New Zealand and the Kyoto Protocol

10 April 2001

Pete Hodgson Speech

New Zealand and the Kyoto Protocol

Climate change is in the news a lot these days.

So it should be. There are few challenges facing us that are more pressing or far-reaching.

I want to tell you that the Government fully accepts the seriousness of the climate change challenge and is committed to New Zealand playing its full role in addressing it at all levels - domestic, regional and international.

I am encouraged by the growing number of New Zealand companies that are taking a similar stance.

I don't plan to spend any time tonight focussing on the impact of climate change on the lives of New Zealanders. But I hope others do, because few issues will have such far-reaching, long-term implications for the way we live and go about our business.

I want to use this opportunity to talk about what has been happening in the negotiation of the Kyoto Protocol, where I believe it is heading and what the events of recent weeks may mean for the issue and for New Zealand.

Climate change is a global issue and as such it demands a global response. National level action is necessary but it needs to be in the wider context of international action. We can't be effective on our own.

That is why New Zealand, since international discussion of this issue began in the late 1980s, has been an active participant in climate change negotiations.

We worked hard in the negotiation of the Framework Convention on Climate Change and signed it at the Rio Earth Summit in June 1992. We moved quickly to ratify it. So, I note, did the United States.

The Convention contains clear obligations for all those that are party to it. More than 180 countries have ratified it, including all developed countries and all our Pacific Island neighbours.

No sooner was the ink dry on the Framework Convention than attention turned to an associated protocol that required developed countries to take legally binding commitments for the reduction of greenhouse gas emissions.

Starting in 1995 it took three years to get agreement on the level of those commitments. In Kyoto in December 1997 the text of the Protocol was finally agreed.

I'm told the negotiations were tense and uncertain to the very last moment. Jeanette Fitzsimons was there and no doubt has clear memories of that momentous occasion.

New Zealand was quick to sign the Kyoto Protocol, signalling our commitment to its purpose. So did most other parties to the Framework Convention, including the United States.

There have been questions recently about why the Protocol requires commitments to reduce greenhouse gas emissions from developed countries only, rather than all countries. The answer is simple : that was the agreement at the start of the negotiations on the protocol.

Why? For sound historic reasons. The vast majority of greenhouse gas emissions since the industrial revolution have been from today's developed countries. The wealth of OECD members is based, in large part on such emissions. So it was agreed back in 1995 that these countries should be the first to take commitments. The first countries, take note ? not the only ones.

The Protocol requires Annex 1 countries - 39 plus the EEC - to accept commitments. In total a 5.2 percent overall reduction would be achieved if all Annex 1 countries meet their commitments. New Zealand's requirement is a zero reduction on 1990 levels.

There is plenty of criticism that the global target is far too modest and that countries should have accepted far greater cuts. I don't share that view. To me the key objective is to get a process working that can be used in subsequent years to make the necessary progress.

Throughout negotiations on the Protocol the issue of developing country efforts to limit emissions has been a vigorously debated issue. It is certain to remain so. What is important to remember is that at this time developing countries are not required to take reduction targets in the first commitment period. What happens after that has yet to be negotiated.

Many developing countries have ratified the Protocol. Developed countries have not yet done so, and it is important for everyone to understand why.

The Protocol is a negotiation of vital significance to the global environment. It seeks progress towards repairing the atmosphere.

But it is also one of the most significant economic negotiations New Zealand has been involved with for a considerable time.

The legally binding commitments the Protocol would create for us have implications for almost all sectors of our society. Through its trading mechanisms it would also create substantial new property rights and enable New Zealand to gain significant economic benefit over a lengthy period.

That's why we are taking great care in negotiations to protect and advance New Zealand's national interests. So too are other developed countries.

The obligations and the opportunities of the Protocol differ greatly between countries. So each is working hard to ensure its interests are protected in the negotiation of what are effectively the rules by which the Protocol will operate..

It's hardly surprising then that the negotiation process has not been fast.

What we are trying to do is negotiate to the satisfaction of every country in the world a myriad of interrelated issues, and resolve them all simultaneously, by consensus.

Three years since Kyoto seems a long time, but getting the right mix of rules is never easy. Frankly if the Protocol wasn't so important the rules would have been agreed long ago.

When it comes to assessing the significance of the Protocol negotiation process, it's important to remember the opportunities the Protocol creates.

The development of an effective response to climate change is part of the international movement, especially in developed nations, towards sustainable economies. That is a change bringing huge growth in commercially valuable knowledge and technological innovation.

In the energy sector alone, for example, the imperative of reducing greenhouse gas emissions is stimulating the development and uptake of new transport and electricity generation technologies, such as hybrid vehicles and fuel cells. There is a new economy involved in reducing our reliance on fossil fuels and we should welcome the opportunity to be part of it.

I have spent a bit of time on the mechanics of the negotiation process to emphasise its very technical and very political nature.

To make progress in such a large and complex negotiation we have chosen to work in an informal group of countries that has become known as the Umbrella Group. We know in New Zealand from long experience that rarely can we hope to achieve what we need at the international level if we stand alone. This is certainly the case with climate change.

Avid followers of the negotiation process ? and I know there are some here ? know that within the developed country parties to the negotiations, the Annex 1 group, there is a clear division between Europe ? by which I mean the 15 members of the European Union and the eastern and central European nations that aspire to join it ? and almost all others.

We fit into the second category. So do Australia, Canada, the US, Iceland, Norway, Japan, Russia and Ukraine. The nine of us have, in negotiations in recent years, worked cooperatively together where a common interest has been identified. The development of effective rules for the efficient operation of the flexibility mechanisms of the Protocol, especially international emissions trading, is a key example of successful Group activity.

It is important to record that this group operates on common interests, rather than formal positions. It prides itself in working together, not being bound together. Where there are differences of view the Group does not seek to form a single position.

The use of nuclear energy within the Clean Development Mechanism is a good case in point. Within the Umbrella Group Japan and Canada and possibly now the US support nuclear CDM projects. We, Norway and Iceland are firmly against them. There are plenty of other examples.

Last month senior officials from each Umbrella Group nation met in Wellington for four days of technical and strategy discussions. The US participants set out their Administration's concerns about the state of negotiations. We, and others, reiterated the importance we attach to completion of the Protocol and the need for real progress to be made at the resumed COP6 session in July.

Last Wednesday I participated in a telephone conference call with other Umbrella Group ministers to review developments. Once again the senior US participant outlined his country's position on the Protocol, the Cabinet level review being conducted on climate change, and so on.

I joined other ministers in registering the importance we attach to cooperation with our Umbrella Group colleagues, our keen interest in learning the outcome of the US Cabinet review and our belief that the Kyoto protocol remains the basis for the international community to address the challenge of climate change.

We have made our position clear. It is well understood. New Zealand continues to support the purpose of the Protocol. We want to see it completed so that developed countries can move to ratification of it. We want to see it enter in to force.

I want now to turn to the recent announcements by the United States that it does not support the Protocol, that it finds it flawed by virtue of its current focus on binding commitments for developed countries alone rather than all countries and wishes to look afresh at how the issue of climate change can be tackled in a manner that does not harm US economic interests.

No one should be in any doubt that these are serious developments. They have implications for the negotiation process, which will only be clearly understood when we know what Washington proposes. The fact is that we won't know all we need to know until July.

I must say I am encouraged by the strong expressions of commitment to the Protocol negotiation process that have been forthcoming. No developed country has come out in open support of the US position.

Many, New Zealand included, have expressed their dismay and called for Washington to complete its review of the issues and come back to negotiations quickly and fully.

Yesterday afternoon I met the acting US Ambassador and repeated the message. Nations around the world are doing the same.

The United States, with about four percent of the world's population, is responsible for 25 percent of total CO2 emissions. So it is in everyone's interest that the US is inside the negotiation process.

The process of finalising the Protocol rests, however, with the much wider membership of the Convention, nearly all of whom strongly support the earliest completion of negotiations.

With this determination to continue the process, not to let it falter, I expect there will be regular contacts between ministers, officials and interest groups on Protocol issues between now and the resumption of negotiations in Bonn in July.

For me the next face-to-face international meeting will be in New York in about 10 days. Jan Pronk, the Dutch Environment Minister and president of COP6, is calling together about 40 ministers and senior officials from all groups and regions to discuss the way forward.

The coming weeks and months will be testing times for all those engaged in these negotiations. The issues that remain are the most difficult ones in a very complex, technical and highly political process.

Our negotiators and I will be working to get the best possible progress at the resumed session of COP6 in July. Some matters may need to be held over until COP7 in November but we want to see enough of those rules I spoke about before being finalised to allow us to stick with our goal of ratification by mid next year.

What is clear is that this approach is also shared by the EU15 and most of the Umbrella Group. There is a lot at stake.

There is one more issue I would like to comment on briefly before I finish. That is the concern I see coming from some quarters, particularly sector groups or organisations, that in planning to ratify the Protocol by mid 2002 the Government is exposing New Zealand's economy to inappropriate risk.

Let me be very clear. A core responsibility of Government is to manage the wide range of risks facing our country at any one time. Climate change, with its challenges and opportunities, is such a risk and this Government is committed to addressing it in a serious and responsible manner.

We will weigh very carefully the final outcome of negotiations on the Protocol. Before we can ratify it, it will need to be ratifiable - it will need to have within it a workable international emissions trading system, recognition of forest sinks and strong compliance provisions.

The development of policies to meet our obligations under the Protocol is being conducted openly and transparently. Considerable effort is being put into consultation with interested groups, because we recognise our obligation to explain what we are doing and why.

I encourage all of you to get involved. I will also make sure you know what is being decided, as soon as those decisions are taken.

We are committed to the objectives of the Protocol. We know that climate change must be addressed seriously and soon. What we also know is that we cannot do it on our own.

Nor will we achieve real results by actions that seriously harm our ability to secure sustainable economic growth for all New Zealanders. That's not our game. On the contrary, with a bit of careful planning our response to climate change can readily bring a net benefit to New Zealand. The converse, doing nothing, bodes ill for our nation.

The Government is determined that New Zealand will show international leadership on this issue. We will also champion environmental integrity for the Protocol. That's something of a hallmark of our contribution, and will remain so.

We will not put New Zealand business and employment at risk. I want to make that very clear. We will be addressing competitiveness effects and other impacts in our decisions on implementation.

As I have underlined, we are committed to consulting with interested parties. So let us work together in the months ahead.

Thank you.

ENDS

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