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3 Net Position Compliance Equation

The maximum amount of emissions (measured as the equivalent in carbon dioxide) that an Annex I Party to the Kyoto Protocol may emit over the commitment period in order to comply with its emissions target is known as a Party’s “Assigned Amount”.

Parties may increase their emissions over their Assigned Amount by increasing the amount of greenhouse gases removed from the atmosphere by so-called carbon “sinks” in the land use, land-use change and forestry sector. However, only certain activities in this sector are eligible. These are afforestation, reforestation and deforestation since 1990 (Kyoto Protocol Article 3.3) and forest management, cropland management, grazing land management and revegetation (Kyoto Protocol Article 3.4). The removal of greenhouse gases from the atmosphere through eligible sink activities minus any deforestation emissions generate Removal Units (RMUs) commonly referred to as carbon credits.

An Annex I Party to the Kyoto Protocol must hold sufficient Assigned Amount Units (AAUs) during the first commitment period of the Kyoto Protocol to cover its 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 emissions through the mechanisms under the Kyoto Protocol’s flexibility provisions. Flexibility provisions include the Clean Development Mechanism, Joint Implementation and trading of units between Annex 1 Parties. The Kyoto compliance equation may be simplified as described in Box 2.

The projected net position over the commitment period of the Kyoto Protocol (2008–2012) is based on projected emissions, estimates of New Zealand’s assigned amount units, the projected removal units generated from forest sinks, and any emissions units allocated to projects such as those awarded under the Projects to Reduce Emissions programme.

Box 2: Kyoto compliance equation

Sum of all emissions from 2008 to 2012 from:

  • energy (including transport)
  • industrial processes
  • solvents and other product use
  • agriculture
  • waste

≤

5 times the emission in 190 (known as the assigned amount of AAUs)

Plus

Removals of carbon dioxide via forest sinks (RMUs)

New Zealand awarded assigned amount units4 to projects under its climate change programme “Projects to Reduce Emissions”. The net position accounts for awarded units by subtracting units awarded to projects from the Assigned Amount. The projected reduction in emissions from the Projects to Reduce Emissions programme are included in the emissions projections from the energy sector.

3.1 New Zealand’s assigned amount

Under the rules of the Kyoto Protocol, the inventory submitted with the initial report calculates the assigned amount. The initial report undergoes an in-country review. Once the international review is finalised and approved through the Kyoto Protocol Compliance Committee, New Zealand’s assigned amount is set for the first commitment period of the Kyoto Protocol.

New Zealand submitted its initial report on 31 August 2006. New Zealand’s in-country review took place in February 2007. The outcome of this review should be finalised during 2007.

The number of assigned amount units is equal to five times the emissions reported for New Zealand’s base year of 1990. The emissions in 1990 were 61.9 million tonnes carbon dioxide equivalent (rounded to one decimal place). Each emissions unit is equal to one tonne of greenhouse gas emissions, converted to carbon dioxide equivalents using the global warming potential for each greenhouse gas (IPCC Second Assessment Report, 1995). This equates to 309.5 million assigned amount units over the first commitment period.

4 Project participants have the option to request Emission Reduction Units (ERUs) in place of Assigned Amount Units.

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