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New Zealand’s net position (emission units)
This webpage contains answers to questions relating to the projections of the net position, with technical details for energy and industry processes, agriculture and forestry.
- General questions and answers on New Zealand's net position
- Questions and answers: Energy and industrial processes.
- Questions and answers: LULUCF.
The latest net position report, Projected Balance of Emissions Units During the First Commitment Period of the Kyoto Protocol, was published in May 2008.
General questions and answers on New Zealand's net position
What is the net position?
The net position report provides a projection of New Zealand’s likely balance of emissions units over the first commitment period of the Kyoto Protocol (CP1: 2008-2012). An emissions unit is equivalent to one tonne of carbon dioxide gas.
The net position is New Zealand’s projected balance of Kyoto Protocol units during the first commitment period (2008-2012) of the Kyoto Protocol. A Kyoto Protocol unit is equivalent to one tonne of greenhouse gas emissions or removals converted to carbon dioxide equivalent by the global warming potential. The balance of units is a projection of what actual emissions will be reported in New Zealand national greenhouse inventory submissions over the commitment period and government transfers of Kyoto emissions units.
Who calculates the net position?
This report is compiled using sectoral projections reports from across government. Agricultural emissions and net removals by forests eligible under Article 3.3 of the Kyoto Protocol are provided by the Ministry of Agriculture and Forestry. Stationary energy (the energy sector excluding transport), transport and industrial processes emissions projections are provided by the Ministry of Economic Development. Emissions from the waste sector are projected by the Ministry for the Environment. The Ministry for the Environment leads the net position update across government to ensure internal consistency of projections, to project manage the update, and to compile the Kyoto Protocol compliance equation.
Will the delay in bringing Transport into the ETS increase emission and thus the Kyoto Liability?
New Zealand will have slightly lower emission reductions in the short term, but given the predominant price effect is coming from the increase in the price of crude oil and a lower exchange rate, there should be little change in the level of expected emission reductions expected from the transport sector.
What is new in the 2008 net position?
As at May 2008, the net position is projected to be a deficit of 21.7 million units during the first commitment period. This comprises 14.7 million tonnes excess emissions over the first commitment period and seven million tonnes of assigned amount units already promised to successful tenders in the Projects to Reduce Emissions programme. The 2008 update compares with a projected deficit reported in May 2007 of 45.5 million units.
How have the latest emissions projections changed from previous projections?
There are five substantial changes from the net position reported in September 2007, these are summarised below and described in more detail in the appendices to the report.
- Emissions from the transport sector are now projected to be 8.8 million tonnes carbon dioxide equivalent lower than projected in 2007. Emissions are projected to be lower because actual fuel use data for 2007 is lower than projected last year and higher fuel prices are assumed for the first commitment period.
- New Zealand’s agriculture greenhouse gas emissions are projected to be 4.7 million tonnes lower than projected in 2007 due to the effects of the drought during early 2008 and a continuing decline in sheep numbers. Sheep numbers projected for 2010 are 1.7 million sheep lower than the 2007 projection (Appendix A: MAF (2008a)).
- In 2007, projected deforestation emissions, in the absence of any policy intervention was 41.0 million tonnes carbon dioxide equivalent for the first commitment period. The government’s stated policy since 2002 has been to cap the liability from deforestation emissions at or below 21.0 million tonnes carbon dioxide equivalent. The 21.0 million tonnes carbon dioxide equivalent figure was used in the 2007 net position projection. In 2008, emissions from deforestation are projected to be 16.9 million tonnes carbon dioxide equivalent over the first commitment period. Projected emissions from deforestation are lower by 24.1 million tonnes carbon dioxide equivalent. The overall effect on the net position as compared with the 2007 report is a reduction in the deficit of 4.1 million tonnes carbon dioxide equivalent. The Ministry of Agriculture and Forestry (Appendix C: MAF 2008b) explains the emissions from deforestation may be higher (but not quantified) if government decisions at the time of the projection (15 April 2008) are not fully implemented.
- An increase of 5.1 million tonnes carbon dioxide equivalent in the estimate of removals due to a change in methodology as recommended by an international review of the 2007 projections (AEA Technology, 2007). The method now combines all factors affecting projected removals in a single model rather than treating each factor separately (Appendix C: MAF (2008 b)).
- Projected emissions from stationary energy and industrial processes are 0.7 million tonnes carbon dioxide equivalent lower than projected in 2007 due to higher expected energy prices, and actual emissions data for 2007 being lower than projected previously (Appendix B: MED (2008)).
Why have energy emission projections reduced since last year?
Higher energy prices, emissions trading and range of new energy policies are projected to reduce emissions from energy. Future energy prices were assumed lower in the 2007 net position report, and the 2007 net position estimate pre-dated several energy related policy announcements.
Why are the transport figures lower?
The most substantive change in projected energy emissions is due to emissions from transport being 8.8 million tonnes carbon dioxide equivalent lower than projected in 2007. The Ministry of Economic Development (Appendix B: (MED 2008)), in summary, explain the reductions are due to actual fuel use data for 2007 being lower than expected and for higher fuel prices being assumed for the first commitment period.
Why are the agriculture projections lower than previous projections?
The agriculture emissions are lower due to the effects of the current drought and a continuing decline in sheep numbers. There are projected to be 1.7 million less sheep in 2010 than in the 2007 projection.
What has changed in the forestry sector to increase projected removals (reducing net emissions)?
Emissions from deforestation are expected to be lower under the proposed forestry emissions trading scheme are projected to be lower because forest owners are required to purchase and surrender New Zealand emissions units to cover deforestation emissions.
An international review of the 2007 projections by AEA Technology in 2007 recommended that the method to calculate projected removals combine all factors affecting the estimate in a single model rather than treating each factor separately. The change increases the projected removals (reduces net emissions) by 5.1 million tonnes carbon dioxide equivalent.
Why are the effects of policies included in the emission projections?
The net position does not evaluate or report the effects of individual policies. All policies are treated together to get the best estimate of New Zealand’s emissions and removals over the first commitment period. The net position is calculated consistent with the Public Finance Act 1989 (section 26U) that requires the net position to incorporate to the fullest extent possible, all government decisions and all other circumstances that may have a material effect on the projection and that can be quantified with reasonable certainty.
Why has an Emissions Trading Scheme been added to the emission projections this time?
The 2008 net position report includes the modelling of an emissions trading scheme, the New Zealand Energy Strategy, and the New Zealand Energy Efficiency and Conservation Strategy. There is a Public Finance Act requirement to include policies that may influence future fiscal situation. As a signatory to Kyoto Protocol the Crown has taken on a liability, so the Emissions Trading Scheme has to be included although it is not yet law.
The 2008 net position report includes all government decisions as at 15 April 2008. The modelled effects of new policies introduced in 2008 are the New Zealand Emissions Trading Scheme, the New Zealand Energy Strategy, and the New Zealand Energy Efficiency and Conservation Strategy. The biofuels sales obligation and solar hot water programme policies were included in the 2007 net position estimate and have been retained in the 2008 projection.
Why do the net position numbers change over time?
The projection of the net position will continue to change as projection models are refined, assumptions are updated and we get closer to the end of the commitment period where variables that were once projected become known values.
What factors cause uncertainty?
Uncertainty is caused by the need to project variables which drive greenhouse gas emissions such as economic growth, fuel and energy prices, exchange rate, technical change and population growth. The future value of these variables cannot be known and we use a range around these variables to quantify different emissions scenarios.
Will the uncertainty reduce?
The net position will remain uncertain until New Zealand’s national greenhouse gas inventory covering the first commitment period has been internationally reviewed, final emissions unit purchases and sales are completed and the review report accepted by the Enforcement Branch of the Compliance Committee of the Kyoto Protocol. The internationally agreed timelines for these processes mean that New Zealand will submit its annual inventory for the 2008 calendar year in 2010. As inventory data is submitted for the first commitment period during 2010-2014, uncertainty in the net position will be reduced because actual estimated emissions data will replace projected estimates of emissions. New Zealand’s Kyoto Protocol compliance over the first commitment period will not be finalised until 2015.
Where does most of the uncertainty come from?
The largest source of uncertainty is due to information and scientific uncertainty for the land use, land-use change and forestry sector. The uncertainty attributable to the values for forest sinks will continue until the Land Use and Carbon Analysis System being developed by the Ministry for the Environment becomes operational. The Land Use and Carbon Analysis System will use satellite mapping to more accurately locate forests. This is a requirement of reporting Article 3.3 sinks under the Kyoto Protocol. Presently the sink estimates are based on a postal survey of forest owners known as the National Exotic Forest Description.
What is New Zealand’s commitment over the Kyoto Protocol?
As a party to the Kyoto Protocol, New Zealand has committed to reducing its average net emissions of greenhouse gases over 2008-2012 (the first commitment period of the Kyoto Protocol or CP1) to 1990 levels or take responsibility for any difference.
How can New Zealand meet its commitment over the Kyoto Protocol?
New Zealand can meet its Kyoto Protocol commitment through a wide range of climate change policies being developed across the energy, transport, building, agriculture and forestry sectors. These include transport measures to improve the emissions standards of new and used vehicles coming into New Zealand, energy performance standards for new products, changes to the building code for home energy efficiency, an afforestation grants scheme and a greenhouse gas emissions trading scheme.
New Zealand can also make use of the Kyoto Protocol flexibility mechanisms such as carbon trading, Joint Implementation, the Clean Development Mechanism, and by offsetting increased emissions against carbon dioxide removed by forests.
Why was the net position reviewed in 2005?
The May 2005 net position report projected that New Zealand would have a deficit of emissions units for CP1. The Ministry for the Environment commissioned UK-based consulting firm AEA Technology to undertake an independent review of the May 2005 net position report. The May 2007 net position report was also reviewed.
What did the review say?
AEA Technology’s key finding was that:
“The methodologies employed to project emissions and sinks across the different sectors [are] generally sound and reasonable in their approach.”
The review noted the uncertainties inherent to all countries’ projected greenhouse gas emissions, and that it is “not uncommon” for projections to change.
How did officials use the review?
The 2007 and 2008 net position reports incorporate many of the improvements to methodology and process identified by government agencies together with additional recommendations by AEA Technology.
Why was the net position reviewed again in 2007?
The net position was reviewed to assess the Ministry for the Environment’s efforts to implement the improvements recommended in 2005, provide suggestions for further improvements and to help improve the treatment of uncertainty.
What did the 2007 AEA Technology review find?
“Overall we [AEA Technology] have found the methodologies employed to project emissions and sinks across the sectors for the 2007 net position report to be generally sound and reasonable in their approach. Furthermore we [AEA Technology] consider that the improvements, which have been made since the 2005 projections mean that the 2007 projections are more robust and better documented than the 2005 projections.
How did officials use the 2007 review?
The 2007 recommended improvements to the treatment of uncertainty for the projected removals by forestry. The new method has narrowed the uncertainty around projected emissions and increased the estimate of removals (reducing the estimate of net emissions) by 5.1 million tonnes carbon dioxide equivalent.
How does the net position contribute to the Kyoto liability?
The net position shows the number of Kyoto emission units needed to meet New Zealand’s commitment over CP1. Multiplying this by the carbon price in New Zealand dollars gives the size of the Kyoto liability. The provision for the Kyoto liability is updated regularly in the crown accounts (see the Treasury website for details of the Kyoto liability).
Questions and answers: Energy and industrial processes, waste, agriculture and LULCF
What is the difference for overall emissions projections between the May 2007 and May 2008 net positions?
New Zealand projected 2010 agricultural greenhouse gas emissions are 0.93 Mt CO2-e (or 2 percent) lower in the May 2008 set of projections.
High levels of livestock slaughtering, due to the 2008 nationwide drought, have lowered the expected numbers of livestock during the first commitment period. Much of the affect of the current boom in dairy prices was incorporated into the May 2007 projections.
What are the major differences of assumptions applied for the 2007 and 2008 net positions?
The assumptions around the economic outlook and the agricultural commodity price outlook have changed between the 2007 and 2008 net position projections. All have changed to a degree; one instance of this change is higher expected urea prices. There are no changes in the biological assumptions.
What are the major differences in policies for the 2007 and 2008 net positions?
There is no policy change expected regarding greenhouse gas emissions for the agriculture sector over the first commitment period.
What are the major differences of modelling applied for the May 2007 and May 2008 net positions calculations for the first commitment period?
There has been no change in methodology use for agriculture between the 2007 and 2008 net position projections. An updated nitrogen fertiliser time series was used in projections of nitrogen fertiliser emissions. The mean projections of nitrogen fertiliser over the 5 year period of the first commitment period were used.
What is the level of uncertainty in the projection?
The projected emissions from agriculture in 2010 range from 34.7 Mt CO2-e to 45.5 Mt CO2–e.
Where is the uncertainty in the projection?
In the agricultural greenhouse gas emission projections, the economic uncertainty comes from uncertainty around the exchange rate and agricultural commodity prices. Biological variability also creates uncertainty in the projections and is centred around methane emissions per unit of feed intake and nitrogen output per animal.
What improvements have been implemented since 2007?
An updated nitrogen fertiliser time series was used.
Questions and answers (LULUCF)
What is the difference for overall emissions projections between the May 2007 and May 2008 net positions?
Projected removals of carbon dioxide by post-1989 forests have increased by 5.1 million tonnes carbon dioxide equivalent during the first commitment period of the Kyoto Protocol (2008-2012).
Projected emissions from deforestation have fallen from 21.0 million tonnes carbon dioxide equivalent to 16.9 million tonnes carbon dioxide equivalent a reduction of 4.1 million tonnes during the first commitment period of the Kyoto Protocol (2008-2012).
The 2007 Net Position Report projected that without policy measures that deforestation would result in at least 41.0 million tonnes of emissions in the first commitment period. If the Emissions Trading Scheme is implemented as outlined in September 2007 it is estimated that projected deforestation could fall to 16.1 million tonnes during commitment period one, a reduction of 24.9 million tonnes carbon dioxide equivalent.
What are the major differences of assumptions applied for the 2007 and 2008 net positions?
The level of deforestation applied in the 2008 estimate is lower than the 2007 estimate because forest owners are expected to deforest less area under the proposed Emissions Trading Scheme (ETS) policy for forestry if it is implemented as proposed in September 2007. The level of deforestation is based on a Deforestation Intentions Survey conducted between November 2007 and January 2008.
What are the major differences in policies for the 2007 and 2008 net positions?
The introduction of the Emissions Trading Scheme for Forestry is the major policy difference between the 2007 and 2008 net positions for LULUCF.
What are the major differences of modelling applied for the May 2007 and May 2008 net positions calculations for the first commitment period?
Monte Carlo simulation was used for calculating the mean and uncertainty range in 2008 where as in 2007 the mean and range were calculated by adding adjustment factors to the total removals from afforestation. This change was made based on recommendations from an international review of the 2007 net position report by AEA Technology (UK).
What is the level of uncertainty in the projection?
Net removals by the LULUCF sector (that is, removals by post-1989 forests minus deforestation emissions) for the period 2008-2012 are projected to be in the range 33.7 – 90.4 Mt CO2.
Where is the uncertainty in the projection?
There are a number of areas of scientific and measurement uncertainty in these projections. The greatest level of uncertainty is in the growth rates of Kyoto forests, the area of ineligible afforestation, the level of future deforestation and the level of emissions from this deforestation.
Deforestation has a substantial effect on the net position because the carbon dioxide accumulated over the life of the forest is assumed to be rapidly emitted to the atmosphere.
New afforestation has relatively little effect on the net position in commitment period one because newly established forests remove small amounts of carbon dioxide in their early growth years. However, new afforestation will remove more substantial levels of carbon dioxide post commitment period as the forests grow.
What improvements have been implemented since 2007?
The method for calculating the mean and range of removals used in 2008 is different to that used in 2007. In 2008 Monte Carlo simulation was used where as in 2007 the mean and range were calculated by adding adjustment factors to the total removals from afforestation. This change was made based on recommendations from the AEA Technology review of the 2007 Net Position Forecasts.
