BlackRock and New Zealand Strike $2 Billion Climate Fund Deal

A sign hangs on the BlackRock offices in New York, on Jan. 16, 2014. Andrew Burton/Getty Images

The world’s largest asset manager, BlackRock, has invested $2 billion (US$1.22 billion) into New Zealand’s climate infrastructure fund to support its ambition to become one of the first countries in the world to reach 100 percent renewable electricity generation by the end of this decade.

Prime Minister Chris Hipkins said the investment was a “game-changer” for the clean technology sector.

“This is a first-of-its-kind fund in the country that demonstrates the huge economic potential of New Zealand being a climate leader and our goal of generating 100 percent renewable electricity,” he said on Aug. 8.

The deal demonstrated that New Zealand could grow its economy while lowering emissions, Mr. Hipkins said.

“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,” he told the press.

“To BlackRock, thank you for your confidence in our climate plans and actions, I’m confident this is a big step forward for climate action, that’s going to achieve significant results.”

The fund will provide greater access to pools of capital for New Zealand renewable energy businesses and create local jobs. No further details have been provided.

New Zealand Prime Minister Chris Hipkins speaks during a tree planting ceremony at Parliament in Wellington, New Zealand, on April 26, 2023. Hagen Hopkins/Getty Images

About 80 to 85 percent of the country’s electricity is already generated from renewable sources, according to the New Zealand Energy Efficiency and Conservation Authority, a government entity that promotes and supports energy conservation and the use of renewables.

A significant portion is generated through hydroelectricity, which provides 57 percent of New Zealand’s annual electricity. Meanwhile, wind turbines generate six percent and solar panels less than one percent.

Energy Minister Megan Woods said New Zealand was now an investment magnet for renewable technology such as battery storage and wind and solar generation.

“This fund will accelerate New Zealand’s emissions reductions, with a particular focus on our path to 100 percent renewable electricity, enabling our businesses to access greater pools of capital to develop and grow,” she said.

“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.”

This initiative is BlackRock’s largest single-country low-carbon transition investment to date.

CEO Larry Fink believes the world can turn to New Zealand’s climate infrastructure strategy as a model of cooperation between public and private sectors for energy transition.

“New Zealand doesn’t just have the ambition to build a more resilient energy system and be a leader in decarbonization globally. It is already doing that today,” he said in a post on LinkedIn.

Wind and Solar Receive Huge Boosts

The investment deal follows other renewable energy announcements.

Energy Minister Woods and Environment Minister David Parker revealed on Aug. 7 plans to fast-track three wind farm projects and the roll-out of 1.9 million solar panels.

Ms. Woods said at its peak, the three wind farms would generate about 419 megawatts of electricity, which is comparable to the Clyde Dam. The dam can produce up to 432 megawatts of power and generates around six percent of the country’s electricity generation.

She noted that New Zealand had geographical advantages for energy generation from wind farms.

“When it comes to offshore generation, our location matters. The least-windy sites in New Zealand are considered to have better wind energy potential than the windiest site in Australia,” Ms. Woods said.

She added that the projects would also create up to 840 construction jobs, which was vital to the country’s post-COVID economic recovery strategy.

In addition, nine solar farm projects have also been referred for fast-track approval.

Mr. Parker said these nine farms will add up to 1,147 megawatts of power to the national grid at its peak output.

In Australia, there have been concerns raised about the waste that renewable energy infrastructure generates.

Andrew Dyer, the country’s energy infrastructure commissioner, told a Senate Estimates hearing on May 23 that the cost to pull down a wind turbine was higher than the cost of assembling it.

“The costs of pulling down a turbine may exceed the revenue you get for 25 years. That’s not a good outcome,” he said.

“In the case of a turbine in Queensland where the bed plate cracked and you couldn’t go near the turbine because it could fall on your head, that cost millions of dollars to take down with robots and explosives. You could be stuck with some big bills.”

Upcoming Election

The string of announcements comes two months ahead of New Zealand’s next general election. Climate and renewable energy is a major policy for Labour.

Some initiatives, however, have not gained traction.

Notably, the Labour government’s world-first flatulence tax fell flat after the main opposition, the National Party, pulled its support for the legislation.

National party leader, Christopher Luxon, said his party proudly supported New Zealand’s Paris climate commitments but could not agree with axing sheep and beef farming by 20 percent to achieve climate goals.