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CSC: NZ must not volunteer for another Kyoto

New Zealand must not volunteer for another Kyoto

by Hon Barry Brill

There are implications for New Zealand arising from United Nations Framework Convention on Climate Change (UNFCCC) that will get down to business for the 16th time in Cancun, Mexico next week. While packing their bags for their departure on Monday, the New Zealand Ministers, Tim Groser and Dr Nick Smith, need to pause to consider what will be in the best interests of we Kiwis whom they will represent. They know already, in advance, that no decisions of any consequence will emerge from Cancun. Rather than seeking to bask in international acclaim by supporting tiny steps toward an uncertain and not yet fully understood destination, they should lead a call for a review of the science to determine, once and for all, whether there are valid grounds for the computer-modelled hypothesis of dangerous warming being caused by human emissions of greenhouse gases.

Unless and until science can definitely confirm that hypothesis, there is no point in allowing money to continue dominating the agenda, as the 193 countries in attendance try to reach consensus on a Long-Term Co-operative Action (“LCA”) agreement to reduce greenhouse emissions.

More importantly for New Zealand, the meeting will also address a proposal that the Kyoto Protocol Annex 1 nations (“Kyoto Countries”) be charged with financial responsibility for further emission reductions after the Protocol expires in December 2012.

Of the 38 Kyoto Countries which originally ratified the Protocol, the European Union signed collectively on behalf of itself and its 27 members. Six of the remaining ten are also from Europe. Only a handful of non-European countries volunteered - Russia, Canada, Japan, and New Zealand.

Unusually, the Protocol allows all 27 full members of the European Union to be treated as a single bloc or ‘bubble’, so that the allocation of country commitments is an internal EU matter. The Protocol represents the high-water mark in achievement of the EU’s slogan of “ever closer union” and has special political importance. The EU also operates the region-wide ETS, which is one of its most important governance functions.

The selection of 1990 as the Base Year for calculating allowable emissions ensures that Kyoto obligations rest very lightly on Europe. In 1990-91, Soviet-style governments were deposed all over Eastern Europe, leading to closures of vast swathes of inefficient high-emission industries. At the same time, the coal industries of Western Europe collapsed in the “dash for gas” made possible by the 1991 arrival of pipelines from the North Sea gasfields. Because of these historical happenings, a 1990 Base Year allows Europe to bank ample carbon credits to carry them through the original Kyoto Protocol commitments.

The Protocol was the outcome of a mammoth negotiation in Kyoto in December 1997. The breakthrough came when US Vice President Al Gore agreed to 1990 being accepted as the Base Year in return for the EU withdrawing its opposition to trading of carbon credits. Russia was also a party to this “Grand Bargain”, when assured of its right to sell the massive volume of “hot air” carbon credits earned by its industrial closures in the early 1990s.

As the three parties - EU, USA and Russia - accounted for more than 70% of global emissions in 1997, it was agreed that the Protocol would come into effect when it was ratified by countries responsible for 55% of global CO2 emissions.

After the US Senate voted 95-0 for a resolution opposing any Kyoto agreement, President Clinton did not pursue US ratification. Australia also declined (until it changed its position in 2007). But the 55% target was reached in early 2005, and the Protocol’s 2008-12 commitments then came into effect.

Helen Clark’s Government ratified the Protocol in 2003, on the basis of calculations by the Hon Pete Hodgson that New Zealand would earn a windfall of about a billion dollars during the 2008-12 Commitment Period. Five years later, a subsequent Minister announced forlornly that we would lose approximately a billion dollars. The current Minister, Hon Nick Smith, having paid out $1.6 billion dollars from ETS taxpayers to forest owners, believes the country will be in credit at the end of 2012, but could be in trouble if there should be any future Kyoto commitment taking us beyond 2020.

Is there any reason why New Zealand should support “Kyoto Two”?

First, let’s be clear that this is a “no-win” negotiation. If we accept future commitments, we add real contingent liabilities to the New Zealand balance sheet – but, in return, we will not receive any assets (contingent or otherwise) or income of any kind.

The NZIER-Infometrics modelling undertaken for the ETS Select Committee made it quite clear that future Kyoto commitments could only be met by buying foreign carbon credits, and the sole issue is whether the financial pain will be lethal or merely excruciating.

Secondly, if we were to sign up again, we would be the only Kyoto Country outside of Europe. The USA’s chief negotiator, Todd Stern, has stated repeatedly that Kyoto has no future, and the USA won’t touch it. Canada, Japan and Russia have all made it very clear that they won’t be there next time, and they will probably be joined by Australia.

Even the EU itself is equivocating, saying it was taken for granted at Copenhagen, and won’t agree to a second Kyoto unless developing countries offer something in return.

Thirdly, another Kyoto would be a red herring – little more than a distraction from the serious issue of a universal LCA. The future Kyoto Countries include none of the top ten current emitters, and none of the top ten fastest-growing emitters. Why would New Zealand invest serious money in a treaty which leaves 84% of global emissions untouched?

What can Kyoto 2 offer from a ‘greenhouse mitigation’ viewpoint? Kyoto 1 held the promise that it might slow global warming by 4 years out of the next hundred (with very favourable assumptions). As New Zealand’s emissions amount to only 0.2% of global totals, its voluntary acceptance of further financial commitments could buy the planet less than a day’s grace - next century! How could the Minister justify this?

Finally, Kyoto was always a grossly unfair arrangement. It is based on the assumption that “rich” countries should carry the whole burden because they can well afford to absorb higher energy costs. Flattered at being thought rich, New Zealand was fitted with much more onerous commitments than Germany, UK, Norway, etc. Many other richer countries – such as Singapore, UAE, South Korea, and Hong Kong (not to mention USA) – have no commitments at all.

By almost any measure, this country has already gone way beyond its “fair share” of the global cost of mitigating greenhouse emissions. The cabinet paper presented by Hon Nick Smith in September 2009 stated that New Zealand should have much lower reduction targets than most other developed countries on an “equal cost” basis:

“ This is because the equal cost approach reflects New Zealand’s higher population growth rate, lower mitigation potential, and lower GDP per capita, when compared with the average Annex I country. Based on the current targets announced by Annex I countries, of 15% below 1990 levels, the equal cost approach would imply a target for New Zealand of 15% above 1990 levels”.

Successive Governments justified ETS legislation by reference to our Kyoto obligations, and there is now a temptation to use our ETS to justify further Kyoto obligations. Thankfully, Governments are too smart to be caught by that sort of circular reasoning. Aren’t they?

Hon Barry Brill, OBE, is a former Minister of Science & Technology and former Minister of Energy. He is currently chairman of the New Zealand Climate Science Coalition.


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