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Posts Tagged Kyoto

Don’t worry Kyoto (National’s Only Looking Out For Its Friends) Gareth Renowden Nov 12

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The New Zealand government has announced that the country will not join the second commitment period of the Kyoto Protocol (CP2), but will instead make voluntary commitments within the Kyoto framework [Herald, NBR]. Climate change minister Tim Groser presented this move as:

…aligning [NZ's] climate change efforts with developed and developing countries which collectively are responsible for 85% of global emissions. This includes the United States, Japan, China, India, Canada, Brazil, Russia and many other major economies.

To put it another way, New Zealand has chosen to abandon the 36 countries already signed up for CP2 — which runs from 2013 to 2020 — and instead aligns itself with the world’s worst polluters. Ironically, Groser rejected CP2 on the same day that Australia, only recently equipped with a meaningful carbon emission reduction scheme, announced it would sign up. The move completes the National-led government’s programme of gutting and dismembering the climate policies it inherited from the last Labour-led government when it took power in 2008.

Reaction from political opponents was swift and, as you might expect, damning1, but more telling from my perspective was the response from scientists, compiled by the Science Media Centre.

Jim Salinger, currently the Lorry Lokey Visiting Professor in the Program in Human Biology, Woods Institute for the Environment at Stanford:

…the New Zealand Government must take its head out of the sand and step up to its scientific responsibility collectively together with the nations of the world in order to save future generations from the horrendous future impacts of a dramatically warming planet.

Martin Manning of the Climate Change Research Institute, Victoria University:

This move now leaves any sense of legal commitment to limiting future climate change to the EU and Australia. And while it probably has only a small direct effect on total global CO2 emissions New Zealand’s retreat seems to be part of a growing reluctance by several developed countries to play any leadership role. So New Zealand’s move is part of a pattern that just leaves the problem to others.

Associate Professor Euan Mason, School of Forestry, University of Canterbury:

The government’s failure to commit us to a second Kyoto commitment period is consistent with, and is perhaps a consequence of, its failure to secure our NZU currency, and represents a failure to take opportunities to contribute to a better environment for us all.

Associate Professor Ralph Chapman, Director, Environmental Studies Programme, Victoria University:

This move has to be interpreted in the context of other signals New Zealand is sending on climate change policy. These signals are sadly pointing in the direction of easing back, rather than doing more, despite the climate change problem steadily worsening. The signals that the NZ government is not serious about climate change include its weakening of the ETS, a hiatus on renewable energy, a determination to build more highways that encourage carbon emitting land transport, and so on.

What’s interesting about these comments is not so much what they say — Hot Topic readers and anyone who has been following developments in climate science and policy would probably say much the same things — but who is saying it. These are working scientists who understand the issue in all its seriousness. They have an intelligent appreciation of the risks we and the world face as the planet warms. It’s becoming all too obvious that those risks are not understood by Key, Groser and the rest of the leadership of the National party.

In radio interviews over the weekend, Tim Groser described the move as in New Zealand’s national interest, and this morning prime minister John Key was forced to defend the move by rewriting history2:

I think we never wanted to a world leader in climate change we’ve always wanted to be what is affectionately called a fast follower.

Key conveniently forgets that Helen Clark’s government most certainly did want NZ to be a world leader on tackling climate change3 — in fact, Clark suggested we should be one of the first carbon neutral economies. Her government put together a coherent blend of policies — an emissions trading scheme backed by a suite of regulations, commitments to renewable energy, solar heating initiatives, home insulation and so on — that backed up that position. Key’s government, as Ralph Chapman notes, has been busily unravelling all that policy.

Groser’s view that this latest move is somehow in “the national interest” seems to depend on a definition of national interest that focusses only on the economic interests of fossil fuel and mining companies and his party’s supporters in the agricultural sector, as well as the frankly daft idea that economic interests can somehow be balanced against environmental issues4. National interest is about much, much more than is dreamt of in his philosophy — and includes taking prudent steps to prepare for an uncertain, but much warmer future. A strategic approach to the risks posed by rapid climate change5 would involve taking immediate steps to ensure that the ETS prices carbon at a level sufficient to ensure emitters take action6.

If Key, Groser, Joyce, English and the others are not listening to what the scientists are saying, perhaps they will listen to the International Energy Agency, who have noted that we are currently on a trajectory that will take us a long way beyond two degrees of warming. The world’s biggest accountants, PricewaterhouseCoopers, recently suggested that current policy settings were pushing the world towards six degrees7 of warming. These organisations speak the language that one must presume National’s leadership understands, so it would behove them to pay attention. But of that there is no sign.

One voice they will almost certainly dismiss out of hand for purely political reasons is that of our last prime minister, Helen Clark. Clark is now the administrator of the UN Development Programme, and recently addressed a meeting at Stanford about “Why Tackling Climate Change Matters for Development”. The full text is available here8, and shows Clark joined the dots on the importance of climate change years ago9, while John Key is still playing with his Etch A Sketch.

Wedded to an unrealistic view of the world, where climate change is just another policy setting that can be fiddled to the advantage of supporters or to suit ideology, New Zealand’s present government is stuck inside an epistemic bubble of considerable size. They are, quite literally, divorced from reality. What the national interest requires is that someone burst that bubble and force them to confront the need to take serious action on mitigating, and — crucially — adapting to the climate changes that are now “locked in” to the system. Perhaps a group of senior scientists equipped with a very large pin might seek an audience with the National Party caucus…

[Yoko Ono - should be played at full volume during all cabinet deliberations until such time as they fully understand the risks we face.]

  1. Labour: Day Of Shame As National Pulls Out Of Kyoto, Greens: ETS destroyed, now Government gets to work on Kyoto.
  2. Or perhaps he conveniently forgets recent NZ political history.
  3. Although his use of the “royal we” suggests he has other problems beyond memory.
  4. A clue: without a functioning environment, a vibrant economy is impossible.
  5. Which is exactly what we’re witnessing today.
  6. And doesn’t stuff up an entire industry, as Euan Mason’s full comment at the SMC notes.
  7. If six degrees is where we’re heading, I’d recommend reading Mark Lynas’ book of that title to get some appreciation of just what sort of Dante’s Inferno that might be.
  8. With short video.
  9. And did so while NZ PM.

NZ in Durban: delegation gone mad? Or just business as usual? cindy Dec 05

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It’s getting embarrassing here in Durban. I’ve had a veritable flood of people come up to me in recent days saying things like “what the hell is your government doing?”

The NZ Government has been pretty bad in these negotiations over the last few years, but things appear to have taken a turn for the worse, in multiple directions.  I’m wondering what’s going on.

Let’s take the “easy” one first.  Kyoto.

With Canada, Japan and Russia on their way out of the Kyoto Protocol, there are a lot of discussions on how one could carry it forward without them.

One possible solution is the idea of “provisionally” implementing a new commitment period, from 2013-2017. This would mean that it wouldn’t legally “come into force” but parties to the Protocol could agree the new rules, and implement it anyway, if they all agreed to do so.

This can happen under the “Vienna Convention on the Law of Treaties” (1969), that NZ has signed up to. Not so, says the NZ delegation. This would be a breach of the constitution.

But a quick look on the MFAT website makes me think they are being a bit daft.  Maybe they were too busy to read the MFAT document: “International Treaty Making: Guidance for government agencies on practice and procedures for concluding international treaties and arrangements” written in August 2011. That’s – erm – about four months ago.

This guidance, presumably for delegations like this one in Durban, spells out the rules of the Vienna Convention, ie, that: “Provisional entry into force of a treaty may also occur when a number of parties to a treaty that has not yet entered into force decide to apply the treaty as if it had entered into force.”

This is precisely what is being proposed.    Indeed, we have done this with a number of international treaties already.   But is NZ just looking for excuses to get out of Kyoto?  Meanwhile I’m off to the printer to get the delegation a few copies.

The “honest, guv” emissions trading regime

Next up, emissions trading. Personally, I don’t think that emissions trading are a proper way to stop climate change.

Doing something to stop climate change somewhere else in exchange for doing nothing at home seems like a weird way to go about things, when we all know that ultimately we should cut our own emissions and be done with it.

It has always seemed a bit cheaty to me and I know I campaigned hard to stop it from happening way back in the day when Kyoto was being negotiated. But setting that aside for a minute, let’s look at the proposal our Government is trying to push here in Durban.

Under the “flexible mechanisms” for emissions trading, NZ is proposing that the rules – erm – have no rules. The environmental groups were onto this, and NZ won its first “fossil of the day” (2nd place) on Friday.

“They want to be able to use any market mechanisms they wish with absolutely no oversight or international review. There would be no way to ensure that the units from one mechanism have not been sold two or three times to another such mechanism. This would likely unleash a wild west carbon market with double or triple counting of offsets and a likely increase of greenhouse gas emissions into the atmosphere.” I’m calling it the “honest, guv” rules – ie you just have to believe what we say.  I’m sorry, but that’s just nuts, especially from a Government that doesn’t seem to like cutting emissions very much.

The “I’m alright jack” rules on forests

Let’s now turn to the forests. NZ has always been pretty bad in the conversations here about Reducing Emissions from Deforestation and Degradation REDD.

That’s the stuff that deals with the emissions from deforestation. First I might remind you that in NZ we have protected our forests.  Long, hard battles have been fought – and were resoundingly won with the historic NZ Forest Accord that banned the cutting of native forests on private land. Our native forests are protected – and so they should be. But not everyone is in the same boat.

But when it comes to the REDD discussions, NZ’s perspective is taken purely from the point of view of our pine plantations. They’ve long been a point of contention between forest owners and government. NZ has always pushed hard to get everyone to accept our “special circumstances”.  But in Kyoto, someone has special circumstances for almost everything – and that would make for extremely messy international agreements.

The problem is that the forest nations, like Brazil, Indonesia, Papua New Guinea, have beautiful old growth forests that MUST be protected, not only for climate reasons, but also for the biodiversity and indigenous peoples who live in them. So it’s important to get the international rules right for these forests, the lungs of the earth.

So it is with the “reference” levels in REDD.  These are like a baseline from which to measure emissions from deforestation.  NZ has proposed that instead of looking at historical behaviour, (our proven rate of deforestation), the rules are based around “projected reference levels” – what we think we might do in the future.

It’s all incredibly complicated, but essentially the NZ delegation is being very creative in trying to invent new ways of getting more Kyoto credits for our plantations so that we don’t have to cut emissions elsewhere. That’s all very well for us, but if you put this regime onto, say, the Amazon, it is unlikely to stop them slowing the rate of deforestation there, which is one thing we need to do to save the planet.

Hot air

You just can’t make this stuff up.  The rest of the world is trying to come up with a way to deal with the Russia “hot air” problem but NZ is terrified that the solution on the table means we might lose some of our own little stash of hot air that we got from Kyoto’s loopholes around accounting for land use change and forestry. Heaven help us if we have to actually cut emissions instead of carrying over credits that we shouldn’t have in the first place.

I am still struggling to come up with an answer on what the hell “my” government is doing.   Nick Smith was coming, now he’s not.  Brendan Burns, sorta understandably, isn’t coming as planned, as he doesn’t know if he’s got a seat in Christchurch Central.   Tim Groser is apparently coming this week, but my hopes aren’t high that he’ll change much.  Is the delegation running loose while their bosses are in turmoil back home?

But what I do know is that these people are definitely not representing my views, nor considering our Pacific Island state neighbours.   Cheating and lying doesn’t stop climate change.

Or perhaps they’re too busy representing Business NZ and the Forest Owners Association, both of whom have a representative on the official NZ delegation?

ps the timezones are almost 12 hrs difference to NZ so I won’t be replying to comments in a hurry.

The Carbon Forest Bryan Walker Dec 24

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The Carbon Forest: A New Zealand Guide to Forest Carbon Sinks for Investors, Farmers, Foresters and ConservationistsA suburban section has long been the limit of my landowning ambition and I’m too old now to start thinking of anything more, but the prospect opened up by a newly published small book had me imagining I could well become interested if I were younger.  The book is The Carbon Forest: A New Zealand guide to forest carbon sinks for investors, farmers, foresters and conservationists (publisher’s site here). The four authors themselves appear motivated by climate change but the detailed advice they offer is far from tied to that concern. People looking to engage in a forestry venture for any reason, including reasonable financial return, will find the book very useful.

It is not written to engage the idly interested reader, though I can report it reasonably accessible for such. The aim is to provide practical information for people wondering about establishing a forest carbon sink on land they either already own or buy for the purpose. The authors describe forest sinks as currently by far the most effective form of carbon sequestration that humans can initiate. In New Zealand the government has identified forestry as the primary tool for meeting our Kyoto target for emissions reduction and has accordingly provided financial incentives for afforestation and reforestation. The book explains the four different government schemes available, the kinds of afforestation each of them is likely to suit and the kinds of carbon credits each can earn. It also acknowledges the voluntary schemes which may be preferred by those who wish to offset their carbon emissions voluntarily, and schemes which avoid trading in carbon credits such as those initiated by people who are purely interested in offsetting their own carbon emissions.

The procedures involved in carbon trading, both statutory and voluntary, and the currency of the carbon credit are made clear. The statutory schemes have been designed to help NZ reach its Kyoto target, though the book notes that this target falls short of what the science recommends, and that the most effective way of achieving the extra reductions is through the voluntary market. However the vast majority of forest sink owners now choose to trade through the statutory schemes which are generally easier and cheaper to deal with.

The analysis of different forest types and their sequestration rates is interesting. It shows that over a one-hundred-year period exotic trees, particularly Pinus radiata, absorb more carbon dioxide than native trees, but over longer periods native trees absorb more than exotics. The two options are not mutually exclusive for forest sink projects and the book indicates ways in which they can be usefully combined, sometimes to suit different soils and aspects within one block of land. The kind of management strategies that are proposed for a sink are an important ingredient in making decisions, and the book sets out some of the costs and returns for both low and high management approaches.

Finding the right kind of land for forest sinks at the right kind of price takes time and careful research. High value pastoral or agricultural land is patently not on the cards, but there is often marginal farmland on existing farms that may provide better return to the farmer if livestock are cleared out, the gate closed, scrub left to grow, and carbon credits claimed. Additional benefits such as erosion control may well accrue. Lifestyle block owners may find that the less intensive management required for growing trees than for raising livestock is appealing, along with the environmental benefits. Small pine plantations that turn out to be of poor quality or are difficult to access may be more profitable farmed as carbon than milled. Urbanites with environmental concerns may find suitable blocks of land for sale, and venture on a carbon sink which will return enough in carbon credits to at least cover costs and provide some additional financial benefit. The writers see good value in any sink which can sequester carbon at a cost of less than $20 per tonne of CO2, especially since the price of carbon is forecast to rise considerably. However they warn that it would be illusory to regard forest sinks as get rich quick schemes. Owners need to have regard for environmental as well as financial returns.

The structure of ownership may be influenced by the degree of financial return sought from the forestry. Multiple options, particularly companies, trusts and incorporated societies, are canvassed and broadly explained with pointers to further information and a warning of the importance of obtaining good legal and business advice. The place of statutory covenants or forestry right in obtaining long-term protection for a forest sink  is discussed, along with the finance, tax, and insurance matters that need to be taken into account in establishing the sink.

For one who had no idea of what might be involved in establishing carbon sinks under the regime which now obtains in New Zealand it was an eye-opener to see the wide ramifications explored in this practical guide book. It was also very encouraging to think that there will probably be many in the country who are starting to think about entering the various schemes available and that we have reason to hope for a big increase in tree planting and growing. A late chapter of case studies of existing forest sinks was reassuring after immersion in all the complexities explored earlier in the book. The case studies cover quite a range: a sink of 600 hectares on a 1600-hectare Marlborough farm; a 157-hectare exotic forest sink in Wairarapa established on a previous hilly sheep and cattle farm; the 642-hectare Queen Charlotte Wilderness Park; a 49-hectare block in Golden Bay of originally marginal farmland; and a 7.6-hectare Wairarapa lifestyle block managed by a Wellington owner.

One of the book’s four authors, Jonathan Kennett, has several years of experience managing reforestation projects and helped initiate the Golden Bay project listed above. Another, Simon Johnson, is a trustee of a forest carbon sink project and has worked as a resource management consultant. A third, Paul Kennett, an author, editor and web-designer, is described as living on a budget of less than 1 tonne CO2-e per annum. Finally, Tom Bennion, who has written some guest posts for Hot Topic in recent months, is a lawyer specialising in environmental and Maori law. It looks like a happy mix of environmental concern and relevant experience that has produced this informative book to help forest projects develop and flourish in the New Zealand landscape.

Coates in Cancún: we have no more time Gareth Renowden Dec 06

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Oxfam NZ’s Barry Coates continues his series of on the spot reports from Cancún: in this episode, he looks at the way international negotiations work…

Negotiations have picked up pace in Cancún. But it is impossible not to feel frustrated with how long it has taken to get to this point. The problem is not just about the past few days in Cancun. Much of the past three years of negotiations has been wasted since the Ministerial meeting in Bali in 2007 that kicked off these negotiations. Government negotiators stated their positions early on, and then in meeting after meeting over the past three years, repeated these positions. Too much of the time and energy of negotiators has been spent trying to score points off each other.

In previous years, the rich nations were very good at doing this and used un-transparent and biased processes to get their own way. This is particularly the case in venues such as the World Trade Organisation. The last time I was in Cancún was for the WTO talks in 2003. After huge protests and the tragic death of a Korean farmer, the talks collapsed in spectacular fashion. The African group walked out of the Cancun WTO negotiations after an unfair negotiations process (eg. a small group of nations were picked to steer the outcome — the ’Green Room’ named after the office in Geneva where the practice started) and after rich nations tried to force their own issues (notably the deregulation of international business) onto an agenda that was meant to be about development (the ‘Doha Development Agenda’). Since then the WTO talks have limped along, in perpetual deadlock.

There have been some similar tactics tried in past climate change talks, although the common aims in negotiations on climate change are more obvious than on trade (or should be). This was one of the reasons that the Copenhagen talks last year were so ill-tempered and disappointing.

The world has changed and these unfair negotiating tactics are being challenged. Developing countries have gained negotiating skill and economic power. The tectonic plates of global governance have shifted with the rise in economic and political power of the major developing countries. As a result, developing countries will no longer accept the agendas imposed by the rich nations. And they negotiate skilfully and collectively in groups — including the large and powerful BASIC countries (Brazil, South Africa, India and China), Africa and other regional groups, the radical ALBA group (Bolivia, Venezuela, Cuba, Ecuador, Nicaragua and some Caribbean countries), the low income Least Developed Countries and the moral conscience of the negotiations, the Alliance of Small Island States.

So the good news from this re-alignment is that developed nations will not get away lightly with their attempts to renege on their obligations to reduce greenhouse gas emissions. When Japan earlier in the week said they would not agree to a second commitment period of the Kyoto Protocol, the response from negotiators was sharp and strong. Japan was heavily criticised. Civil society groups have also played an important role — Japan’s announcement was met with campaign actions here in Cancún from NGOs in the Global Campaign for Climate Action, and by campaigners in many countries. It appears that Japan has been surprised by the reaction (I don’t know why they didn’t anticipate it). They are still here, and still negotiating and they may be showing more flexibility than their harsh statement implied (’we will never inscribe our target in the Annex B to the Kyoto Protocol under any circumstances and conditions’).

But in other ways this greater balance of power poses challenges to global governance. In climate change negotiations, as in most UN negotiations, there are two main blocs — developed and developing countries — under the rather outdated UN definitions (developing countries include relatively rich nations like South Korea and Singapore). The two blocs can grind each other into stalemate, as they seek to gain advantage, often through unproductive points scoring. Even the most obvious decisions, such as defining a base year for emissions reductions, take years to agree. The answer to the question was always going to be 1990, as it was under the Kyoto Protocol, but Canada and Croatia resisted because it doesn’t suit their pattern of greenhouse gas emissions. Yesterday, after three years, it appeared that this issue had finally been agreed. Glacial progress.

The United Nations is often blamed for these problems, but really the blame lies in the approach of governments. Despite the attempts of the United States and others to find a new place to negotiate, only the UN can generate the full participation and buy-in that is essential for a global agreement.

This means that negotiations are taking years, and we are running out of time. Rising greenhouse gas emissions are causing damage and suffering. The World Meteorological Organisation came out with its most recent data earlier this week. It shows that the past decade has been the hottest ever. Temperatures this month will determine whether 2010 is the hottest year since records began. But millions of people around the world know this already. Farmers know that the seasons are changing, that droughts or intense rainfall are destroying their crops and storms are more frequent and intense. Climate change is deadly serious and extremely urgent, particularly to millions of poor and vulnerable people whose lives and livelihoods are at risk.

The good news from Cancún is that there is a real possibility that there will be some meaningful agreement here.

The good news from Cancún is that, despite the glacial progress over the past three years, Japan’s unhelpful announcement, and a myriad of other obstacles, there is a real possibility that there will be some meaningful agreement here. The Mexican government has been fair and transparent in chairing the negotiations, but they have also been insistent that negotiations will not take place on a line-by-line basis, with arguments over every word. They are steering progress forward through informal meetings, the involvement of Ministers (including New Zealand’s Minister of Climate Change Negotiations, Tim Groser), and strong directions by the chairs of working groups. A lot of the real progress in the negotiations is therefore happening outside the formal process, but it is being managed in an open and transparent way. At last, the negotiations are starting in earnest and compromises are getting made.

The agreement will not include everything we want. But it will include some elements that are important for tackling climate change and helping those at risk. In particular, Cancún might agree the basic structure of a fair Climate Fund. Oxfam has been lobbying negotiators to make sure the structure is equitable and effective in getting funding to those who desperately need it. Some of the other issues will need more work to get to a decision, particularly the level of ambitions on emissions reductions. There has been little progress on that so far, but at least Japan and others are still around the table negotiating. We are pushing hard for a clearly defined process beyond Cancun to raise the level of ambition for emissions reductions.

The 2003 collapse of the WTO trade negotiations was a disappointment for the developing countries that were pushing for fairer trade rules, but it had the silver lining of getting issues like investment out of the trade talks. It also sent a strong message that the rich nations could no longer bully their way to get what they want. But we haven’t got time for a collapse of these climate change negotiations. A collapse would mean even more delay and more suffering. As a T-shirt in Cancun worn by youth delegates here says: ’You have been negotiating all my life. You cannot tell me you need more time.

We need a global agreement — a fair, ambitious and binding agreement. It is clear that an agreement won’t be signed here. But if we get the right result from Cancun, signing the deal in Durban next year becomes a real possibility. We have no more time.

NZ ETS passes the Kyoto bill to our children Gareth Renowden Jul 13

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This guest post is by Simon Terry, Executive Director of the Sustainability Council and co author with Geoff Bertram of ’The Carbon Challenge: New Zealand’s Emissions Trading Scheme’ (published by Bridget Williams Books).

New Zealand’s failure to reduce emissions to its Kyoto Protocol target means the taxpayer still faces a $1.1 to $5.7 billion net liability after all the ETS charges have been paid. That is the bottom line after taking account of what the ETS will contribute to paying off the Kyoto bill and Treasury’s advice about how to price what is left.

Years of narrow accounting, which had given the impression that the government was at various times in credit under the Protocol, was finally abandoned in the May Budget — at least in part. It broke with the past by recording key deforestation liabilities on the books, thereby signalling the real cost of New Zealand’s 22% overshoot of its Kyoto target.

This Budget entry officially scotches the myth that the government faces no financial impacts under the Protocol because it can rely on offsetting credits from plantation forests. Those plantation forests are earning credits now, but the credits must be paid back when the trees are harvested in the 2020s. Using these credits to pay the Kyoto bill is the equivalent of putting the cost of these emissions on the plastic for the next generation to pick up.

The Budget’s inclusion of a contingent liability for harvesting forests that are earning credits today is an important step, but it covers only the five years of the ETS to 2012. What the Budget failed to show is that the next period from 2013 to 2020 will be even more costly. New Zealand is actively negotiating a new international commitment that it expects will involve a stricter emissions target, while official projections are for the nation’s emissions to keep rising and carbon prices to also go up.

During that period there will be an even larger volume of forest credits earned by New Zealand and a corresponding contingent liability for their harvesting, which the Budget still does not record. This is despite a Treasury statement a year ago that it ’will be necessary to recognise’ a contingent liability right out to 2020. While the detail of the international commitment New Zealand will take on remains to be agreed, based on pledges to date and the current ETS settings, there would again be a very significant taxpayer liability after all ETS charges are paid.

The ETS simply fails to collect enough revenue to cover expected international commitments.

The ETS simply fails to collect enough revenue to cover expected international commitments. During the first Kyoto period, after all the exemptions, rebates and compensation payments are allowed for, the Government will receive just 12 million emission units net under the ETS, with each unit accounting for a tonne of greenhouse gas emissions. Compared to the current estimate for the Kyoto liability of 69 megatonnes (Mt), the ETS will reduce this by only a sixth during the Kyoto period.

That means over 80% of the cost of dealing with today’s emissions is to be dumped on a future generation of taxpayers.

You can imagine the reaction if someone proposed that the government take out a loan to cover 80% of everyone’s power bills and that loan was not due for payment until the 2020s. Yet that is the direct equivalent of what is happening under the ETS during its first five year at least. Consumers may not be accustomed to facing a price on carbon, but newness is hardly a moral defence for passing the bill to our children. Unless Parliament votes to withdraw from Kyoto (and only Act supports this), it is basic that today’s polluters pay today’s emissions bill.

The remaining unpaid liability of $1.1 to $5.7 billion is calculated as set out below:

  • The Budget lists, as a contingent liability, the need to cover 86.1 Mt of emissions resulting from harvesting forests that earn credits between 2008 and 2012. On the basis of the low carbon price of $20.29/tonne used in the Budget, it puts the gross liability for this at $1.747 billion.
  • The deficit from the Kyoto agreement however is only 69 Mt and once ETS revenue equal to 12 Mt is accounted for, the shortfall of 57 Mt represents a net Kyoto liability of $1.1 billion. Yet the Treasury warned in July 2009 that carbon prices could go as high as $100/tonne, and so the net liability could be as much as $5.7 billion.
  • During the next period from 2013 to 2020, the Treasury has projected a related contingent liability of roughly another 100 Mt. On that basis, the Budget should also show a further entry for this of about $2 billion at the $20/tonne carbon price.
  • It is possible that certain forests that are earning credits today will never be cut down, but there is no scenario under current government policy in which forest owners do not need to be paid for the newly stored carbon in those forests.

For today’s polluters to fully meet the Kyoto liability, total ETS payments obviously need to rise a great deal. However, households and small businesses are paying their fair share of the Kyoto bill, and it is major industrials and pastoral farmers that receive the heavy discounts at the taxpayers’ expense.

These subsidies and other compensation arrangements dominate the ETS flows such that only one in five of each dollar charged under the ETS becomes available to the Government to pay off the Kyoto liability.

Households already bear half the total costs resulting from the ETS during its first five years (52%), while accounting for just a fifth of all emissions (19%). Together with small-medium industry, commerce and services, and transport operators, they would pay 90% of the costs resulting from the ETS during the first five years while being responsible for 30% of total emissions.

With a tighter international commitment to come and New Zealand’s gross emissions still rising, the scale of the subsidies to major industrials and pastoral farmers is set to deliver increasing fiscal stress that will build up pressures for change in addition to the inequity that will be increasingly observed. Other moves overseas will also tend to put pressure on the ETS, including carbon border taxes.

Fortunately, New Zealand is well endowed with low cost options for reducing its carbon footprint

Fortunately, New Zealand is well endowed with low cost options for reducing its carbon footprint, including agricultural efficiency measures that cut emissions and the planting of permanent forests to newly store carbon. Once the notion that doing nothing will be costless is abandoned, it is surprising how much progress can be made under even modest assumptions. There are a series of options that together could deliver a 40% net reduction on the business-as-usual emissions otherwise expected in 2020 — and at no economic cost if the effective carbon price is assumed to be $30/t or higher.

As it currently stands, the ETS will reduce gross emissions by less than 1% during its first five years – relative to what they would have been anyway. Emission actually keep growing, but at a slower rate. Much the same is true out to 2020 if the ETS settings are not changed. Getting the Kyoto accounts straight is the starting point for a major reworking of carbon pricing policy.

Note: The Budget estimates of contingent liabilities can be viewed at: http://www.treasury.govt.nz/budget/forecasts/befu2010/038.htm The Treasury document drawn on states with respect to the gross liability for both periods: ’180 million forestry credits will be used … At a price of $100/unit, this contingent liability could be as much as $18 billion for the period 2008 — 2020’. See: 2020 Emissions Reduction Target: Further Analysis, T2009/1811, 31 July 2009, p.7. While the Treasury amended the government’s online accounts following this July document, it has not registered a contingent liability for harvesting on its own website that tracks the Kyoto ’net position’.

Copenhagen: opening thoughts Gareth Renowden Dec 09

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This video was embedded using the YouTuber plugin by Roy Tanck. Adobe Flash Player is required to view the video.

Delegates at the opening ceremony for COP15 — the 15th Conference of the Parties to the UN Framework Convention on Climate Change in Copenhagen — had to sit through this video, so I think you should too. ;-) It’s a fitting introduction to the next couple of weeks. There are not enough hours in the day for me to be able to cover everything that’s happening, but I hope to be able to provide occasional perspective, and pointers to interesting material.

Some key issues:

  • Can the global community pull together, or is the gap between the positions of the rich world and developing nations too big to bridge?
  • If a global deal can be done, will it be able to deliver emissions reductions on the scale required to avoid damaging change?
  • Will a deal build on Kyoto, or will a new framework emerge?
  • What will all this diplomatic tussling mean for New Zealand’s interests, and what role will Nick Smith, Tim Groser and John Key play?

A lot of the underlying tensions are already emerging, as the leak of a negotiating position document — the “Danish text” agreed by key developed nations (including NZ) is causing outrage in developing countries. The Guardian spells it out:

The UN Copenhagen climate talks are in disarray today after developing countries reacted furiously to leaked documents that show world leaders will next week be asked to sign an agreement that hands more power to rich countries and sidelines the UN’s role in all future climate change negotiations.

The document is also being interpreted by developing countries as setting unequal limits on per capita carbon emissions for developed and developing countries in 2050; meaning that people in rich countries would be permitted to emit nearly twice as much under the proposals.

While the diplomatic games begin, commentators sharpen their pens. Bill McKibben thinks the whole thing will be a disaster:

It’s like nothing we’ve ever faced before — and we’re facing it as if it’s just like everything else. That’s the problem.

To help me keep an eye on all this, I’ll be using a number of resources. Apart from my usual array of RSS and Twitter feeds, I’ll be keeping an eye on the Guardian’s amazingly diverse coverage (and blogs), the BBC (try the animated 800,000 years of climate history) and the COP15 web site (they provide good news coverage, and if you have the time, they’re providing live feeds to a lot of stuff). Press journalist David Williams is blogging his time at the conference, and the Science Media Centre has a page listing useful resources — aimed at the media, but there’s a lot of good stuff in there for the interested reader.