Kapuni Green Hydrogen Hub given the green light by the Court of Appeal

As 2023 drew to a close, the Court of Appeal released its much-anticipated decision on the Kapuni Green Hydrogen Project (Project).

The case is significant, not only because it was the first ever appeal to be heard and determined under the COVID-19 Recovery (Fast-track Consenting) Act 2020 (Fast Track Act), but also because it deals with significant environmental issues. These include whether the Project was consistent with the principles of the Treaty of Waitangi/Te Tiriti o Waitangi (Treaty) and whether the Project’s intended transition to utilise green hydrogen to fuel heavy transport justified the grant of consent.  

Our resource management lawyers, Lauren Wallace and Rebecca Eaton, acted for Hiringa Energy Limited (Hiringa) and Ballance Agri-Nutrients Limited (Ballance) in relation to this appeal and summarise some of the Court’s key findings below.  

Background

The Project involves the development of a $70 million renewable hydrogen hub at Kapuni in South Taranaki. In simple terms, renewable electricity is to be generated from four large wind turbines which will power an electolyser to be established at the nearby Ballance Agri-Nutrients Kapuni Ammonia-Urea Manufacturing Plant (Ballance Plant). The hydrogen produced by the electrolyser will initially be sold to Ballance as feedstock for ammonia and urea production at the Ballance Plant, but over a five-year period, the hydrogen produced will be transitioned to provide a zero-emissions fuel source for heavy vehicles as demand in the hydrogen refuelling market grows.

Hiringa and Ballance  first applied for consent for the Project in August 2021. The application stated that “the purpose of the Project is to develop an industrial-scale low emissions energy facility which produces commercially sustainable green hydrogen to be used for industrial and transport applications to enable decarbonisation of the heavy transport fleet and heavy industry and to assist with New Zealand’s transition to a low emissions economy.” Further, “that the Project is a strong example of a 'just transition' project, one that leverages the existing skills and infrastructure in the Taranaki region to create a new energy model, as the region moves away from its reliance on oil and gas.” 

In December 2021, an expert consenting panel (Panel) granted consent to the Project, subject to conditions. The conditions included the requirement that the intended transition over 5 years to supply zero-emissions fuel be reported on and monitored by the South Taranaki District Council, which has the ability to amend the conditions to progress the transition.

Te Korowai o Ngāruahine Trust (TKONT) supported by four hapū (Ngā Hapū), appealed the decision to the High Court. Greenpeace joined the appeal as an interested party. TKONT argued the Panel’s decision failed to properly consider the cultural landscape of Ngāruahine as a whole and that the Panel applied the wrong Treaty test. Greenpeace argued that the Panel failed to properly take into account the environmental effects of the end use of the urea fertiliser produced by the Project.  

In October 2022, the High Court dismissed the appeal on all grounds. 

Greenpeace appealed the High Court’s decision and argued that the Panel failed to include any condition requiring the transition to actually occur and that as such, the Panel had erred in assessing the environmental effects of the Project. Ngā Hapū joined the appeal as an interested party and argued that the grant of consent was unlawful because it was not consistent with the principles of the Treaty of Waitangi. 

Court of Appeal decision

The Court of Appeal dismissed the appeal on all grounds.  

Andrew and Catherine Clennett (Hiringa), Tan Yan Meng (Mitsui & Co), John Paxie (Ballance), Lauren Wallace and Rebecca Eaton (GQ), and Cam Twigley (BTW Company) outside the Court of Appeal.

Transition Issue 

In response to Greenpeace’s argument that the Panel failed to include any condition requiring the transition to actually occur, the Court concluded as follows:  

The Project was not referred [by the Minister] to the Panel because it would certainly make a successful transition to utilising the hydrogen for transportation.  It was referred to the Panel in part because, if the intended transition to hydrogen fuel was successful, it would assist New Zealand’s efforts to mitigate climate change and transition to a low-emissions economy more quickly.  

With respect to Greenpeace’s argument that the Panel failed to properly assess the environmental effects of the Project, the Court held that the urea that would be produced was a small percentage (approximately 1.15%) of the total urea available for use in New Zealand. This is a lawful activity regardless of the Project and the Court found that the Project will not give rise to any adverse effects additional to the existing production at the Ballance Plant.

Treaty consistency  

Ngā Hapū argued that consistency with the Treaty principles of active protection and the exercise of tino rangitiratanga over taonga required the Application to be declined. This, they said, was because the Crown was under an obligation to protect taonga of great spiritual and physical importance to Māori, and Taranaki Maunga and Nga Hapu’s tikanga-based relationship with the Maunga is a taonga. And further, because the adverse spiritual and cultural harm to that connection from the Project could not be mitigated.  

The Court of Appeal decision considered the relevant Treaty principles and held: 

“While Ngā Hapū’s connection to Taranaki Maunga is a taonga, it does not necessarily follow that any new addition to the landscape around the Maunga will always be contrary to the principle of active protection.  Tino rangatiratanga required the Panel to respect the views of iwi and hapū about the effect of the turbines on their spiritual and cultural values, but in this case these views were not consistent nor aligned. Ngāti Manuhiakai, the hapū in whose rohe the proposed turbines are to be located and whose view to the Maunga is most affected, was in favour of the Project.”

Further that:  

“The turbines have mainly low or very low adverse visual effects relative to the Maunga from the marae of the hapū who now oppose the Project.  Importantly, the turbines are to generate renewable power to produce hydrogen that may provide an alternative fuel source for the benefit of New Zealand’s response to the climate emergency the world faces.  It was for that significant public interest that the Project was recommended for referral by the Minister for fast-tracking.” 

GQ and Hiringa comments

Partner Lauren Wallace said the case is a really interesting example of the challenges that innovative decarbonisation projects can face when contending with competing environmental concerns. Here the Court was required to consider both the spiritual and physical importance of Taranaki Maunga to Ngā Hapu, and the emission reduction and employment benefits that would flow from the Project. In reaching its decision, the Court noted that the overarching Treaty principle of partnership involves reasonableness and cooperation. Accordingly, a balancing of interests is needed and some compromise must be made.

Catherine Clennett, director of Hiringa, says the Project will help catalyse the transition from a fossil fuels economy to a carbon-neutral one.  

“For local people in Taranaki the project represents an estimated 40 jobs and $4 million plus wages during the build and the development of local technical expertise,” she says. “But much more than that, it gives the region hope that it can achieve a just transition away from a fossil fuel economy.”

“We are committed to working with Iwi and Hapū in our region to see the benefits envisioned by the Project realised, including support for kaitiakitanga, and environmental monitoring, jobs and access to affordable renewable energy.”

If you have any questions regarding this case or other resource management and environmental matters, please don’t hesitate to get in touch with GQ's RM Team.