2 Projected balance of units over the first commitment period of the Kyoto Protocol
The projected balance of units over the first commitment period of the Kyoto Protocol (2008-2012) is based on a straightforward comparison of the projected emissions, New Zealand's assigned amount units, the removal units generated from forest sinks and any liability from the Projects to Reduce Emissions policy (Table 1). In the following sections of this report, additional detail is provided on each of these components.
As at May 2005, New Zealand is projected to have deficit of units over the first commitment period of the Kyoto Protocol. The balance of units is projected to range between -11.3 Mt CO2e (95% CI) under an optimistic scenario and -62.6 Mt CO2e (95% CI) under a pessimistic scenario. The best estimate of the balance of units is -36.2 Mt CO2e.
Three scenarios are used to quantitatively assess uncertainty about the projection. 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, reductions from policy measures and removals via forest sinks. A pessimistic scenario comprises all pessimistic outcomes, i.e. high emissions from all sectors and low reductions from all policies and low removals from sinks. Conversely, the optimistic scenario shows a combination of all optimistic values.
It is highly unlikely that all pessimistic or all optimistic situations will occur together. The uncertainty around the projected balance of units is modelled using a Monte-Carlo simulation. The 95% confidence intervals around the mean are used to represent likely bounds to the pessimistic and optimistic scenarios (Table 1 and figure 1). Triangular probability distributions are used to transform the optimistic and pessimistic values into probabilities.
Table 1: Projected units over the first commitment period (CP1) (all figures Mt CO2e)
Pessimistic scenario |
Most likely scenario |
Optimistic scenario |
|
|---|---|---|---|
a. Projected emissions over CP1 |
434.0 |
401.7 |
377.1 |
b. Assigned amount units |
307.6 |
307.6 |
307.6 |
c. Emissions to be covered (b-a) |
-126.4 |
-94.1 |
-69.5 |
d. Removals via sinks |
41.8 |
70.9 |
90.8 |
e. Balance (c+d) |
-84.0 |
-22.6 |
22.0 |
f. PRE liabilities (e+f) |
-7.5 |
-7.5 |
-7.5 |
Balance of units (pure scenarios) |
-92.1 |
-30.7 |
13.8 |
Likely balance of units from simulations (95% CI around mean) |
-62.6 |
-36.2 |
-11.3 |
There is a range of 51Mt CO2e between the optimistic and pessimistic scenarios. This uncertainty reflects the difficulty in modelling the complex interactions of the New Zealand energy sector, projecting agricultural markets and animal productivity, estimating the success of the climate change policy package and predicting removals from forest sinks prior to the New Zealand Carbon Accounting System being operational. In addition, a review has highlighted a number of areas where significant improvements are required in the SADEM model used for CO2 emissions from the energy and industrial processes sector. It is intended that the issues with the SADEM model will be addressed progressively.
