Executive Summary

The April 2009 net position report updates New Zealand’s projected balance of Kyoto Protocol units during the first commitment period 1 January 2008 to 31 December 2012 of the Kyoto Protocol. A Kyoto Protocol unit is equivalent to one tonne of greenhouse gas converted to its carbon dioxide equivalent by the global warming potential. The net position is a projection of what actual emissions and removals will be reported in New Zealand’s national greenhouse inventory submissions over the commitment period and any transfers of Kyoto Protocol units.

As at April 2009, the net position is projected to be a surplus of 9.6 million Kyoto Protocol units during the first commitment period. The April 2009 update compares with a projected deficit reported in May 2008 of 21.7 million Kyoto Protocol units.

The change from the previous projection is explained mainly by lower projected emissions from the agriculture sector and increased net removals from planted forests. Projected agriculture emissions over 2008–2012 are now 184 million tonnes. This is a decrease of 14.4 million tonnes (7.3 per cent) from the 198.5 million tonnes projected in 2008. Agriculture emissions projections are lower largely due to the effect of the 2007/2008 drought. Net removals by post-1989 forests are projected to be 85 million tonnes, an increase of 17.8 million tonnes (26 per cent) from the previous projection of 67.2 million tonnes. The two key reasons for the change in removals are that new information on post-1989 planted forests indicates that these forests are removing more carbon dioxide per hectare than assumed previously (8.2 million tonnes) and new information on intended deforestation emissions (9.6 million tonnes). Total energy and industrial emissions projections for 2008–2012 remain at 185 million tonnes and have not changed from the 2008 projection.

The projections will continue to change over the commitment period. The projection will always be based on the best information available at the date of the projection. Change will be caused by the use of the latest assumptions on variables such as economic growth or oil prices, use of the latest scientific research on emissions and removals, and replacing projections with actual inventory data. For the first time, the April 2009 net position report uses provisional data for actual emissions from the agriculture and energy sectors for 2008.

The actual net position will remain uncertain until New Zealand’s national greenhouse gas inventories covering the first commitment period have been submitted, reviewed, and the review report noted 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 (the first year of the commitment period) in 2010. New Zealand’s Kyoto Protocol compliance over the first commitment period will not be finalised until 2015.

The net position report does not attempt to evaluate or report the effects of individual policies. All policies are aggregated together to get the best estimate of New Zealand’s emissions and removals over the first commitment period. The net position is calculated to be consistent with the Public Finance Act 1989. This Act 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 (section 26U).

The net position report is compiled using sectoral projection reports from across government. Agricultural emissions and net removals by forests eligible under Article 3.3 of the Kyoto Protocol are projected by the Ministry of Agriculture and Forestry. Stationary energy, transport and industrial process emissions projections are provided by the Ministry of Economic Development. Projections of emissions from the waste sector are provided by the Ministry for the Environment. The Ministry for the Environment leads the net position update across government to ensure the internal consistency of projections and compile the Kyoto Protocol compliance equation (Kyoto Article 3.1).

What has changed since 2008?

The component breakdown of the changes in the net position between the 2008 and 2009 estimates are shown in Figure 1. The major changes are summarised below and are described in more detail in the appendices to this report.

Figure 1: Changes to the net emissions estimates since 2008

Text description for figure 1

Agriculture emissions projections for 2008–2012 are lower due largely to the 2007/2008 drought. The drought reduced stocking rates for cattle and sheep. Emissions per head of livestock were also lower because the feed intake was reduced. New scientific research on a New Zealand-specific emission factor, and the incorporation of a nitrification inhibitor, dicyandiamide (DCD), also reduced estimated emissions by 4.1 million tonnes. Overall, projected agriculture emissions for 2008–2012 are now 184 million tonnes, 14.4 million tonnes (7.3 per cent) lower than the 198.5 million tonnes projected in 2008.

Net removals by planted forests are projected to be 85 million tonnes, 17.8 million tonnes higher than the 67.2 million tonnes projected in May 2008. The two key reasons for this change are:

new information on post-1989 planted forests indicates that these forests are removing more carbon dioxide per hectare because they have been planted on more fertile sites than older forests. They have also received less intensive forest management, particularly thinning. These factors mean there are more trees per hectare growing at a faster rate. The impact of the change is a projected increase in removals from post-1989 forests of 8.2 million tonnes during the first commitment period 2008–2012. The information is from a preliminary analysis of the Land Use and Carbon Analysis System (LUCAS) planted forest inventory field data
deforestation emissions are projected to be 9.6 million tonnes lower than in the May 2008 net position. This is due in part to improved information on the area of immature forests intended to be deforested. This information has not been available previously. Deforestation of younger forests produces lower emissions than older forests. It was also assumed that all forest carbon is instantly emitted at the time of deforestation. It was previously assumed that harvesting residues decayed over time.

The total energy and industrial emissions projections remain at 185 million tonnes for 2008–2012 and have not changed from the May 2008 projection. There are reductions in the projected emissions from energy due to a lower than projected energy demand during 2008 and the expected effects of an economic recession. However, these have been offset by the effects of removing policies for a biofuels sales obligation and the renewable electricity preference, and a small increase in fugitive emissions from greater geothermal electricity generation. There has also been a small reallocation of emissions from the industrial processes sector to the energy sector, but this does not increase overall emissions.

The projected emissions from waste during 2008–2012 have increased to 8.3 million tonnes, an increase of 1.1 million tonnes from the 7.2 million tonnes in the May 2008 projection. This is the result of improvements to the method used to model emissions from solid waste disposal in the greenhouse gas inventory.

The projected quantity of Kyoto Protocol units awarded under the Projects to Reduce Emissions programme has been reduced from 7.0 to 6.8 million tonnes.

What is new in 2009?

For the first time, the net position report is using provisional estimates of actual emissions for 2008 – the first year in the commitment period of the Kyoto Protocol. The Ministry of Economic Development and the Ministry of Agriculture and Forestry are using provisional data for 2008 for the energy and agriculture sectors.

Preliminary results from the Land Use and Carbon Analysis System’s field studies are being used to project removals by post-1989 planted forests.

A New Zealand-specific emission factor to determine nitrous oxide emissions from agricultural soils has been used in the 2009 net position. The New Zealand factor replaces the Intergovernmental Panel on Climate Change (IPCC) emission factor. The agriculture projection also includes use of dicyandiamide (DCD), a nitrification inhibitor which reduces nitrous oxide emissions from livestock dung and urine deposited onto agricultural soils.

The Ministry of Agriculture and Forestry has updated the Pastoral Supply Response Model. The key outputs of the model include projected animal performance data as well as animal populations, along with using a land-use change forecasting component. The Pastoral Supply Response Model is now linked to the inventory model used in calculating agricultural emissions. This update has enabled the inventory model to be used for the net position.

Planned improvements in the projections

From mid-2009, new information on the area of post-1989 forests will become available from the Land Use and Carbon Analysis System. The system will provide the mapped and calculated areas of land-use change that will be used in the greenhouse gas inventory. The new information will change the projected removals from post-1989 forests which, if significant, would prompt an interim update of the net position report.

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