You are here:
Publications 
Climate Projected Balance of Emissions Units During the First Commitment Period of the Kyoto Protocol Online version
4 Projected Emissions over the First Commitment Period of the Kyoto Protocol
4.1 Projected balance of units
As at May 2007, New Zealand’s net position is projected to be in deficit by 45.5 million units over the first commitment period of the Kyoto Protocol (Table 2). Three scenarios are used to quantitatively assess uncertainty about the projection for each sector. The variables used in the scenarios represent the best available knowledge as at the time of projection. The most likely scenario represents what is considered the most likely outcome of projected emissions for each sector, and removals via forest sinks. It is highly unlikely that all upper or all lower outcomes will occur together.
The Ministry of Agriculture and Forestry has provided a most likely scenario for deforestation of 21.0 million tonnes carbon dioxide. This scenario is based on the government’s current policy to cap the Crown’s deforestation liability for pre-1990 forests at 21.0 million tonnes carbon dioxide. A deforestation survey undertaken in 2006 indicated that deforestation is likely to exceed the 21.0 million tonne cap in the absence of policy interventions under current market conditions. The 2006 deforestation intention survey indicated that forest owners currently intend to deforest about 50,000 hectares during the first commitment period of the Kyoto Protocol. This area would generate deforestation emissions of approximately 41.0 million tonnes carbon dioxide.
If the upper deforestation scenario of 41.0 million tonnes carbon dioxide is used in determining the deficit on the Crown’s accounts the deficit will be 65.5 million units.
Table 2: Projected balance of emissions units over the first commitment period (million emissions units)
View projected balance of emissions units over the first commitment period (large table)
Total emissions of greenhouse gases for the Kyoto Protocol commitment period are projected to be 405.4 million tonnes carbon dioxide equivalent. The total for modelled projections of emissions over the first commitment period equates to average annual emissions of 81.1 million tonnes carbon dioxide equivalent (Figure 2).
Figure 1 shows the change in average annual emissions from 1990 to 2010 by sector and in total. The average annual value of the net position during the first commitment period of the Kyoto Protocol (2008–2012) is also shown, and includes an estimate of the average annual value of units awarded under the Projects to Reduce Emissions (PRE) programme.
Emissions projections for each sector are based on detailed sectoral modelling. A simple linear extrapolation of total emissions has been included in Figure 2. This extrapolation projects total annual emissions to be 81.7 million tonnes carbon dioxide equivalent. This is close to the modelled projection for total annual emissions and provides some assurance of the validity of the modelling process for projecting total national emissions (excluding deforestation).
Figure 2: Projected emissions for 2010, total emissions reported in the national inventory from 1990–2005 and a linear extrapolation of previous emissions
Table 3: Projected emissions of gases and sources listed in Annex A of the Kyoto Protocol over the first commitment period (million tonnes carbon dioxide equivalent)
|
Upper |
Most likely scenario |
Lower |
|
|---|---|---|---|
|
Emissions |
|||
|
Projected aggregate emissions |
405.4 |
||
|
Energy (excluding transport) |
103.0 |
92.8 |
86.1 |
|
Transport |
84.7 |
80.1 |
76.7 |
|
Industrial processes |
22.3 |
22.2 |
22.1 |
|
Solvent and other product use |
0.3 |
0.3 |
0.3 |
|
Agriculture |
228.3 |
203.1 |
180.0 |
|
Waste |
7.3 |
7.0 |
6.7 |
Note: 1 million tonnes is equivalent to 1,000 gigagrams.
4.2 Assumptions
Model inputs and outputs are co-ordinated across departments to provide consistency with the assumptions. For example, the Ministry of Agriculture and Forestry’s dairy herd projections are an input to the Ministry of Economic Development’s energy demand module for dairy processing.
In previous years, macroeconomic assumptions such as economic and demographic change were based on Treasury’s Half Yearly Economic and Fiscal Update.
These assumptions were formulated in November 2006. Since then, agricultural commodity prices have changed significantly. On 23 May 2007, as a result of rapidly changing and buoyant international prices for dairy products, Fonterra announced an increase in the payout to its dairy farmers for milk solids of 27 per cent. This increase, along with changes in other agricultural commodity prices, was expected to make a material difference to projections of livestock numbers and hence possible total emissions.
A decision was made to make use of the newer price and exchange rate assumptions (as in the Ministry of Agriculture and Forestry’s Situation and Outlook for New Zealand Agriculture and Forestry publication and Treasury’s Budget Economic and Fiscal Update) to derive livestock projections and agricultural emissions. The forecast in total agricultural emissions did not change significantly as the increase in dairy cow numbers due to the high dairy payout was offset by a decrease in the sheep flock.
The deficit of emissions units is calculated using crown accounting standards and does not include the effects of policies that have not been agreed through Cabinet by the end of April 2007. Policies included in this net position report include the biofuels sales obligation and the solar hot water programme. The effects of the Projects to Reduce Emissions programme on the net position are modelled as part of the energy emissions projection by the Ministry of Economic Development, using their Supply and Demand Energy Model (SADEM).
4.3 Accounting for uncertainty
Projections of emissions and removals via sinks are broken down by sector (Table 2). The net position compliance equation as described in Section 3 is also calculated in Table 2. The projections are estimates of future values and are inherently uncertain. The projected net position is expected to continue to change every year when the net position is updated. To accommodate this uncertainty upper and lower emissions projections have been provided for each sector. The uncertainty is shown by each sector in Figure 3. The bars in Figure 3 show the range between the upper and lower emissions scenario outcome. Bars to the left of the zero axis show the range between the most likely scenario and the high emissions scenario for each sector. Bars to the right of the zero axis show the range between the most likely scenario and the low emissions scenario for each sector.
-
Agriculture: upper and lower emissions projections for the first commitment period are based on variations in commodity prices combined with high and low emissions factors for dairy cattle, beef cattle, sheep and deer.
-
Energy transport and industrial process: upper and lower emissions projections for the first commitment period are based on variations in macroeconomic factors, levels of production and consumption, and outcomes of policy measures.
-
Net removals from land use, land-use change and forestry: upper and lower projections for the first commitment period are based on variations in future deforestation and afforestation rates. In addition, upper and lower projections are calculated to allow for measurement and scientific uncertainty.
-
Waste emissions: upper and lower emissions projections for the first commitment period are based on variations in the outcome of existing waste minimisation and management policies.
It is highly unlikely that all upper or all lower situations will occur together. In previous net position reports (May 2005 and May 2006) a repeated sampling technique (also known as a Monte Carlo simulation method) was used to quantify the uncertainty about the most likely outcome.
A Monte Carlo simulation method was applied by the Ministry for the Environment in the 2005 and 2006 net position reports to weight the uncertainty from each sector to total uncertainty in the net position. There is debate as to whether the Monte Carlo method is suitable tool for modelling emissions projections uncertainty for New Zealand, because of the limited number of modelled projections and because there are unknown factors such as the result for land use, land-use change and forestry where the end result will have a dominant effect on the final net position.
The AEA Technology review team, reviewing the 2007 net position have been asked to provide guidance on how best to treat this uncertainty.
4.4 Reconciliation with 2006
Table 4 compares the net position from May 2005, the interim update to the net position reported in the Crown Financial Statements in December 2005, the May 2006 net position and the current estimate of the net position for 2007.
Table 4: Reconciliation of previous projections of the most likely balance of emissions units (million tonnes carbon dioxide equivalent)
Emissions projections in some sectors are higher while other sectors are lower; however the net effect is that emissions are projected to be higher during the first commitment period than reported in the Crown Financial Statements since May 2006. Figure 4 tracks the changes to the net position by component and shows how changes in each component have affected the final net position value since the May 2006 net position report.
