a view to introducing the Bill to Parliament by October 2018. We also agreed that an Interim Climate Change Committee will do the ground work on important matters while the Commission is being established. 12. Cabinet agreed to set up an Interim Climate Change Committee (Interim Committee) to make progress on priority matters while the Commission is being established [CAB-17-MIN-0547.01 refers]. 13. This will ensure timely delivery of the Government s climate change commitments, as set out in the Coalition Agreement between the New Zealand Labour Party and the New Zealand First Party (Coalition Agreement) and in the Confidence and Supply Agreement between the New Zealand Labour Party and the Green Party of Aotearoa New Zealand (Confidence and Supply Agreement). 2

Comment I now seek Cabinet agreement on the terms of reference for the Interim Committee. 14. I have consulted other Ministers and Members of Parliament on the Interim Committee terms of reference and its membership. The proposed terms of reference for the Interim Committee are in Appendix 1. The key elements are set out below. (1) The Interim Committee will develop evidence and analysis on the priority matters of agriculture and renewable electricity generation. I consider it necessary to begin making progress on agriculture and to capitalise on the opportunities in the renewable electricity sector. 15. I propose that the primary deliverables of the Interim Committee will be reports containing the evidence and analysis required for the Commission to make recommendations to Government on the following areas: a) How surrender obligations could best be arranged if agricultural methane and nitrous oxide emissions enter into the New Zealand Emissions Trading Scheme (NZ ETS) 1, b) Planning for the transition to 100% renewable electricity by 2035. 2 16. With respect to point a) above, the Interim Committee s analysis will need to consider the range of feasible options for including agriculture in the NZ ETS, such as different points of obligation (for example at the farm or processor level), the impact of maintaining current policy settings, and alternative or complementary options that may also enable agriculture s contribution to meeting New Zealand s emission reduction targets. 17. With respect to point b) above, the Interim Committee s analysis will take into account the objective of achieving the lowest possible emissions from the electricity system. This will require consideration of factors such as security of supply, price impacts and ongoing changes in the sector (e.g. innovation and emerging technologies on the demand and supply side). 18. In undertaking these functions, I propose that the Interim Committee take into account the following overarching factors: 18.1. the Commission s potential role (subject to legislative processes) in developing five-yearly carbon budgets for New Zealand s pathway towards meeting a new 2050 target and the potential contribution of agriculture and renewable electricity to this long-term transition 18.2. New Zealand s international obligations, including but not limited to the Paris Agreement requirement to set progressively more ambitious 1 The Coalition Agreement between the New Zealand Labour Party and New Zealand First states: If the Climate Commission determines that agriculture is to be included in the ETS, then upon entry, the free allocation to agriculture will be 95% but with all revenues from this source recycled back into agriculture in order to encourage agricultural innovation, mitigation and additional planting of forestry. 2 The Confidence and Supply Agreement between the New Zealand Labour Party and the Green Party of Aotearoa New Zealand states that the Government will: Request the Climate Commission to plan the transition to 100% renewable electricity by 2035 (which includes geothermal) in a normal hydrological year. Solar panels on schools will be investigated as part of this goal. 3

Nationally Determined Contributions (NDCs) and reach net-zero emissions in the second half of this century 18.3. The importance of the just transition, in particular the likely impact of changes in policy on households, communities, iwi/māori, businesses and other groups 18.4. Alignment with New Zealand Government social, economic and fiscal policy objectives and strategies. (2) Consultation and engagement will be a critical and extensive part of the Interim Committee s work. 19. Throughout its inquiry, the Interim Committee is expected to consult with New Zealanders, and is likely to engage with the public, iwi/māori, industry, technical experts, special interest groups, sector lead groups and other interested parties. Interim Committee members will be accompanied and supported by Secretariat staff during such consultation. 20. The Interim Committee will also be expected to consult widely and on occasions meet with the Chief Executives Board. The Interim Committee and its Secretariat will be independent of the Chief Executives Board. 21. It will also be important for the Interim Committee to engage with similar agencies in other jurisdictions, especially the UK Climate Change Committee. (3) The Interim Committee will pass its work on to the Commission for it to make recommendations to Government. 22. I propose that the Interim Committee hand over its findings to the Commission, which I expect will be established in 2019. It will then be up to the Commission to make recommendations and provide advice to the Government. 23. The reports of the Interim Committee will be provided to the Minister for Climate Change, who will then forward them to relevant portfolio Ministers, and direct them to be provided to the Commission and released to the public.. 24. I consider this approach will facilitate the transition from the Interim Committee to an independent and enduring Commission. (4) The timing of the Interim Committee s consideration of agriculture and renewable electricity generation will correspond with the establishment of the Commission. 25. The Interim Committee will pass on its findings to the Commission once the Bill is passed and the Commission is established. 26. Appendix 2 sets out an updated indicative timetable for the Bill and the milestones for the Interim Committee and the Government. This timeline sets out the timing and sequencing of key government decisions on priority climate change policy matters. I propose that the Interim Committee consist of five members and one specialist advisor, each of a very high calibre and possessing the appropriate skillsets. I intend to seek formal appointment of Interim Committee members from Cabinet in April 2018. 4

27. I propose that the membership consist of a Chair and Deputy Chair individuals with strong leadership and governance experience as well as three members and one specialist advisor from one or more of the following variety of disciplines: 27.1. agriculture 27.2. business and international competitiveness (including knowledge of disruptive technology and innovation) 27.3. climate change policy 27.4. climate change science 27.5. energy production and supply 27.6. resource economics and impacts (including social impacts) 27.7. Māori cultural expertise (including knowledge of te reo and tikanga Māori, Māori business and economy, and the principles of the Treaty of Waitangi). 28. I intend for the Interim Committee members and specialist advisor to report to the Chair. The Committee as a whole will be accountable to the Minister for Climate Change. 29. In my view, individuals should not be appointed to the Interim Committee membership as advocates or representatives of particular interest or sector groups, but rather because of their key skillsets and standing in their respective fields, their independence and potential to transition onto the Commission. 30. I have narrowed down the preferred candidates based on the above criteria and requisite skillsets, and have consulted with other ministers and Members of Parliament on the shortlisted candidates. I also sought input from iwi, business, non-governmental and science organisations for potential candidates. 31. I intend to return to the Appointment and Honours (APH) Committee with nominees for Cabinet s formal appointment on 4 April 2018. The successful appointees will then be formally notified as soon as possible, followed by appropriate publicity. The Interim Committee will be supported by a full-time Secretariat, as agreed by Cabinet, and co-located in the Ministry for the Environment. 32. A dedicated Secretariat will support the Interim Committee to carry out its functions. The Secretariat will be recruited with the requisite skillsets and will likely include secondments from relevant agencies, including but not limited to the Ministry for the Environment, Ministry of Business, Innovation and Employment and the Ministry for Primary Industries. 33. I have considered the options for the physical location of the Interim Committee against a range of criteria, including the location s availability, neutrality and facilitation of shared services. 34. I intend for the Interim Committee to be co-located with the Ministry for the Environment, but ring-fenced from policy units, in terms of physical location and 5

information security, to allow the Committee to operate discretely and effectively. This is the most cost-effective option, and the secretariat will be able to request information from relevant government agencies to support its evidencegathering and analysis. A Climate Change Board of Public Sector Chief Executives (Chief Executives Board) will also play an important role in the overall transition. 35. The public sector has an important role to play in ensuring that the transition to a net-zero emissions economy by 2050 is just and effective. Levers and policies across multiple portfolios and ministries will be required to meet future climate targets and help New Zealand adapt to climate change. 36. The Chief Executives Board, a new initiative signalled in the Confidence and Supply Agreement, presents an opportunity to provide oversight and leadership in the public sector on climate change outcomes. This may take on particular importance as the respective roles of the Commission and Chief Executives Board in setting and meeting carbon budgets to achieve climate targets take shape. 37. I recognise that taking decisive action on climate change and transitioning to a net-zero target by 2050 is not just an environmental matter, but is interdependent with our broader economic strategy. 38. Therefore, I recommend that Cabinet agree to delegate the approval of the terms of reference for the Chief Executives Board to the Minister of Finance, Minister of Energy and Resources, Minister of Transport, Minister for the Environment and Economic Development, Minister of Agriculture, Minister of Forestry and Regional Economic Development and the Minister for Climate Change, following the development of the terms of reference by the relevant chief executives. 39. The Ministers of Finance, Energy and Resources, Transport, Environment and Economic Development, Agriculture, Forestry and Regional Development and I will work with the Minister of State Services and consult other relevant ministers on the terms of reference before these are approved. Consultation 40. The Department of Internal Affairs, Ministry for Primary Industries, Ministry for Women, Ministry of Business, Innovation and Employment, Ministry of Foreign Affairs and Trade, Ministry of Justice, Ministry of Transport, State Services Commission, Te Puni Kōkiri and the Treasury were consulted on this paper and the Interim Committee terms of reference. The Department of Prime Minister and Cabinet was also informed. 41. I have consulted with the [Prime Minister, Deputy Prime Minister and Ministers holding relevant portfolios (Crown/Māori Relations, Finance, Transport, Energy and Resources, State Services, Economic Development and Environment, Māori Development, Agriculture, Forestry, Women, and Conservation).] 42. The Ministry of Business, Innovation and Employment, Ministry for Primary Industries and State Services Commission also reviewed and provided input into the terms of reference for the Interim Committee. Their views have been incorporated and they support the terms of reference provided in Appendix 1. 6

Financial implications 43. There are no additional financial implications associated with the proposals in this paper. 44. Cabinet agreed additional funding for the Interim Committee and its associated Secretariat under Vote Environment 2017/18 and 2018/19, and noted that some funding for the Secretariat will be absorbed within the existing baselines of the Ministry for the Environment, Ministry of Business, Innovation and Employment and Ministry for Primary Industries [CAB-17-MIN-0547.01 refers]. 45. I will seek funding to establish the Climate Change Commission as part of Budget 18. Human rights 46. There are no human rights implications associated with this paper. Legislative implications 47. There are no legislative implications associated with this paper. Regulatory impact analysis 48. There are no regulatory implications associated with this paper. Gender implications 49. There are no gender implications associated with this paper. Disability perspective 50. There are no disability perspectives associated with this paper. Publicity 51. Following Cabinet appointment of the Interim Committee members and their notification, I intend to publicly announce the appointment of the Interim Committee members and release the terms of reference. 52. I also propose that this Cabinet paper be proactively released on the Ministry for the Environment s website. Recommendations I recommend that the Environment, Energy and Climate (ENV) Committee: Background 53. note that on 18 December 2017, Cabinet invited the Minister for Climate Change to report back to Cabinet by 28 February 2018 on: 53.1. the terms of reference for the Interim Climate Change Committee; 53.2. the timing and sequencing of key government decisions on priority climate change policy matters; 7

53.3. together with the Minister of State Services, on the terms of reference for the Chief Executive Board [CAB-17-MIN-0547.01 refers]. Interim Climate Change Committee terms of reference and appointment 54. note that the primary deliverables of the Interim Climate Change Committee will be reports containing the evidence and analysis required for the independent Climate Change Commission to make recommendations on the following areas: 54.1. How surrender obligations could best be arranged if agricultural methane and nitrous oxide emissions enter into the New Zealand Emissions Trading Scheme (NZ ETS) 54.2. Planning for the transition to 100% renewable electricity by 2035. 55. approve the terms of reference for the Interim Climate Change Committee 56. note that the Interim Climate Change Committee membership will consist of a Chair, Deputy Chair, three members and a specialist advisor with expertise across one or more of the relevant disciplines 57. note that a reasonable degree of cooperation will be required among relevant government agencies to share data to inform the work of the Interim Climate Change Committee 58. invite the Minister for Climate Change to report to the Cabinet Appointments and Honours committee with nominees for the membership of the Interim Climate Change Committee Climate Change Public Sector Board of Chief Executives 59. agree to delegate approval of the terms of reference for the Climate Change Public Sector Board of Chief Executives to the Minister of Finance, Minister of Energy and Resources, Minister of Transport, Minister for the Environment and Economic Development, Minister of Agriculture, Minister of Forestry and Regional Economic Development and the Minister for Climate Change, working with the Minister of State Services and consulting other relevant ministers Publicity 60. note that this paper will be proactively released on the Ministry for the Environment s website Authorised for lodgement. Hon James Shaw Minister for Climate Change 8

Note: this document was amended on 10 April to include the following text in paragraph 17 "and a Specialist Advisor". Appendix 1. Terms of reference for the Interim Climate Change Committee Context The Interim Climate Change Committee terms of reference 1. The Government is committed to taking decisive action on climate change, in keeping with New Zealand s obligations to limit the rise in global temperatures and transition to a low emissions and resilient future. 2. As a party to the Paris Agreement, New Zealand will participate in global efforts to address climate change by adopting progressively more ambitious Nationally Determined Contributions (NDC) that reflect the highest possible ambition as well as national circumstances. New Zealand s first NDC is to reduce emissions to 30 percent below 2005 levels by 2030. 3. Government recognises taking bolder action on climate change will require further investment and policy interventions. The domestic response to climate change needs to be integrated into the country s broader economic development strategy and take into account our position as a small, trade-dependent economy. This transformation will involve significant opportunities but also economic and social impacts on households, iwi/māori, communities and firms. Such impacts may need to be managed to ensure a just transition. 4. The Government has therefore initiated a programme of work to consider how to reduce emissions and adapt to the effects of climate change. As part of this, Cabinet has agreed to the development of a Zero Carbon Bill to set the framework for New Zealand s action on climate change, for introduction to Parliament in 2018. This Bill is intended to define a new 2050 emission reduction target consistent with the international goal of reaching net zero emissions in the second half of this century. The Bill will also propose to establish an independent Climate Change Commission (the Commission). 5. Cabinet also agreed the following principles to ensure a just and effective transition: i. taking a transparent and participative approach to climate change policy, with wide community, business and Māori engagement and consultation (acting consistently with the principles of the Treaty of Waitangi), and ensuring cross-party support; ii. iii. ensuring that policy settings provide investment predictability, so we can help businesses and communities plan ahead by being clear about what our climate change goals are now; being ambitious with respect to reducing our gross emissions by not unduly relying on international emissions reductions to meet our targets, while retaining all options at this point; iv. creating enduring institutional arrangements for climate change and environmental governance, with decisions underpinned by strong data and evidence. 6. To enable the timely delivery of Government climate change priorities, an Interim Climate Change Committee (the Committee) is being created as a precursor to the proposed independent Commission Change Commission. 1

7. The public service will continue to act as the Government s primary policy advisor on climate change alongside the Committee and the Commission. Purpose of the Committee 8. The Committee is a Ministerial Advisory Committee appointed by the Climate Change Minister with the agreement of Cabinet. The Committee will provide independent evidence and analysis on the issues set out in this Terms of Reference that will be passed to the Climate Change Commission to inform its recommendations. Deliverables 9. The Committee s primary deliverables will be reports containing the evidence and analysis required for the Commission to make recommendations on the following areas: a. How surrender obligations could best be arranged if agricultural methane and nitrous oxide emissions enter into the New Zealand Emissions Trading Scheme (NZ ETS). 1 b. Planning for the transition to 100% renewable electricity by 2035. 2 10. The Committee s reports will be provided to the Minister for Climate Change, who will then direct that it be provided to the Commission and released to the public. The Minister for Climate Change will also forward the reports to relevant portfolio Ministers. Ministers will not have an opportunity to give feedback to the Committee before general release. Approach 11. In developing its deliverables, the Committee will take into account the following overarching factors: - the Commission s potential role (subject to legislative processes) in developing five-yearly carbon budgets for New Zealand s pathway towards meeting a new 2050 target and the potential contribution of agriculture and renewable electricity to this long-term transition - New Zealand s international obligations, including but not limited to the Paris Agreement requirement to set progressively more ambitious NDCs over time and reach net zero emissions in the second half of this century - The importance of a just transition, in particular the likely impact of changes in policy on households, communities, iwi/hapū/māori, businesses and other groups - Alignment with New Zealand Government environmental, social, economic and fiscal policy objectives and strategies. 12. When preparing necessary evidence and analysis to inform the Commission s assessment of how agriculture s potential surrender obligations could best be arranged, the Committee will consider: 1 New Zealand Labour Party and New Zealand First coalition agreement states: If the Climate Commission determines that agriculture is to be included in the ETS, then upon entry, the free allocation to agriculture will be 95% but with all revenues from this source recycled back into agriculture in order to encourage agricultural innovation, mitigation and additional planting of forestry. 2 New Zealand Labour Party and Green Party of Aotearoa New Zealand confidence and supply Agreement states that the Government will: Request the Climate Commission to plan the transition to 100% renewable electricity by 2035 (which includes geothermal) in a normal hydrological year. Solar panels on schools will be investigated as part of this goal. 2

- the objectives and design of the NZ ETS, including the Government s current work programme of improvements to NZ ETS policy and legislation, including aligning unit volumes with New Zealand s emission reduction targets through a rolling five-year cap setting process - the impact of maintaining current policy settings on both agriculture and other sectors, including any distortionary effects on economic incentives and investment, and New Zealand s overall economic development - the principle of internalising costs that the country faces through international commitments to sectors that create those costs, so that changes at the margin of those sectors emissions face the full costs that the country faces - the full range of feasible options for including agriculture in the NZ ETS, such as different points of obligation (at the farm level, processor level, input producer level e.g. fertilisers, or a hybrid approach) and other inputs, and their impacts - the desirability of rewarding land-owners/farmers who take positive steps to significantly reduce their emissions, and to create incentives for emissions-friendly technologies and farming practices to be widely employed, where those technologies and farming practices exist - the need to balance administrative complexities and transaction costs of individuals participating in the ETS - the desirability of seeking to ensure that farmers who significantly increase their emissions face the costs of those increases in emissions - alternative or complementary options that may also enable agriculture to contribute to meeting New Zealand s emission reduction targets and transition to a low emissions economy - the potential timing for the implementation of the options - options for transitional support, alongside 95% free allocation that would be provided if NZ ETS surrender obligations are introduced - options and implications for the recycling of any funds that may be generated through the inclusion of agriculture in the NZ ETS. 13. When preparing necessary evidence and analysis to inform the Commission s recommendations on moving towards 100 per cent renewable electricity, the Committee must take into account: - the objective of minimising emissions from electricity generation - security of supply - affordability for consumers - ways to measure progress towards minimising emissions in the electricity sector (i.e. alternatives to measuring the proportion of renewables) while still allowing for effect of hydro inflow variability on emissions. 14. The Committee should also have regard to the following: - consequential impacts on opportunities to reduce emissions from the energy sector - links to innovation and emerging technologies 15. Its evidence and analysis should recognise the inherent and future uncertainty regarding what constitutes a normal hydrological year, and take this into account when considering complementary or alternative indicators. 3

16. The Committee will have regard to a broad range of evidence and analysis in preparing its reports, including: - the Productivity Commission inquiry into how New Zealand can maximise the opportunities and minimise costs and risks of transitioning to the lower net-emissions economy - relevant reports and data prepared by the Ministry for the Environment; Ministry of Business, Innovation and Employment; the Ministry for Primary Industries; the Energy Efficiency and Conservation Authority, the Parliamentary Commissioner for the Environment; the Prime Minister s Chief Science Advisor; and the Biological Emissions Reference Group - Other relevant reviews, including the Electricity Pricing Review. Membership 17. The Committee will consist of a Chairperson (the Chair), a deputy Chairperson, three Committee members and a Specialist Advisor (the Members) appointed by and accountable to the Minister for Climate Change. 18. Members will be appointed because of their personal expertise and ability to provide independent, strategic assessments of climate change issues. They will not act as advocates or representatives of a particular interest or sector group. Secretariat 19. The Committee will be supported by a full-time dedicated Secretariat, appointed for the duration of the Committee. The role of the Secretariat is to prepare a range of resources and materials at the direction of the Committee. 20. The Head of Secretariat (HoS) will be appointed by the Chief Executive of the Ministry for the Environment with input from the Chair, and will report to the Chair. 21. Secretariat staff will include subject matter specialists seconded from the Ministry for the Environment, the Ministry of Primary Industries, the Ministry of Business, Innovation and Employment and other relevant agencies. Secretariat staff will report to the HoS. Relationship with Ministers and officials 22. To ensure independence, the work of the Committee will be conducted in accordance with the Terms of Reference as approved by Cabinet, and it will not be subsequently directed by Ministers. The Committee is expected to meet with relevant Ministers before starting its work to discuss these Terms of Reference and clarify any details of scope. The Committee may also meet with relevant Ministers to provide information as its work progresses, and act in accordance with the no surprises approach. 23. The Committee is likely to have information requirements across the Climate Change, Energy and Resources, Agriculture and Forestry portfolios. The Committee will regularly engage with the Minister of Climate Change, other relevant Ministers and government officials for the purposes of gathering this information and understanding the Government s wider climate change work programme, economic and social objectives. Information from agencies will be subject to the agreement of the relevant Deputy Secretary. 4

24. In particular, the Committee should collaborate with relevant government agencies and businesses on electricity modelling where the Ministry of Business, Innovation and Employment, Transpower and the Electricity Authority hold key data, but also drawing on expertise from the Energy Efficiency and Conservation Authority. Operations 25. The Committee is expected to meet once a month at a minimum, with discretion to meet more frequently, subject to budgetary constraints. In addition, there may be up to two days consultation/engagement per month per Committee Member. The scheduling of these processes will be determined by the Chair and Members as part of their establishment phase. 26. The Committee and Secretariat will be co-located at the Ministry for the Environment, have their own separate space in the building, and their own secure filing structure within the Ministry s knowledge management system. 27. The Committee will manage all its own communications with specialist support from the Secretariat. Consultation 28. The Committee is expected to consult widely and meet on occasions through the process with the public sector Chief Executives Board (CE Board). The Committee and its Secretariat will be independent of the CE Board. Provision has been made for the Committee to engage with similar agencies in other jurisdictions, especially the United Kingdom s Committee on Climate Change. 29. Consultation and engagement will be a critical and extensive part of Committee s work. The Committee is expected to consult with New Zealanders, and is likely to engage with the public, iwi/hapū/māori, industry, technical experts, special interest groups, sector lead groups and other interested parties. Committee members will be accompanied and supported by Secretariat staff during such consultation. Timeframes 30. The Committee is expected to begin its work in May 2018 and prepare its final reports by 30 April 2019. The timeframe for the Committee can be extended with agreement by the Minister for Climate Change. Fees and reimbursements 31. Letters of appointment will detail the remuneration and reimbursement arrangements for the Chair and members. Consensus 32. The Committee will operate on the basis of consensus and, where it is not possible to achieve a consensus, on the basis of majority vote with the Chairperson having the final casting vote. 33. The Chair will determine the meeting processes. Media 34. The Chair will be responsible for any public statements on behalf of the Committee. 5

Attendance and substitutions 35. Members who are unable to attend a meeting of the Committee cannot be represented by a substitute or proxy. Declarations of conflict 36. Members are responsible for declaring any real or potential conflict of interest to the other members of the Committee, as soon as the conflict arises. General confidentiality requirements 37. In order for the Committee to operate effectively, members must maintain the confidence of the Committee, including maintaining confidentiality of matters discussed at meetings, and any information or documents (not otherwise publicly available) provided to the Committee. 38. The Committee will consider the potential impacts on the NZ ETS market when communicating with stakeholders or releasing information, both publicly and privately Removal of members 39. Any serious breach of any of these terms of reference may result in the Minister removing a member from the Committee at their sole discretion. Serious breaches of the Terms of Reference include, but are not limited to, a breach of confidentiality, unauthorised communication with media about the Committee, or a failure to declare, or appropriately manage, a conflict of interest. 40. Any member removed from the Committee can be replaced with a new member at the discretion of the Minister for Climate Change. Disestablishment of the Committee 41. The Committee will be disestablished when its reports are provided to the Commission, or when the purpose and functions of the Committee have been completed, as determined by the Minister for Climate Change. 6