New Zealand’s double dealing and special pleading over the second Kyoto Protocol period: part the second

As the New Zealand Government decided not to join a second commitment period of the Kyoto Protocol, today is the last day New Zealand has an international greenhouse gas obligation. To mark the end of the Kyoto first commitment period, Robin Johnson's Economics Web Page provides the second of two posts on New Zealand's Kyoto opt-out.

Is New Zealand's Minister for Climate Change Issues Tim Groser a Kyoto pariah? Or a Kyoto visonary? A global emissions reduction emissary or is he tar-sanded with a Canadian brush? I once more try to make sense of New Zealand's double dealing and special pleading over the Kyoto Protocol second commitment period and the Doha hooha. This time with the aid of the man himself. Tim Groser has written an opinion editorial in the New Zealand Herald.

Tim Groser, New Zealand's most forthright Minister for Climate Changes, has a shocker of an Op Ed in the New Zealand Herald.

When I first read it, I wrote down my responses to what seemed the most misleading claims. The headline shocker is that either Tim Groser is so out of touch with his portfolio that he has no idea what the current price of carbon in New Zealand, or he is so incompetent that he can't tell US dollars from NZ dollars.

But there are shockers for all of us. I present Groser's quotes in italics and in indented blockquote format, followed by my response in plain text and no indents.

TG: "It's time to move past Kyoto agreement"

Canada o Canada. Groser is channelling Canadian Minister of Environment Peter Kent "Kyoto for Canada is in the past."

TG: "The unrelenting emphasis (on Kyoto) has sucked energy out of debate, diverting attention from the real problem."

This is a classic PR spin tactic of diversion. Groser wishes to divert attention towards the USA, China and India and away from New Zealand's double dealing.

TG "The science, as I interpret it, remains pretty clear"

Yes, Tim Groser does not deny the science, it's just that National and Mr Groser have no intention acting domestically in any way consistent with the science. Perhaps that makes him a 'policy denier'

TG "The international community needs to develop a more robust approach involving far more of the major emitting countries. Whatever New Zealand does will be completely irrelevant unless the major emitters participate."

Canada o Canada "We support a new international climate change agreement that includes commitments from all major emitters. That is the only way we are going to achieve real reductions and real results" Canadian Minister of Environment Peter Kent.

TG "some of the confusion has been deliberate"

Ah the old fifth column within, the extreme green economic traitors, those awkward truth telling ecologists like Mike Joy, Ha I can just find some with other opinions.

TG "First, the ETS has not been "gutted" by the changes passed recently in Parliament"

No, because the NZETS was "gutless" from day 1, as it has no cap, and it always allowed unlimited importing of international units. In 2012, National did defer indefinitely agriculture's entry and extend indefinitely the provisions for half-price emissions for emitters (2-for-1 deal).

TG "No New Zealander - no household, no company - has to pay more, or subsidise anyone because of this decision"

Except New Zealand Aluminium Smelters Limited and Norske-Skog Tasman.

TG "Our top priority is to strengthen the recovery in extremely difficult international economic times."

That really means Groser's top priority always was to have an emissions trading scheme with a more-or-less zero carbon price.

TG "the (NZETS) legislation was, in effect a , a one-way bet taken on the last day of the Labour Government's life in 2008 that the 2009 Copenhagen Summit would deliver a 'single, comprehensive and ratifiable climate change agreement' (the political mantra of the day)."

That statement is a totally revisionist Chairman Mao-like rewrite of history to suit a political agenda. The staggered entry of sectors dates back to Helen Clark's MOU with agriculture signed after the Belch Tax debacle. It also reflects political lobbying by Business NZ and the need to find votes of support from Peter Dunne to get the legislation passed.

TG "We no longer have to pass amending legislation to avoid an automatic ramping up of the scheme, irrespective of either economic conditions or international progress."

By saying this Groser lets us know that for National the delayed entry dates and the apparent all-sectors design were a "Potemkin village". National never had any intention of bringing agriculture into the NZETS.

TG "At current low international carbon prices - they move around but they are clustered around $5 - there is indeed little petrol in the ETS tank. But that is exactly the way it was designed - to be aligned to world prices, whatever world prices are, up to a cap"

To me this is so gobsmacking it's...Hekia Parata. Groser has no idea what the current NZ carbon price is! Groser can't even read the price of a New Zealand unit (NZU) off the Bloomberg website without confusing US dollars and NZ dollars. What an idiot!

Here is the chart Groser can't read

The NZU price is NOT "around $5" Its around $NZ2.50/tonne

So Tim Groser says the NZETS is designed to import the international carbon price and thats a good thing. If it is so good being wedded to international prices, why has he taken us out of the Kyoto Protocol second commitment period?

TG "The domestic political debate has confused the structure of the policy with the international drivers of the carbon price."

Thats just adding insult to financial injury to the Kyoto forestry sector where some have has lost 80% of the value of the post-1989 Kyoto forests. It's a double blow, as the Government is keeping forestry removal units (earned for the same forests) to itself to fudge the Kyoto net position.

TG "watch what happens to the carbon price when the international recession is over and the EU moves to strengthen carbon markets and, hopefully, more countries start adopting carbon policies. You will then hear, no doubt, the exact opposite of the current political debate. Foresters will be happier as the carbon they sequester becomes more valuable (paper profits unless they sell them) and emitters will be less happy as they pay a higher carbon price."

Thanks for lecture on prices, Tim. By the time the Eurozone has dealt with the over-allocation their carbon markets, and if they ever do, it will be way past 2015 or 2016, and New Zealand won't even be in Kyoto's second commitment period and Tim Groser will probably have canned the NZETS by then anyway!

TG "NZ continues to make remarkable progress in increasing the share of our electricity coming from renewable energy - it is 77 per cent and climbing."

Tim Groser is taking credit for past Ministry of Works hydro projects. Does he really think the public are so stupid as to see that argument as in any way relevant to climate change mitigation? Meanwhile the younger generation are calling for the power shift to 100% renewable electricity. How long until Groser calls them 'extreme greens'?

TG "So is this a great time to put new costs on our major exporting industry when we have a huge need to increase our exports?"

I could say how else could a carbon price work if it is not a real cost? How can any NZ carbon price policy be effective if half the economy is out? This is Groser's and National's real policy bottom-line. Exports uber alles! Exports above all else! National truly and obviously have no intention of pricing New Zealand's domestic greenhouse gas emissions.

TG "Our agriculture sector is, by and large, the most carbon efficient agriculture sector in the world."

Thats very Bruce Wills of him. So agriculture will be fine with a no-exceptions emissions trading scheme or carbon tax.

TG "This is the Global Research Alliance on Greenhouse Gas Emissions, which we lead."

Great but what pays for it? Thats right, taxpayers. So that's a subsidy, then. Having agriculture in the emissions trading scheme would help pay for it.

TG "A few days ago we joined another international initiative on climate change - the Climate and Clean Air Coalition"

Great! so now we mitigate climate change by friending someone's Facebook page. I think I will let William Nordhaus know he doesn't need to run carbon pricing on the DICE global model anymore as it's all on Facebook.

TG "It is time to move beyond Kyoto and find a solution that can have a real environmental impact."

Canada o Canada. "Kyoto for Canada is in the past..","Copenhagen and Cancun agreements, which were negotiated in 2009 and 2010 as the world stared down the end of Kyoto, are the future." Peter Kent, Canadian Minister of Environment.

TG "We are on track to meet or exceed our Kyoto commitment to 2012."

Only because of the "Kyoto escalator" of the gross 1990 baseline for the net target forest fudge.

From 1990 to 2010, New Zealand's gross emissions grew by 20%, from 60 million tonnes (mt) to 72mt. Net emissions grew by 59% (from 32mt to to 52mt (data New Zealand's Greenhouse Gas Inventory 1990-2010) So both gross and net greenhouse gas time series show a relentless upward trend.

So for my conclusion, I might just recycle some from a previous post. But with one difference.

1. When we hear Tim Groser talking of focusing on a global climate solution that involves 86% of the emitters that can have a real environmental impact, we now know he is just recycling speech notes from Canadian Minister Peter Kent and diverting attention from New Zealand's policy shambles.
2. Tim Groser and National have absolutely no intention doing anything domestically to reduce emissions of greenhouse gases.
3. Tim Groser and National also have absolutely no intention of imposing any real carbon price on New Zealand's industrial and agricultural emitters.

New Zealand’s double dealing and special pleading over the second Kyoto period: part the first

As the New Zealand Government decided not to join a second commitment period of the Kyoto Protocol, today, the 31st of December 2012 is the last day New Zealand has an international greenhouse gas obligation. To mark the end of the Kyoto first commitment period, Robin Johnson's Economics Web Page provides the first of two posts on New Zealand's Kyoto opt-out.

Is New Zealand Climate Change Minister Tim Groser a Kyoto pariah? Or a Kyoto visonary? Is he a global emissions reduction emissary or is he tar-sanded with a Canadian brush? I try to make sense of New Zealand's double dealing and special pleading over the Kyoto Protocol second commitment period and the Doha climate change talks hoo-ha.

I am very confused about New Zealand's climate change policy since the Doha international climate change talks (COP18) and New Zealand opting out of a second period of the Kyoto Protocol back on 9 November 2012.

The Kyoto part two opt-out is described as a lose-lose decision that shuts New Zealand out of the Kyoto international carbon markets and is a shambles and a disgrace.

So I have a question for all readers.

If New Zealand Minister of Climate Change Tim Groser is serious about New Zealand's 2020 greenhouse gas target, why would he forego formally lodging the 2020 target into the existing Kyoto Protocol framework (where the national institutions and arrangements are already up and running), in favour of pledging to meet the target on a voluntary basis?

Let me break that question down into several parts.

1. Imagine you are the Minister for Climate Change in the government of a small developed nation.
2. This nation has signed an international treaty with a few other nations which states a short-term national target for emissions of greenhouse gases (GHGs).
3. This nation enacts the treaty by creating some new institutions; a national register for emissions units, national inventories of greenhouse gas emissions, national surveys of afforestation, and a process of reporting the predicted progress towards the national target.
4. The nation has adopted several policies relying on the treaty institutions; an emissions trading scheme, forest sink schemes, research alliances, and international trading of emissions units.
5. The nation has a second publicly stated medium-term target for reducing greenhouse gas emissions for the years following the expiry of the first target.

If you are serious about that second greenhouse gas emissions target, why would you pledge the target on a voluntary basis, when you could have formally lodged your target into the existing treaty (where the national institutions and arrangements already exist)?

Any answers? Anyone? Would you like to phone a friend?

Okay, here's a hint. The Parliamentary Commissioner for the Environment has said that New Zealand is on track to exceed the 1990 greenhouse gas baseline by 30% rather than meet the 2020 target of reducing greenhouse gases by 10 to 20% compared to 1990.

Figure 3.2 from page 18 of Parliamentary Commissioner for the Environment, “Lignite and climate change: The high cost of low grade coal”, December 2010. Data from MfE 2009. Fifth national communication under the United Nations Framework Convention on Climate Change, Ministry for the Environment, Wellington.

Now just because New Zealand's net emissions are likely to consistently increase through to 2020 doesn't automatically mean New Zealand would not meet the 2020 target if translated into a Kyoto second commitment period target. We could just buy extra emissions units from the international Kyoto carbon markets.

That is, if there was a sensibly designed emissions trading scheme. Such a scheme would be 100% "emitter pays", with emitters making their own market-based decisions to either reduce emissions or to buy the emissions units. Well we certainly don't have that.

So my conclusion is that it is not just that Tim Groser has absolutely no intention doing anything domestically to achieve the 2020 target of a 10 to 20% reduction in greenhouse gases. Groser and the National Government clearly have absolutely no intention of imposing any real carbon price on New Zealand's industrial and agricultural emitters.

Did anyone sign the Kyoto Protocol in good faith? New Zealand didn't.

Robin Johnson's Economics Web Page introduces the Kyoto Escalator chart (inspired by the Skeptical Science Escalator chart) and argues that New Zealand was just as complicit as the major European countries in negotiating the Kyoto Protocol so that they complied with it without reducing either gross or net emissions.

The Kyoto Escalator: New Zealand's Gross greenhouse gas emissions (blue) increase by 19%; Net emissions (brown) increase by 23% and 'Kyoto' emissions (red) are less than average 1990 gross emissions. Double click on the chart to see it at 100% and in good resolution.

Professor Dave Frame is the new director of the Climate Change Research Institute at Victoria University of Wellington. He is a University of Canterbury-trained scientist who has worked for some years in Britain. He has just joined the New Zealand climate change fray with a very interesting opinion editorial "International focus needed over climate" in Wellington's Fairfax-owned Dominion Post. Welcome to climate change issues back in New Zealand, David.

David Frame writes that New Zealand does not want to be thought of as the country that reneges on international treaties.

"Reputationally, accepting commitments and then failing to deliver on them is not a look New Zealand likes. "Doesn't honour the treaties it's signed" is not one of the few sentences we want people to remember about us."

So, yes, I agree, New Zealand should honour the treaties it signs. I hate to nitpick but, isn't New Zealand the country that was explicitly founded in 1840 on a treaty that was not honoured? Is our record on international climate change treaties any better?

David Frame describes the history of the Kyoto Protocol climate negotiations

"...the Kyoto Protocol was a no-win situation for places like New Zealand. In the 1990s Britain and Germany were reducing their emissions of greenhouse gases for non-climate-related reasons (declining manufacturing and the collapse of the coal industry in Britain; technological substitution in the case of post-reunification Germany)."

"Kyoto's structure, reductions of emissions by some specific fraction compared with 1990 levels, were designed with this in mind, since it allowed Europe to appear to "take the lead" without actually doing anything very different from what they were going to do anyway. It was an approach so clearly aligned with the near-term reputational interests of some stakeholders that the Nobel prize-winning strategist Tom Schelling wrote of it: 'I cannot help believing that adoption of such a commitment is an indication of insincerity'."

Frame believes New Zealand's negotiators were innocent parties who acquiesced in these machinations while Britain and Germany portrayed themselves as "leaders" on climate change, even though their emissions reductions basically consisted of doing what they were going to do anyway.

While I am a little disappointed that Britain and Germany acted in such a self-serving way, I don't doubt that David Frame is correct about their motives. However, I don't think he is correct to say New Zealand was innocent. On 31 October 2007, the then Minister of the Environemnt Simon Upton gave a speech about New Zealand's negotiating position three weeks before the UNFCCC meeting in Kyoto. All emphasis is mine

Upton stated that within New Zealand's negotiating position, using forest sinks to offset increases in emissions was just as important as the Protocol including international emissions trading, an all-gases approach and prompt acceptance of commitments by developed countries.

"Sequestration of carbon in sinks (such as forests) should qualify alongside emission reductions for the purposes of counting progress towards any targets that are agreed."

Upton contines.

"I want to say why sinks are important - spelling out in broad terms the economic benefits to New Zealand of counting sinks - and explain briefly how New Zealand considers they ought to be treated. Then I want to say why - even though the correct treatment of sinks is both fair in terms of the Convention, and good for New Zealand's economy - sinks nevertheless do not and cannot protect New Zealand emitters of greenhouse gases from adjustment."

"Adding to carbon stocks through afforestation should count positively; reducing stocks (through forest harvest, land clearance and such like) should count negatively."

"If - and I emphasise if - sequestration is treated in the way New Zealand has long been advocating, then the major contribution we expect to make to removing carbon from the atmosphere in future years will earn us 'credits'."

Upton and the New Zealand negotiators got what they wanted. Forest carbon sink credits were included as offsets. However, Upton provided several cautionary notes. If New Zealand's forest carbon credits were recognised in Kyoto, it may be perceived as special pleading. Also fairness suggested that forest owners should receive them, and be able to sell them. As opposed to the Government keeping them for compliance with Kyoto.

"New Zealand's stance on sinks has been treated with scepticism by some because, superficially, it looks as though it may be special pleading by New Zealand to take advantage of our sinks to reduce the pressure on emitters to make adjustments. We do not see it that way. New Zealand has been clear in responding to other countries that we do not see the accrual of sink credits as a way to insulate New Zealand from acting to reduce emissions. We see New Zealand's sink credits being an integral part of the international emission trading market. As such, we see New Zealand emitters facing the world price for carbon emissions provided that price is generated by a free market in emission permits."

"Let me now turn to a related question: why recognition of sinks nevertheless does not and cannot protect New Zealand emitters of greenhouse gases from adjustment. It might be suggested that New Zealand's interest in sinks stems purely from a desire to secure for itself a large buffer that would allow for significant growth in greenhouse gas emissions. That is not the case -- nor do I believe would it be credible to pursue such an objective."

"It would simply not be credible to advocate least cost tradeable mechanisms for the world and then seek to keep New Zealand's forest credits for domestic use only. Sequestration credits should accrue to the forest growers who earn them, and they should be free to place them on the world market."

So Simon Upton foresaw two problems with using the credits from forest carbon sequestration as a buffer to allow growth of GHG emissions. There was the reputational problem of New Zealand's insincere negotiating position in the Kyoto discussions. And there was the problem that the credits should accrue to the owners of the forests, not the Government.

New Zealand's climate change officials solved the "who's credits?" problem by inventing a new 'junk' currency to be issued to the commercial foresters instead of Kyoto units (and to buy off greedy emitters); the New Zealand Unit.

As we can see from the Kyoto Escalator graphic, in spite of gross greenhouse gas emissions increasing by 19% (blue line) and net emissions increasing by 23% since 1990 (brown line), New Zealand is on track to comply with the Kyoto accounting rules (the red line) as the 1990 start point is 'gross' and the 2008 to 2012 target is 'net'.

The real Kyoto forest carbon removal units were kept "off the balance sheet". In the New Zealand Greenhouse Gas Inventory 1990 2009 and in the Kyoto Protocol net position report, the carbon sequestration from 2008 to 2012 is estimated from forest surveys. The actual Kyoto removal units will not be recognised until after 2012. It is these as-yet unissued units that offset the 19% increase in New Zealand's gross GHG emissions since 1990.

It seems since Simon Upton's time, we have developed collective amnesia about intentionally negotiating the Kyoto Protocol so that we could rely on forest carbon sinks to buffer increases in greenhouse gases. Has any one of the Kyoto Protocol parties negotiated and acted in good faith? New Zealand certainly hasn't