Leaving toothless Kyoto loses little

CHALKIE

Last updated 05:00 28/11/2012

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OPINION: Facts, to a politician, are ammo, best written out on a piece of paper, scrunched up and thrown across the floor of the House at opponents.

The receiver, as is the custom, will never unwrap the projectile to read the fact, and instead will apply a pre-chewed wad of additional factoid to the scrunch before returning fire.

A game of spitball follows.

This is all good fun in a primitive sort of way, but not necessarily enlightening.

Take the tit for tat over the Kyoto Protocol, for example.

On November 9, the Government said it would not sign up to the second commitment period of the Kyoto Protocol, which begins in January and runs until 2017 or 2020, depending on what is agreed at a UN conference taking place in Doha.

The Kyoto Protocol is generally seen as the only international binding agreement to reduce greenhouse gases, limit global warming and cut catastrophe off at the pass, so ending New Zealand's involvement next month looks like a major blot on our green credentials, not to mention bad news for the planet.

The Labour Party called it a "day of shame", the Green Party railed about broken promises and New Zealand not doing its fair share.

Chalkie can see why the Kyoto decision makes good political ammo, but the flying spitballs don't tell us much about what's really happening.

Figuring out what's happening with the Kyoto Protocol is like cleaning the stables of Augeas - just when you think you're making progress you find a whole heap more dung to deal with.

However, after wading through the sludge, Chalkie has some ideas about how it's going. The short version is that, in or out of Kyoto, New Zealand has nothing to crow about in the war on warming, binding commitments are nothing of the kind, and political expediency rules.

Let's look at our greenhouse gas emissions, for example. The Kyoto Protocol, an international deal arising from the United Nations Framework Convention on Climate Change, requires certain countries to meet emissions targets between 2008 and 2012. In aggregate, the target is a 5 per cent reduction on 1990 levels. The 1990 total was 12.6 billion tonnes of CO 2 equivalent, gross, so the target for the 2008-12 first commitment period was five times that, less 5 per cent, or about 60.4 billion tonnes.

As we approach the end of 2012, it is apparent that meeting this target will be a piece of cake. According to UN data, in the three years from 2008-10 the Kyoto group has emitted about 6.1 billion tonnes less than its target level.

Those figures don't include the effect of what the UN calls "land use, land use change and forestry", which generate a further small benefit through the consumption of CO 2 by trees.

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So hooray, we're doing really well, right?

Well, no, not really.

For a start, those numbers are just for the 37 countries with commitments under the protocol, so they don't count India, China and the United States - basically the world's biggest polluters.

It's also clear that some countries - Russia and Ukraine in particular - had it easy because their smokestack industries peaked in the late 1980s and were going to make big cuts anyway. Those two alone have emitted about 5 billion tonnes less than their target so far (assuming the measurements are accurate).

This surplus of carbon credit is a problem. It hugely reduces the market price of tradeable carbon credits and thus the value of projects designed to cut emissions; and because if the surplus rolls over into the next commitment period, which starts next year, it will distort the economics of the Kyoto system for years to come.

But how does New Zealand fit in?

The Government's announcement this month noted we are on track to achieving our emissions target under the protocol, which is 309.6 million tonnes of CO 2 equivalent emitted between 2008 and 2012 - ie, an emission level unchanged since 1990.

"Indeed we are forecasting a projected surplus of 23.1 million tonnes," Climate Change Minister Tim Groser said.

This is so. However, if you were to therefore conclude our greenhouse gas emissions had gone back to 1990 levels, or better, you would be wrong.

In fact, our emissions in 2010 - the latest full-year figures available from the UN - were 60 per cent higher than in 1990 - easily the worst performance of the 37-country peer group.

The discrepancy arises because of the way emissions are measured for Kyoto purposes. In essence, the 2008-12 figures include the net benefit from forestry sinks and so on, while the 1990 base figure used in Kyoto targets does not, thus allowing New Zealand to compare apples with bananas and claim an improvement.

However, when you compare apples with apples - net figures with net figures - we have gone backwards in a big way.

Presumably dairying is the main culprit for our gaseous maximus.

Wrong again.

According to New Zealand's Greenhouse Gas Inventory, agricultural emissions in 2010 were 33.7 million tonnes, 9.4 per cent higher than in 1990.

Energy emissions were 31.1 million tonnes, up 32.6 per cent on the 1990 level.

The trend looks the same in absolute terms, with agriculture up 2.9 million tonnes compared to energy up 7.6 million.

So, since we are putting a price on the growth in emissions since 1990, energy is a much bigger issue than agriculture. The energy increase, incidentally, is mostly due to cars and trucks.

But perhaps we shouldn't fret too much. After all, the Kyoto Protocol was intended as a mechanism to reduce aggregate emissions - individual states are free to exceed their targets, but they must pay a penalty if they do.

Well, that's the theory. In practice, it seems only schmucks pay penalties.

Those nice Canadians, for example, were heading for a major carbon blowout - UN figures show in 2010 their emissions were tracking about 440 million tonnes in excess of target and the full liability was expected to be billions of dollars - so they simply said "we're not playing any more" and withdrew from the Kyoto agreement a year ago.

By Chalkie's estimate, no other country faces a significant carbon liability for the first commitment period.

The few with modest carbon excesses will find the potential impact reduced by the low cost of carbon credits, currently about € 1.10 (NZ$1.74) a tonne. The low price is partly because of the flood of credits from Russia and Ukraine, as well as the the use of Clean Development Mechanism credits, which come from projects in developing countries.

Or they can defer the liability to the end of the second commitment period by copping a penalty in the form of a smaller allocation of credits for the next round.

Which brings us back to the business of the second commitment period.

If New Zealand had stayed with the protocol from 2013, its proposed target was to cut emissions to between 10 and 20 per cent below 1990 levels (under the dubious apples and bananas comparison noted above).

Instead, it has said it will pursue the same target under the UN Framework Convention on Climate Change.

The main difference between the convention and its Kyoto protocol, according to the UN, is that the convention "encourages" countries to stabilise greenhouse gas emissions, while the protocol "commits" them to do it.

Canada has shown the supposed distinction doesn't exist.

Furthermore, New Zealand's emissions trading scheme will continue to function, so the main policy measure - for what it's worth - remains in place. Chalkie reckons not being in Kyoto after this year simply means taxpayers aren't on the hook for failing to meet the target, although, as we've seen with Canada, the hook has no barb anyway.

So will the decision to quit Kyoto after this year make much difference? Probably not.

It seems what happens now is that the world's nations will try to come up with a new binding agreement by 2015, to begin in 2020.

It will be better than the Kyoto Protocol, they hope, because it will include the likes of China, India and the US.

On past form, Chalkie expects every country will solemnly commit to as little as possible while doing their best to tilt the playing field in their favour.

It's international spitball.

Chalkie is written by Fairfax Business Bureau deputy editor Tim Hunter.

- BusinessDay.co.nz

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