The maximum amount of emissions (measured as the equivalent in tonnes of 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. This is specified in Kyoto Protocol Article 3.1 and Annex B to the Kyoto Protocol (see Box 1 on page 6).
Parties may increase their assigned amount by removing greenhouse gases from the atmosphere by carbon sinks in the land use, land-use change and forestry sector. Mandatory activities in the land use, land-use change and forestry sector are afforestation, reforestation and deforestation since 1990 (Kyoto Protocol Article 3.3). Forest management, cropland management, grazing land management and revegetation are voluntary for the first commitment period (Kyoto Protocol Article 3.4). New Zealand did not elect any Article 3.4 activities. The removal of greenhouse gases from the atmosphere through eligible sink activities minus any harvesting and deforestation emissions generates removal units (RMUs). Removal units are popularly known as carbon credits.
An Annex I Party to the Kyoto Protocol must hold sufficient assigned amount units (AAUs) 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 excess emissions through the Kyoto Protocol’s flexibility mechanisms. Flexibility mechanisms include the Clean Development Mechanism, Joint Implementation, and trading of units between Annex 1 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 may be simplified as shown in Figure 3.
The net position over the commitment period is based on projected emissions, New Zealand’s assigned amount, the projected removal units, and emissions units promised to other agents – for example successful tenders in the Projects to Reduce Emissions programme.
The New Zealand has promised to provide assigned amount units to projects under its programme Projects to Reduce Emissions. The net position accounts for units promised to these projects by subtracting them 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.
2.1 New Zealand’s assigned amount
New Zealand’s assigned amount is fixed as 309,564,733 metric tonnes carbon dioxide equivalent (this equates to 309.6 million assigned amount units). 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 1995). These units are lodged in New Zealand’s emission unit registry operated by the Ministry of Economic Development. The assigned amount is based on the estimates of emissions for 1990 from the inventory 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 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 2008 inventory submission is 0.03 million tonnes carbon dioxide equivalent higher (less than 0.1 per cent) than the 1990 level used in the assigned amount calculation.
“The Parties included in Annex I shall, individually or jointly, ensure that their aggregate anthropogenic carbon dioxide equivalent emissions of the greenhouse gases listed in Annex A [to the Kyoto Protocol, refer below] do not exceed their assigned amounts, calculated pursuant to their quantified emission limitation and reduction commitments inscribed in Annex B [to the Kyoto Protocol, refer below] and in accordance with the provisions of this Article, with a view to reducing their overall emissions of such gases by at least 5 per cent below 1990 levels in the commitment period 2008 to 2012.”
(Kyoto Protocol 1997)