View all publications

Executive Summary

This May 2008 report updates 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. The report is known as New Zealand’s net position report and is compiled using the best available information at the time of projection.

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 7 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.

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.

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.

This report has been 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.

The net position is typically updated on an annual cycle, culminating with the release of the net position report in May. An update may be released when there is a change in policy or economic environment that is judged to have a material effect on the net position. A change of around two million tonnes carbon dioxide equivalent is generally considered a trigger for an update.

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 is 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.

What has changed since 2007?

Changes in the components of the Kyoto Protocol compliance equation are shown in Figure I.

Figure I: Changes to the estimates since 2007

Figure I shows where each change in the net position deficit since the 2007 estimate has occurred.

Transport

-8.8

Change in projected emissions

Removals via sinks

5.1

Change in projected removals

Agriculture

-4.7

Change in projected emissions

Deforestation

-4.1

Change in projected emissions

Deforestation without 2007 cap

-24.1

 

Stationery energy

-0.4

Change in projected emissions

Industrial processes

-0.2

Change in projected emissions

AAUs allocated to projects

-0.5

Change in projected emissions units

Assigned amount units

less than 0.1

 

Waste

+0.2

Change in projected emissions

The blue arrow represents the reduction in the deficit.


Note: In 2007, projected deforestation emissions, in the absence of any policy intervention, was 41.0 million tonnes carbon dioxide equivalent. In 2008, emissions from deforestation are projected to be 16.9 million tonnes carbon dioxide equivalent. Projected emissions from deforestation have fallen by 24.1 million tonnes carbon dioxide equivalent compared to the 2007 net position report. 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.

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 this report.

  1. 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 (MED 2008, included here as Appendix B).

  2. 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 now 1.7 million lower than in the 2007 projection (MAF 2008a, included here as Appendix A).

  3. 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 (MAF 2008b, included here as Appendix C) explains that the emissions from deforestation may be higher (not quantified) if government decisions at the time of the projection (15 April 2008) are not fully implemented.

  4. 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 by AEA Technology in 2007. The method now combines all factors affecting projected removals in a single model rather than treating each factor separately (MAF 2008b).

  5. 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 (MED 2008).