3. Question No. 3—Energy and ResourcesGLEN BENNETT (Labour—New Plymouth) to the Minister of Energy and ResourcesQuestion No. 3—Energy and Resources3. GLEN BENNETT (Labour—New Plymouth) to the Minister of Energy and Resources: What action is the Government taking to decarbonise New Zealand's energy sector?Hon Dr MEGAN WOODS (Minister of Energy and Resources): Last week we announced that the Government is partnering with Fonterra to cut their coal use in half for manufacturing emissions at sites across the country. This partnership will result in earlier emissions reductions of around 2.1 million tonnes by 2035 and will result in annual reductions of up to 328000 tonnes of carbon. That's the same as removing 120000 cars off the road. The deal demonstrates how the transition to a low-emission economy is not only good for the climate but also a win for our major export industries by producing low-carbon goods and improving New Zealand's economic resilience—a longed-for win New Zealand workers by futureproofing our economy and jobs.Glen Bennett: How will the Government's partnership with Fonterra help New Zealand meet its emissions reductions targets? Hon Dr MEGAN WOODS: Our partnership with Fonterra will drag the emissions reductions forward into earlier emissions budgets meaning we invest in New Zealand's decarbonisation transition rather than buying expensive foreign carbon credits to offset their emissions. The agreement will deliver 1.2 million tonnes of the emissions reductions required in New Zealand's second emission budget and 830 tonnes of carbon dioxide emissions in budget 3. This also makes up around 7 percent of the energy and industry sector sub-target in emissions budget 2 and 4 percent in emissions budget 3.Christopher Luxon: Where does the money come from?Hon Dr MEGAN WOODS: I challenge Mr Luxon to ask me a question rather than chipping in and maybe he could explain what National will do instead.Glen Bennett: Why is the Government partnering with Fonterra to reduce their coal use?Hon Dr MEGAN WOODS: The independent Climate Change Commission has been clear: the emissions trading scheme (ETS) alone is not sufficient for New Zealand to meet its climate goals with the ETS needing to be significantly higher than it is today to justify fully funding projects. Some large industrial users have said that without complementary measures like Government Investment in Decarbonising Industry the ETS would have to be up to $200 per tonne for these vital decarbonisation projects to stack up for their businesses. This would massively impact the economy including driving up New Zealand's energy costs. For example this would add more than 40c per litre to the cost of petrol; if that's what the National Party are suggesting I suggest they release the policy.Glen Bennett: What other benefits will be delivered through the Government's partnership with Fonterra?Hon Dr MEGAN WOODS: As the Prime Minister said last week by partnering with Fonterra to reduce emissions we're helping to maintain New Zealand dairy's competitive edge as international consumers and food manufacturers demand further climate commitments. I've heard firsthand the importance of New Zealand's climate credentials to our exports. This partnership is an investment in our future economic prosperity.