Archived 2005 Climate Change Policy- Kicking the Carbon Habit

Administrative Update 16 May 2007

Read the Climate Change Policy Summary

Definitions

1. Kyoto Forest — Forests planted since 1990 on non-forested land.

2. PFSI - Permanent Forest Sink Initiative; forests (other than pine) planted since 1990 and not intended for clear felling that meet specific criteria for management and are therefore eligible for carbon credits under 2006 legislation.
3. Plantation forests — forests that are planted for production purposes.
4. Kyoto Units - Under the Kyoto Agreement, credits have to be held or purchased for each tonne of carbon emitted into the atmosphere. Such units come in various forms: AAU, CER, RMU, ERU. They are from here on called "Kyoto units".
5. KP1 — Kyoto Period #1 (1 January 2008 — 31 Dec 2012), the first time period to which the mandatory targets of the Kyoto protocol apply.

Introduction:

Our climate is changing. As a result of human activities, atmospheric levels of carbon dioxide and other greenhouse gasses, such as methane, are higher now than they have ever been in the last 650,000 years. These gasses trap the heat from the sun, and our planet is becoming warmer, which is causing our climate to change.

Some of the effects of global warming and climate change include:

• The Gulf Stream, the warm current that keeps Western Europe habitable, has weakened by 30%.
• The West Antarctic ice sheet is breaking up at an unprecedented rate.
• The Arctic Sea ice is disappearing and glaciers are in retreat in most parts of the world.
• The melting of the subsoil in the tundra in Siberia and northern Canada releasing the methane currently trapped in these frozen swamps.

The number of extreme weather events of all kinds has increased 5 fold since the 1950's and there is evidence that this is linked to climate change. The intensity of hurricanes has increased since the mid 1970's and the first hurricane ever recorded in the South Atlantic hit the coast of Brazil in 2004.

The impact of this human induced climate change disproportionately affects the world's poorest and most vulnerable people. The World Health Organisation estimates that already each year 150,000 people are dying as a direct result of climate change. Food production will also be adversely affected as many crop plants in the tropics are already at their physiological limits.

If we do nothing and we carry on as we are then irreversible runaway climate change will eventuate as ecosystems switch from absorbing carbon dioxide to emitting carbon dioxide.

Such runaway climate change would have severe consequences for the planet. Whole ecosystems would be wiped out and sea level rises would threaten coastal communities, contaminate water supplies and damage infrastructure everywhere. Millions around the world would face death and starvation as a result.

Although New Zealand will not be as severely affected as some other countries we will still have to deal with increased severe weather events such as extreme floods and storms and in some areas more frequent droughts. Sea level rise will threaten our largely coastal settlements and infrastructure and new pests and diseases will become established.

At the moment runaway climate change is preventable, but it will require a concerted effort from all governments, businesses and individuals to achieve this. We have a very short period of time in which to act.

This means that we must drastically reduce our greenhouse gas emissions as quickly as we can. For New Zealand, we need to aim to reduce our total emissions by at least 60% by 2050. (Note: Please also see our Agriculture and Rural Affairs, Conservation, Eco-Tax, Energy, Environment, Housing, Transport, Waste, and Water Policies for further detailed policy points that are relevant to climate change).

Vision

The Green Party envisions a world where all people live in harmony with the environment and where natural ecosystems flourish. Collectively we understand the dangers of man-made emissions that destabilise the world's climate. We co-operate at local, national and international levels to control our greenhouse gas emissions so that they do not negatively impact on global weather patterns, at the same time avoiding unnecessary hardship or destabilising the global economy.

Key Principles

The Green Party believes that:

1. Worldwide our total global emissions must be reduced quickly and converge to emission quotas that are based on equal per capita entitlements. (A process known as contraction and convergence).

2. In order to achieve the necessary reductions in greenhouse emissions all countries must be part of a binding international agreement that sets regular targets for emissions and monitors compliance with these levels.
3. Those countries with the highest per capita emissions must do the most to reduce their emissions.
4. Those sectors with the ability to reduce their emissions or to switch to non-emitting activities must do so as quickly as possible.
5. At a national level, the government must move towards exposing all sectors of the economy whose activities contribute to climate change to the world price for carbon
6. To give businesses and the economy time to adjust, the exposure to the world price for carbon needs to be managed in stages, with the energy sector being the first to be fully exposed to the world price because it has the most opportunities for alternative action.
7. The government must ensure that emitters cover the overall cost to the taxpayer of their emissions and do this in a fair and equitable manner.
8. The Government must use any income from a price on carbon, both to assist the transition to a low carbon economy and to protect low income and other vulnerable sectors of society from the effects of the resulting increases in energy and fuel prices.

Specific Policy Points

1. Supporting and Strengthening Kyoto

The Green Party will:

1. Ensure that New Zealand supports the implementation of the Kyoto Protocol, because this is the only international agreement that we presently have that works towards reducing emissions.

2. Make every effort to persuade the US to join Kyoto.
3. Work with all countries to negotiate a much stronger binding agreement for post-2012, which must involve all nations accepting obligations on per capita entitlements and reducing total emissions quickly.
4. Ensure that all our international trade agreements uphold the principles of Kyoto.
5. Place a carbon tax on energy intensive imports from OECD countries which have not accepted binding targets.

2. Setting the Framework for reducing our Emissions

About half of New Zealand's emissions come from farming (from methane and nitrous oxide) and half from the energy and transport sector (from burning fossil fuels). Our ability to reduce emissions varies from sector to sector. There are renewable alternatives to fossil fuels, so the energy sector can provide most of our emissions reductions. However, all sectors, whose activities contribute to climate change, should face the price of carbon to some extent.

To do this the Green Party will:

1. Move the whole economy towards a global integrated carbon trading system after 2012
2. Ensure that the taxpayer's liability in 2012 is covered by emitters during KP1.
3. Set the liability for carbon emissions at points in the economy so that ordinary consumers and most businesses do not have to engage directly with international trading. . The way that this is done will differ for each sector but all sectors will have to cover all or part of their emissions liability. The mechanisms by which this will be achieved are outlined below for each sector:
   
   1. The Energy Sector
      1. Companies who first bring fossil fuel into the NZ economy, whether by mining it here or importing it, will be required to purchase and transfer to government enough Kyoto-compliant emissions units to cover the carbon that is released when that fuel is burned. This liability would cover the whole KP1 period and the units could be purchased and remitted at any time during that period.
      2. The exception to the above (3.a.1) would be for the fuel that is sold to electricity companies. This fuel would be exempt because Electricity companies will themselves be required to purchase Kyoto compliant emission units, and transfer these to government. This will give electricity companies the flexibility to determine their costs and savings within their company, and will encourage the use of renewable energy for electricity. The effects on energy consumers would be the same as with a carbon charge set at the world price.
   2. The Agriculture Sector

      Other than by reducing stock numbers there is no way to avoid methane emissions from livestock at present. Nitrous oxide emissions from farming can be somewhat reduced with new technology but this is still being researched. It is therefore not reasonable to require agriculture to face a carbon price for all its emissions.

      The growth in dairying is so fast that it threatens not just our Kyoto position, but also water availability, water pollution and other environmental effects. It is therefore reasonable that the agriculture sector face a price for the growth in its emissions above a baseline. However the Green Party believes that it is not reasonable or efficient to expect individual farmers to engage with the world carbon trading system.

      The Green Party will:

      1. Set the baseline for agriculture at the level of their emissions at 1990 because that is the point after which NZ becomes liable for the emissions according to the Kyoto agreement.

      2. Exempt the beef and sheep industries from any requirement to purchase units unless their emissions rise beyond 1990 levels as currently their emissions are below 1990 levels.
      3. Place the liability for any increased emissions from the dairying and deer farming sectors with the large processing companies rather than with individual farmers. For example if Fonterra processes 90% of our milk, they will be required to purchase enough Kyoto units to cover 90% of the increase in our emissions from dairying since 1990 and remit them to the government.
   3. The Forestry Sector

      New Zealand earns Kyoto units for the net increase since 1990 in carbon stored by plantation and permanent sink forests. They have often been described as a "property right" of those who planted forests after 1990. However, post Kyoto forests only earn credits internationally to the extent that pre-1990 forests are maintained and replanted. Deforestation of non-Kyoto forests reduces the units earned by NZ from Kyoto forests. The Greens believe foresters should receive some benefit from the carbon they store but do not accept that forestry credits are an individual property right belonging to Kyoto foresters.

      In the same way that we have treated dairying as one sector which benefits or holds liability collectively, we propose that the forestry industry is also treated as one sector. The net benefit to NZ of any increase in our forest carbon since 1990 should be shared across all forests, because all trees store carbon. In order to recognise the positive contribution of the forestry sector towards reducing our emissions the Green Party will:

      1. Ringfence all credits from Kyoto forests for projects that will benefit and stimulate the forestry sector as a whole. This means that the ring fenced credits will be used to fund:
         1. A payment to all Kyoto forests for the carbon sequestered in KP1 - but at less than the full value of that carbon. This will be surrendered, with interest, if they are deforested.
         2. A replanting incentive payment for pre-Kyoto forests that are replanted during KP1. This will include a bonus payment if alternative longer rotation species are planted instead of Pinus radiata. This incentive will continue for pre-Kyoto forests that mature during KP2 if the international agreement allows sufficient funds for this.
         3. Research & Development of benefit to the forestry industry, including
            
            1. Funding research and development of projects to use of wood waste as an energy source
            2. Developing and promoting wood as an alternative to energy intensive building products, such as steel and concrete, both of which create high levels of emissions in their manufacture.
            3. Promoting and encouraging longer rotation species as an alternative to Pinus radiata. This is necessary to reduce the vulnerability of our existing forest estate to climatic and biosecurity threats.
      2. Ensure that the Crown covers the full cost to the taxpayer of deforestation for this current harvest cycle of non-Kyoto forests on any Crown land with crown owned forestry leases that has been returned to Maori as a Treaty settlement.
      3. Require a carbon payment of not more than half the cost to the taxpayer for all other deforestation of non-Kyoto forests. This would combine with the loss of the replanting incentive, and the requirement for growth in dairying to face the carbon price, to discourage land use change except where forestry was genuinely a poor use of the land.

3. Looking forwards and Revenue recycling

If the energy sector takes responsibility for all their emissions and agriculture takes responsibility for its growth in emission since 1990, and forestry provides neither a cost nor a benefit to the Crown position regardless of changes in the size of the forest estate, then all the Kyoto units that NZ receives under the Kyoto cap and trade system for the 5 year KP1 will be available to the Government.

In addition the Government will make additional profit from the electricity SOEs that must be recycled into energy efficiency. It will also save the $600m which has already been appropriated in the 2006 budget to partly cover 2012 liabilities. The Green Party believes that such revenue should be used to further reduce carbon emissions, to provide partial protection to sectors which have no way of reducing emissions and are at risk internationally; and to encourage the development of alternative carbon neutral energy and agricultural practices.

1. To this end, the Green Party will recycle the revenue from the surplus carbon credits to:
   1. Address inequities where some sectors cannot respond as quickly as others by:
      1. Working with industry sectors whose international competitiveness would be at risk if they faced the full price of carbon to negotiate exemptions for up to 90% of their emissions during KP1. (Eg aluminium, cement, steel ) provided they upgrade their plant to world best practice in energy efficiency and carbon emissions.
      2. Shifting the West Coast economy away from coal mining by assisting Solid Energy, a Crown Owned Enterprise, to fully rehabilitate all old mining areas and to simultaneously wind down its coal mining operations and expand its wood pellet operations , and thus not provide further fuel for global warming.
   2. Invest in technology research and development to further reduce our emissions and hence our liabilities after 2012 by:
      
      1. Providing research and funding into promoting soil conservation, carbon sequestration in soils, and erosion control programs because our high levels of soil erosion are likely to contribute hugely to our post 2012 Kyoto liabilities.
      2. Funding investments in energy and renewable energy, such as more rounds of the "Projects to Reduce Emissions (PRE) used in previous years to encourage wind generation.
      3. Fund an intensive programme of energy efficiency, renewable energy and transport programmes, as detailed in our energy, transport and housing policies.
   3. Providing increased funding for public transport, including electric rail, so that users find the system efficient, sufficient, and a low cost way to travel.
   4. Assist low income and vulnerable sectors of society to adjust to the resulting changes in the economy by:
      
      1. Making appropriate adjustments to the tax system
      2. Improving energy efficiency for low income households through progressive pricing, insulation retrofits, and clean and efficient heating devices and other measures as detailed in our energy policy.
   5. Running public education programs to educate the public on ways of saving energy and reducing emissions.