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4 Projections uncertainty

 

Projections are estimates of future values and are inherently uncertain. To accommodate this uncertainty, upper and lower emissions projections are included for each sector. The uncertainty range for each sector is shown by each sector in Figure 10. The projected net position is expected to continue to change each year when the net position is updated as a result of new policies and new information such as oil prices. The high and low estimates for each sector are reported in Table 2.

The total range of uncertainty summing across all sectors has decreased from 156.7 million tonnes carbon dioxide equivalent reported in the 2007 net position report to 138.7 million tonnes carbon dioxide equivalent.

  • Agriculture: upper and lower emissions projections for the first commitment period are based on variations in commodity prices used to project future animal numbers combined with high and low changes in productivity, of cattle, sheep and deer. The uncertainty is high for animal numbers because the 95 per cent variance is used for the last 10 years of product prices. There was a substantial jump in prices for milk solids, which increases the 95 per cent confidence interval hence greater uncertainty, compared to the 2007 projection.

  • Stationary energy transport and industrial processes: upper and lower emissions projections for the first commitment period are based on variations in macroeconomic factors, levels of production and consumption, and policy measures.

  • Net removals from land use, land-use change and forestry: upper and lower projections for the first commitment period are based on future deforestation and afforestation rates. The largest source of uncertainty is due to information and scientific uncertainty. The uncertainty attributable to the values for forest sinks will continue until the Land Use and Carbon Analysis System (LUCAS) being developed by the Ministry for the Environment becomes operational. LUCAS will use satellite mapping to more accurately locate forests. This is a requirement of reporting Article 3.3 sinks under the Kyoto Protocol. Presently the sink estimates are based on a postal survey of forest owners, known as the National Exotic Forest Description.

  • 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 have fallen 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) explains that the emissions from deforestation may be higher (but not quantified) if government decisions at the time of the projection (15 April 2008) are not fully implemented.

  • 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 practices.

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 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.

Table 2: Projected net position over the first commitment period (million emissions units)

  Upper emissions scenarios Most likely scenarios Lower emissions scenarios

Projection of Assigned Amount Units

Stationary energy

105.7

92.4

82.6

Transport

73.5

71.3

69.7

Industrial processes

22.1

22.0

21.9

Total energy and industrial processes

201.3

185.6

174.1

Solvent and other product use

 

0.2

 

Agriculture

227.6

198.5

173.4

Waste

7.5

7.2

6.9

Projected aggregate emissions

 

391.5

 

Projection of Removal Units

Removals via forests

64.2

84.1

107.3

Deforestation emissions

30.5

16.9

16.9

Net removals via forests

33.7

67.2

90.4

Note: One emissions unit is equivalent to one tonne of greenhouse gas emissions converted to carbon dioxide equivalents by their global warming potential (IPCC 1995).

Figure 10: Uncertainty ranges by sector (million tonnes carbon dioxide equivalent)