Today's Business View columnist is John Pfahlert, executive officer with the Petroleum Exploration and Production Association of New Zealand.
Column: Business view
The headlines in the press last week read "2020 vision - drop emissions by 10 to 20 per cent".
Business NZ has described the target as "striking a sensible balance".
The Greenhouse Policy Coalition said the target was "challenging". Predictably the Green group, such as Greenpeace, is unimpressed with the targets set by Nick Smith and his colleagues.
So what are we now committed to?
The Government has set a target of 10 per cent to 20 per cent reductions in greenhouse gases based against a 1990 base year.
The commitment is highly conditional on a global agreement being secured that limits equivalent carbon dioxide (CO2-e) to 450ppm and temperature increases to 2 degrees Celsius, effective rules on forestry, and New Zealand having access to international carbon markets.
The target is going to be a big ask for New Zealand because our gross emissions are 24 per cent above 1990 levels. On top of this, half our emissions come from agriculture, unique among developed countries (and for which we have no response), and we already have one of the highest proportions of renewable electricity.
While forestry planted in the 1990s is offsetting the increases in our gross emissions, the age of our trees means it will not be the case in 2020.
Mr Smith has said that the target range of 10 per cent to 20 per cent reduction from 1990 levels is comparable to Australia's, taking into account conditionality, different base years, our lower GDP, and our higher costs of abatement.
The Australian position is that it has committed to a 4 per cent unilateral reduction; or a 14 per cent reduction conditional on emerging nations such as China and India committing to make reductions post 2012; or a 24 per cent reduction conditional on an adequate global agreement being achieved at Copenhagen.
By comparison, New Zealand is prepared to take on a responsibility target for greenhouse gas emissions reductions of between 10 per cent and 20 per cent below 1990 levels by 2020, conditional on a comprehensive global agreement being negotiated at Copenhagen this year.
The global agreement sets the world on a pathway to limit temperature rise to not more than 2C.
Developed countries make comparable efforts to New Zealand's.
Advanced and major-emitting developing countries take action commensurate with their respective capabilities.
There is an effective set of rules for land use, land-use change and forestry.
There is full recourse to a broad, efficient international carbon market.
The Government has said that New Zealand will meet its 2020 target through a mixture of domestic emission reductions, the storage of carbon in forests, and the purchase of emission reductions from other countries.
No-one seriously believes in a global agreement being reached at Copenhagen. Even our negotiators have been saying that there isn't a snowball's chance.
The best that people are hoping for is some lesser agreement in the year or two after.
I suspect that the closer nations get to 2012, the less likely any form of global agreement will be.
Indeed, perhaps the best that can be hoped for are a range of bilateral, or nation-state commitments.
What has surprised me most is the muted response to the costs of the new target by consumer groups.
Assuming that we hit the mid point of a 15 per cent reduction, economic analysis shows this will impose a cost on each New Zealander of $1400 a year, or $5600 per household of four.
This is only 10 years away.
If a government proposed personal income tax increases like this they would be thrown out of office.
Why the muted response?
Perhaps no one really believes that when push comes to shove the Government will actually do anything.
In the absence of a global agreement New Zealand hasn't committed itself to do anything - it's all conditional on concerted action which is being taken globally.
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