Latest update on New Zealand's net position

This page provides the latest update on New Zealand's net position under the Kyoto Protocol. This is used for tracking progress towards our Kyoto Protocol commitment over 2008-2012. It includes background information to provide context.

Latest net position

It is predicted that New Zealand will meet its greenhouse gas emissions reduction target for the first commitment period (2008-2012) under the Kyoto Protocol with a surplus of about 90.8 million Kyoto units. This is our net position under the Kyoto Protocol (net position).

Based on the March 2014 carbon price of NZ$0.30, the surplus units have a value of $27 million.

Our emissions over the first commitment period

New Zealand's total greenhouse gas emissions (emissions) were 372.8 million tonnes of carbon dioxide equivalent (Mt CO2-e) over 2008-2012. These emissions were partially offset by 71.6 Mt CO­2-e of sequestration from forestry. Therefore New Zealand's net emissions over the first commitment period were 301.2 Mt CO2-e, which was 8.4 Mt CO2-e below our target.

Kyoto units to balance emissions

Parties to the Kyoto Protocol use Kyoto units to track their progress against greenhouse gas reduction commitments. Each Kyoto unit represent one tonne of CO2-e. Each party must have enough Kyoto units to account for their total emissions.

The Government in 2007 issued 309.6 million Assigned Amount Units (AAUs) which are a type of Kyoto Protocol unit to account for our emissions. This followed an internationally-reviewed account of our 1990 emissions. Since then, 7.5 million of these AAUs have moved out of the Government account, while 90.0 million units have been surrendered to the Government through the New Zealand Emissions Trading Scheme (NZ ETS) (see table below).

There are 463.6 million Kyoto units in the Government account as of March 2014 (including the anticipated RMUs). The Kyoto units are recognised on an accrual accounting basis when it is estimated that emissions have occurred (as opposed to accounting for them when they are surrendered by participants in the NZ ETS).

New Zealand’s emissions and Kyoto units in the Government account

  April 2014   April 2013
New Zealand’s emissions
Mt CO2-e1
Total emissions
+372.8
+9.3
+363.5
Forestry sequestration Removal Units (RMUs)
-71.6
+5.7
-77.2
Net emissions
301.2
+14.9
286.3
 
Kyoto Units in the Government Account
Millions of Units
Initial Assigned Amount Units (AAUs)
309.6
 
309.6
Purchases by the Government
+0.1
0.0
+0.1
Transfers to Projects to Reduce Emissions (PRE)
-4.9
-1.7
-3.2
Transfers to Permanent Forest Sink Initiative
-1.4
-0.7
-0.7
New Zealand Units converted to AAUs
-1.2
0.0
-1.2
AAUs projected to remaining PRE projects
0.0
+1.7
-1.7
Kyoto units surrendered via NZ ETS2
+90.0
+77.0
+13.0
Current Kyoto unit balance
392.0
76.3
315.9
 
New Zealand’s net position
90.8
61.2
29.6
  1. MtCO2-e = million tonnes of carbon dioxide equivalent.
  2. NZ ETS = New Zealand Emissions Trading Scheme.

Notes: Numbers may not add due to rounding to one decimal place.
Sequestration from forestry is actually represented by RMUs in the Kyoto Protocol accounting framework.

Graphic representation of the net position

Graphic representation of the net position
Notes: Total emissions over 2008-2012 (left) and the balance of Kyoto units to account for these (right).
Numbers may not add due to rounding to one decimal place.
Sequestration from forestry is actually represented by RMUs in the Kyoto Protocol.

Background to the net position

New Zealand’s commitment under the Kyoto Protocol

Under the Kyoto Protocol, New Zealand committed to limit emissions to our 1990 levels on average over the first commitment period or to take responsibility for any emissions over this level. This is a commitment to reduce emissions to 309.6 Mt CO2-e over the five year period.

How the Kyoto Protocol works

The Kyoto Protocol works like an international emissions trading scheme. At the end of a ‘true-up’ period (see ‘true-up’ section below), we must retire units equal to our total emissions over the 2008-2012 period. If our emissions are below our target we will have a surplus of emission units to sell. Conversely, if our emissions are over the target we will have to buy emission units to cover the deficit.

About the net position under the Kyoto Protocol

The net position is a summary of New Zealand's greenhouse gas emissions over the first commitment period of the Kyoto Protocol and the Kyoto units available to balance these.

The number, in millions of units, refers to the number of Kyoto units New Zealand will have to spare (surplus), or need to purchase (deficit) to meet our obligations under the Kyoto Protocol.

The net position is calculated as the difference between total emissions (from the Greenhouse Gas Inventory) and Kyoto units held in the Government account (which includes RMUs representing forestry sequestration).

How the NZ ETS affects the net position

Participants of the New Zealand Emissions Trading Scheme (NZ ETS) must surrender emission units to the Government for some or all of their emissions. These can be New Zealand Units (NZUs) which can only be used in the NZ ETS or one of a variety of Kyoto units. These Kyoto units contribute to the net position.

The net position has increased over the last year because more Kyoto units were surrendered under the NZ ETS than NZUs.

The ‘true-up’ period

A 100 day ‘true-up’ period is held after greenhouse gas inventory reviews have been completed on all parties to the Kyoto Protocol. Over this period, parties can continue to trade Kyoto units to ensure they have more units than tonnes of CO2-e emitted.

The Kyoto Financial Position

The Kyoto Financial Position is the value of the net position if the Government sold surplus or bought needed units on the international market. It is calculated using current trading prices for emissions and the exchange rate. This asset or liability must be reported in the Government’s financial accounts.

Reviewed:
01/07/14