Net Position Report 2009

• Executive Summary
• 1 New Zealand’s Emissions Profile 1990–2007
• 2 Kyoto Protocol Compliance Equation
• 3 Projections of Emissions and Removals
• 4 Projections Uncertainty
• 5 Reconciliation Against Previous Projections
• References
• Appendix A: Agriculture Emission Projections provided by the Ministry of Agriculture and Forestry
• Appendix B: Projected Balance of Emissions for the Energy, Transport and Industrial Processes Sectors for the Kyoto Commitment Period, 2008–2012
• Appendix C: Land Use, Land-use Change and Forestry Sector provided by the Ministry of Agriculture and Forestry
• Appendix D: Projected Waste Sector Emissions for the First Commitment Period of the Kyoto Protocol

2 Kyoto Protocol Compliance Equation

The maximum amount of emissions that an Annex I party to the Kyoto Protocol may emit over the commitment period is known as a party’s assigned amount. This is specified in Kyoto Protocol Article 3.1 and Annex B to the Kyoto Protocol (Box 1).

The initial assigned amount was calculated from New Zealand’s emissions in 1990 as reported in the Initial Report under the Kyoto Protocol (MfE, 2006). Parties may add to their assigned amount by removing greenhouse gases from the atmosphere through carbon sinks in the land use, land-use change and forestry sector. Reporting afforestation, reforestation and deforestation activities since 1990 (Kyoto Protocol Article 3.3) is mandatory in the first commitment period. Reporting on forest management, cropland management, grazing land management and revegetation is voluntary for the first commitment period (Kyoto Protocol Article 3.4). New Zealand did not elect to report on any of these Article 3.4 activities. The removal of greenhouse gases from the atmosphere through eligible sink activities generates removal units (RMUs). Removal units must be cancelled for any harvesting and deforestation emissions. Removal units are popularly known as carbon credits.

A party with a commitment under the Kyoto Protocol must hold sufficient assigned amount units (AAUs) to cover the total emissions during the first commitment period. If the party’s emissions exceed its assigned amount plus removal units, it must take responsibility for its excess emissions through the Kyoto Protocol’s flexibility mechanisms. Flexibility mechanisms include the Clean Development Mechanism, Joint Implementation and the trading of units between Annex I parties. Parties incur a 130 per cent penalty during any future commitment period if, during the first commitment period, they do not hold enough emissions units to cover their total emissions. The Kyoto compliance equation for the first commitment period is simplified in Figure 3.

Figure 3: Kyoto Protocol Article 3.1 compliance equation

Note: Gross emissions include energy, agriculture, waste, industrial processes and solvents and excludes emissions from deforestation between 2008 and 2012. Total removals of article 3.3 forests are net of deforestation emissions.

 

The New Zealand Government has promised to provide assigned amount units to participants in its Projects to Reduce Emissions programme. The net position accounts for units promised under these projects by subtracting them from the assigned amount. The projected reduction in emissions from the Projects to Reduce Emissions programme is included in the emissions projections from the energy sector.

New Zealand’s initial assigned amount

New Zealand’s initial assigned amount is fixed at 309,564,733 metric tonnes of carbon dioxide equivalent or assigned amount units. The initial assigned amount is based on the estimate of emissions for 1990 from the inventory which was submitted as part of the Initial Report under the Kyoto Protocol (MfE, 2006) and reviewed by an international review team in February 2007 (UNFCCC, 2007).

The initial assigned amount is fixed for the first commitment period. In contrast, emissions and removals for all years of the national greenhouse gas inventory will change due to continuous improvement of the inventory. Consequently, the level of emissions in 1990 reported in the 2009 inventory submission is 0.06 million tonnes lower (less than 0.1 per cent) than the 1990 level used in the initial assigned amount calculation.

Each emissions unit is equal to one tonne of greenhouse gas emissions, converted to carbon dioxide equivalents using the global warming potentials as specified by the Second Assessment report of the Intergovernmental Panel on Climate Change (IPCC Second Assessment Report, 1995).

New Zealand’s Emissions Unit Registry

The Climate Change Response Act 2002 puts in place a legal framework to allow New Zealand to ratify the Kyoto Protocol and to meet its obligations under the United Nations Framework Convention on Climate Change.

The Act includes powers for the Minister of Finance to manage New Zealand’s holdings of units that represent New Zealand’s target allocation for greenhouse gas emissions under the Protocol. It enables the Minister to trade those units on the international market. The Act establishes a National Inventory Agency to record and report information relating to greenhouse gas emissions in accordance with international requirements. The Act also requires New Zealand to establish an emissions registry. The emissions registry records holdings of Kyoto Protocol emissions units and is called the New Zealand Emission Unit Register (NZEUR). The New Zealand Emissions Unit Register is administered by the Ministry of Economic Development and may be viewed online at https://www.eur.govt.nz/eats/nz/.

The New Zealand Emission Unit Register manages the accounting, reporting and reconciliation of emissions unit holdings and transactions as part of the New Zealand Emissions Trading Scheme and also to meet New Zealand’s commitment and obligations under the Kyoto Protocol (Article 7). The New Zealand national registry complies with the registry requirements as defined by decisions 13 and 5 of the first Conference and Meeting of Parties under the Kyoto Protocol in Montreal in December 2005.

If units are transferred to or from private and offshore holding accounts (Figure 3) then the net position estimate will need to be revised accordingly.

Box 1: Kyoto Protocol Article 3.1

Source: Kyoto Protocol, UNFCCC (1998).

 

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