Government cautious over NZ’s Kyoto surplus

Hon Dr Nick Smith

Minister for Climate Change Issues

15 April 2009Media Release

Government cautious over NZ’s Kyoto surplus

New Zealand is now expected to exceed its Kyoto target by 9.6 million tonnes – a surplus worth an estimated $241 million, Climate Change Minister Nick Smith announced today.

Dr Smith today released the 2009 Net Position Report for the first commitment period of the Kyoto Protocol (2008-2012). The results for 2009 are in contrast to 2008 which projected a deficit of 21.7 million tonnes (an estimated cost of $546 million).

The main reasons for the change are the drop in agriculture emissions caused by the drought in 2007/08 and improved information on carbon storage in forests.

“It is good news that we may exceed our Kyoto target but we need to be cautious of these projections given their volatility.

“It is difficult for the Government to make sound climate change policy when projections have ranged from a 55 million tonne surplus in 2002 to a 64 million tonne deficit in 2006 and when the figures over the past year have varied by 31 million tonnes equivalent to $787 million.

“The 2009 projections will be independently reviewed and audited over the next few months to check they are as accurate as possible.”

The significant changes in projections include:

• Deforestation emissions down by 9.6 million tonnes (Mt) due to new data showing smaller trees being felled in land use changes

• Post-1989 (Kyoto) forests absorbing 8.2Mt more of carbon due to the trees not being thinned and being planted on better soils

• Drought conditions causing significant reductions of 10.3Mt in animal emissions due to fewer cattle, sheep and deer

• More accurate data on nitrous oxide agricultural emissions resulting in a 3.8Mt improvement

“There has been no significant change in emissions from the energy, transport and industrial sectors. There has been a minor reduction due to the recession in transport emissions but this has been offset by the reduction in the fuel price since the 2008 peak and the effect of the previous Government’s decision to defer entry to the ETS two years.

“These changes in projections highlight how difficult it is to measure natural processes like farm animal and forestry emissions which demonstrate the unique Kyoto challenges that New Zealand has.”

“There are two important factors to recognize in the latest projections. First, these figures do not signal any progress in abating New Zealand’s gross greenhouse gas emissions which are 23 percent above 1990 levels. We are just fortunate that more than 600,000 hectares of new forests were planted in the 1990s that are growing strongly and offsetting our continued growth in energy and transport emissions.

“Secondly, these projections are for New Zealand Incorporated and not the Government and it is highly unlikely the Crown will end up with any surplus. This is because post-1989 forest owners may choose to claim millions of tonnes of credits that their forests absorb between 2008 and 2012.

“These positive figures are to be welcomed but New Zealand still has a major challenge to reduce its gross greenhouse gas emissions. The Government will be continuing to advance pragmatic policies to ensure New Zealand contributes constructively to global efforts to address climate change.”

ENDS

Points to Note:

The 2009 Net Position Report shows that New Zealand’s liability of $4816 million as at 31 January 2009 moves to being a projected asset of $243 million, using the Treasury carbon price as at 31 January 2009 of $25.31 per tonne. That is an improvement of $787 million dollars since last year’s projection.

The Net Position Report uses best available information at the time of projection. The figures are produced by the Ministry for Agriculture and Forestry, the Ministry of Economic Development and the Ministry for the Environment. The Ministry for the Environment compiles the report across government.

The exact net position will not be known until 2015 after New Zealand’s national greenhouse gas inventory covering the first commitment period has been internationally reviewed and the review report accepted by the Enforcement Branch of the Compliance Committee of the Kyoto Protocol.

The Ministry’s Net Position Report (Projected balance of emissions units during the first commitment period of the Kyoto Protocol) is published on its website at http://www.mfe.govt.nz/issues/climate/about/qa-net-position.html. It is an overview of emission projections across all industry sectors. Specific emissions data for each sector are reported by the agency responsible and included as appendices to the Ministry for the Environment report. Detailed questions on each sector should be answered by the agency responsible for that sector. For example, energy and industry emissions are available from the Ministry for Economic Development.