22 September 2016

Is it in the spirit of the Paris Agreement to ratify it with more emissions and more creative accounting?

Is the New Zealand Government's plan to ratify the Paris Agreement in 2016 consistent with a two degrees Celsius (2C) carbon budget? Now also posted at Hot Topic

Since the December 2015 Paris Agreement, the British climate scientist Kevin Anderson has given a couple of talks with the title Beyond Dangerous Climate Change: Does Paris Lock-out 2 Degrees?

Anderson's message is that although the Paris Agreement was a diplomatic triumph, it relies on speculative utopian technological fixes (bio-energy carbon capture and storage) in the future in order to reconcile the now extremely limited carbon budgets consistent with the desired 2C (and 1.5C) temperature limits with business-as-usual economics and politics. In other words, the Paris Agreement locks out the 2C target.

Why do I mention that? Because I want to run a 'Kevin Anderson' ruler over the New Zealand Government's recently announced ratification of the Paris Agreement. To conduct a bare assessment of New Zealand's emissions taking account that it is the cumulative emissions that determine warming. I want to ask the question 'does the New Zealand ratification also lock out any policies for emissions reductions consistent with a fair share of a 2 degrees Celsius carbon budget?'

To set the context, I'll set out some of the mechanics of what ratification of the Paris Agreement will require in New Zealand. Then in true Kevin Anderson style there will be a look at projected emissions and some graphs.

As we know, last month, on 17 August 2016, Minister for Climate Change Issues Paula Bennett announced that New Zealand would ratify the Paris Agreement this year.

Bennett's announcement represented a change in position as in April she had told Fairfax's Tracy Watkins that she was not rushing to ratify the agreement in the next couple of months

A cabinet paper from Paula Bennett "Paris Climate Change Agreement - Report back to Cabinet and Approval for Signature" has been on the Ministry for the Environment website since April 2016.

We also know from the Ministry of Foreign Affairs and Trade (MFAT) that ratification of the Paris Agreement will involve:

"..presenting the agreement and a national interest analysis to Parliament for examination by a select committee, after which the select committee tables a report in the House. After this, legislation may be passed and then New Zealand may ratify the Agreement".

The "Paris Agreement National Interest Analysis" was very briefly open for submissions on the New Zealand Parliament website until 2 September 2016.

The Ministry of the Environment has a Paris Agreement webpage. This confirms that once Parliament agrees to ratification (and enacts legislation), the Government will deposit the ‘instrument of ratification’ with the UN Secretary General before the next international UNFCCC climate change meeting in Morocco (COP22) in November 2016.

Therefore, some stepping stones are apparent. There will be a Parliamentary Select Committee considering the National Interest Analysis and submissions. That Parliamentary process has its shadow process, the Ministry for the Environment driven, and therefore more Government-controlled, review of the New Zealand Emissions Trading Scheme. Some amending legislation will probably be presented as the outcome of both processes.

A crucial point will of course be the detail of this amending legislation.

Paula Bennett has stated that the Government has "absolutely no intention of changing our target" (the New Zealand 2030 climate change target), and that the required 'Paris' legislation will be nothing major. Therefore, as she stated to Radio New Zealand, the New Zealand Emissions Trading Scheme will only need to be tweaked to meet the commitments under the Paris Agreement.

So the amendments will be to the Climate Change Response Act 2002 which is the statute that incorporates the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol into New Zealand law. The UNFCCC is included as the first schedule to the act and the Kyoto Protocol is included as the second schedule.

The amendments will probably affect the provisions describing the operation of the New Zealand Emissions Trading Scheme (which has been under review all of 2016). Perhaps the Paris Agreement will be incorporated as a further schedule.

The current highly conditional New Zealand INDC (Intended National Determined Contribution), otherwise known as the 2030 climate change target, will become a NDC National Determined Contribution. Professor Ralph Sims notes that the NDCs "will need to be based largely on domestic mitigation actions" but "they are not legally binding".

Ralph Sims, who was writing back in February, was hopeful that the New Zealand NDC would be strengthened to be more ambitious, given that the sum of the 2015 INDCs "collectively would lead to an untenable 2.7 – 3 degrees Celsius future, rather than restrict global warming below the internationally agreed 2 degrees Celsius above pre-industrial levels" He seemed to have some hope that the then yet-to-be published Royal Society climate mitigation report would contribute to that.

So does that mean the Government will actually do something to reduce domestic emissions? Perhaps toughen up the emissions trading scheme, so that it uses only New Zealand units and has a fixed cap (as in 'cap and trade'), and auctioning units instead of free generous allocation of units to industry? No, of course not!

The National Interest Analysis continues on paragraph 104 on page 30:

"We have assumed that New Zealand will be able to purchase sufficient international emissions reductions in the 2020s".

So instead of domestic emissions reductions, we are betting the farm on the magic of the market, more speculative emissions trading, open access to and availability of international emission units from international carbon markets. However, this is no sure thing. Table 5 on page 15 states (my emphasis):

"The (Paris) Agreement provides for a centralised market mechanism and also allows other approaches to be developed by Parties. When and how the centralised market mechanism will be operationalised is unclear, and it may not provide a timely and sufficient supply of emission reductions to be economically practical for New Zealand’s use.".

So no pressure, New Zealand! The analysis then lists the many steps/obstacles on and in the way of New Zealand having access to functioning international carbon markets.

"This means that New Zealand will likely need to build future international markets from the bottom up in cooperation with other willing participants. New Zealand must: find willing trading partners, develop standards (including working with others) to ensure international carbon markets can function effectively (eg, on environmental integrity and unit registries), ensure that its trading activities are consistent with any future accounting requirements".

Paragraph 64 on page 19 of the Paris Agreement National Interest Analysis then states:

"New Zealand’s first nationally determined contribution (i.e. the 2030 target) was developed on the basis that New Zealand will achieve the 2030 target through a combination of domestic emission reductions, forestry growth and participation in international carbon markets."

Where have we heard that before? Back when I looked at the creative accounting for the 2020 emissions reduction target.

Surely, if the Government says it intends to adopt a mix of policies, one of which is domestic emission reductions, then some domestic emission reductions will actually happen?

Well perhaps we could look for the reductions in domestic emissions in the Ministry for the Environment's projections of future emissions "with measures" and "without measures" out to 2030. These are in the report New Zealand’s Second Biennial Report under the United Nations Framework Convention on Climate Change released in December 2015. This is the report where the only substantive differences between the with and without energy sector projections were the closure of the Huntly Thermal Power Station which then got reversed. Thus cancelling the projected decline.

At the time of their release in late December 2015, Radio New Zealand reported the complete inconsistency with the freshly-signed Paris Agreement; Emissions set to far outstrip Paris target. And they quoted an expert.

"Suzi Kerr, a senior fellow at economic research institute Motu, said the projections were completely incompatible with the target New Zealand took to the Paris climate change talks"

Here is a chart of these incompatible projected emissions from 2013 to 2030 by sector. The emissions for all sectors are all expected to increase. For the land-use, land-use change and forests (LULUCF) sector, the net carbon absorbed (or sequestered) is displayed as negative emissions and is projected to decline.

Here is another chart of the projected gross emissions (without LULUCF) and the LULUCF carbon sequestration (shown as negative emissions). The LULUCF 'credits' are subtracted from the gross emissions to get net emissions (the red line and dots) which is the real measure of what gets into the atmosphere. Note that the forestry sequestration is declining towards zero through the 2020s, but is still a net 'sink' of emissions.

However, wasn't there meant to be a 'wall of wood' in the 2020s? Of wholescale harvesting or land-use change of the 1990s pine forests that would tip the net carbon sequestration from the forests into being a net source of deforestation emissions in the 2020s.

Paul Young of the Morgan Foundation has looked at the issue and has concluded that the Government is pushing to change the rules used for accounting for forest carbon.

"They intend to switch to an 'averaging' approach, which will completely remove the planting and harvest cycle once a plantation forest reaches maturity. This change actually seems sensible; the problem is that we are changing the rules halfway through the game, in a way that directly favours us. If we had used the proposed rules from the beginning, New Zealand would receive far fewer forestry credits up to 2020"

We can look at this issue by comparing the current (December 2015) projections for the forests/LULUCF sector with the previous projections that were in the 2013 Sixth National Communication.

It seems very obvious that the Ministry for the Environment have used a very different definition of sequestered forest carbon in 2015 from the definition used in 2013. By my calculation they have found an extra 248 million tonnes of carbon in the decade from 2020 to 2030. That change in accounting treatment has changed the 'sign' of the signal. A decade of net deforestation has changed into a decade of net storage. That is inspite of the fact that the wall of wood of harvesting is still expected in the 2020s.

Paul Young is also still concerned the the Government has not ruled out using the surplus emissions units to comply with the 2030 target. Its not mentioned in either the Cabinet paper or the National Interest Analysis, so I asked Minister Bennett's office that question and I am waiting for a response.

Time for a conclusion. Is the New Zealand ratification of the Paris Agreement going to help or hinder the agreement's ambitious goals?

The ratification reveals that New Zealand will be doing what it's always done under the UNFCCC. New Zealand's greenhouse gas emissions are expected to rise and our policy response is more creative accounting and forest fudging. Our speculative utopian techno-fix is emissions trading. The New Zealand Government simply has no policies for reducing domestic emissions, let alone in a way consistent with a fair share of a 2 degrees Celsius carbon budget.

11 September 2016

The Ministry for the Environment's disavowed orphan carbon budget

Did you know that the Ministry for the Environment prepared a 'two degrees' carbon budget in 2014?

The relevant report "Potential long-term pathways to a low carbon economy for New Zealand", Wellington, Ministry for the Environment, August 2014, is not available from the Ministry's web page. However, I requested it from the Ministry via the 'For Your Information' website.

Incredibly, Idiot Savant had a blog post about it up at No Right Turn on Friday titled Climate change: No path to lower emissions under National before I had even updated the status of my Official Information Act request on FYI.

The paper explicitly sets out to explore a New Zealand carbon dioxide budget consistent with limiting eventual global warming to two degrees Celsius, using the contraction and convergence method.

Presumably because of that aim, the paper appears to have been completely disavowed by the Ministry for the Environment. The cover letter replying to my request at FYI states that the report is neither formal advice to the Government nor is it Ministry policy. The report has a header stating that it is 'sensitive' and 'Not Government or Ministry policy'. There is an italicised inserted 'Note' saying that Treasury does not agree that contraction and convergence is an appropriate measure of a 'fair share'.

The guts of the report are three carbon budgets (a 10th percentile, a median and a 90th percentile) based on applying contraction and convergence to one of the IPCC two degrees-consistent carbon budgets. Oddly, the working calculations and the actual budget amounts are omitted. I guess I can just make another request for them. The budgets are only presented in this graph.

28 August 2016

Moro bars and triple dips Geoff Simmons fact checks Paula Bennett's claim that the surplus units are clean

Geoff Simmons tells us a good story about dodgy uncle Trev, fake bank notes and real moro bars while he fact-checks Paula Bennett on the integrity of the surplus emission units. It's a real triple-dip!

The Morgan Foundation's Geoff Simmons has done a whiteboard Friday video on Minister for Climate Change Issues Paula Bennett's claim that the surplus emission units are not tainted by the 97 million fake Russian and Ukrainian emission reduction units that the Climate Cheats report of April 2016 showed had been handed to the Government under the NZ emissions trading scheme.

Geoff explains the issue very well and has the numbers right. More than that, I think Geoff should get the Joe Romm language intelligence award for using a great metaphor for New Zealand's use of the 'hot air' Ukrainian and Russian emission reduction units.

Dodgy uncle Trev's fake twenty dollar note.

Your dodgy uncle Trev gives you a twenty dollar note. It looks like a ordinary twenty dollar note, but knowing uncle Trev, you have your doubts. Anyway, you use the dodgy note to buy a moro bar at a dairy and get back seventeen dollars change in valid notes. The dairy owner now has a fake twenty dollar note in the till. You have eaten the real moro bar. You still have seventeen real dollars. You could buy more moro bars.

Obviously the fake twenty dollar note represents the emission reduction units. Replace uncle Trev with the Ukrainian and Russian joint implementation projects and the carbon brokers.

The purchase of the moro bar stands in for the emitters surrendering the 'el-cheapo' emission reduction units to the Government under the emissions trading scheme. And also for the Government then using the 'el-cheapo' emission reduction units that it holds to comply the Kyoto Protocol 2008 to 2012 target.

The seventeen real dollars (and the moro bar) are the legally valid 'surplus' assigned amount units that the Government is now 'using' to meet both the 2020 and (some of) the 2030 emissions reduction targets. The Government has, in effect, used the post Kyoto unit surrender mechanism to 'launder' the dubious emission reduction units from the emissions trading scheme into valid surplus assigned amount units held in Government accounts.

Arguably, Bennett's intentions are ethically worse than the fake-note-moro-bar metaphor. Bennett is going for a "triple dip" of using surplus/dodgy units to 'comply' with three different emissions targets in spite of the upward trend in New Zealand's GHG emissions.

Dip 1: the Kyoto Protocol 2008 - 2012 target

Dip 2: the UNFCCC 'minus 5%' 2013 - 2020 target

Dip 3: the Paris Agreement 2020 - 2030 target.

You can verify for yourself that the Government intends to do some creative accounting with the surplus units so that they allow greenhouse gas emissions to increase out to 2020 while the Government can claim that New Zealand is 'meeting' it's "minus 5%" emission reduction target. Just go to Latest update on New Zealand's 2020 net position on the Ministry for the Environment's website.

That webpage states explicitly that New Zealand will have 85.7 million emission units surplus to use out to 2030 after using some to meet the 2020 target. Here is a screenshot.

Further down the page is this barchart that shows that New Zealand's gross emissions from 2013 to 2020 are expected to be 655.9 million tonnes and that the baseline is 509.8 million tonnes. I have somewhat crudely marked the increase in emissions on the left hand bar.

I fully agree with Geoff Simmon's conclusion. It's simply unethical to make a monetary gain from fake currency. Just as you should wipe the moro bar crumbs off your shirt and give the dairy owner back the seventeen dollars (or a real twenty) in place of the fake note, Paula Bennett and the Government should cancel the surplus units instead of explicitly using them to meet targets while emission volumes increase. And we should never ever let ourselves be in the position of having an uncapped internationally linked emissions trading scheme that permits creative accounting as our main climate change policy.

15 August 2016

Morgan Foundation's Climate Cheats II: Who’s the Real Cheat Here? The Dozen Dirty - Now thats a title!

Geoff Simmons and the Morgan Foundation have done it again! They have just released a sequel to 'Climate Cheats', the fantastically-named 'Who’s the Real Cheat Here? Climate Cheats II: The Dozen Dirty Businesses'. Simon Johnson breathlessly reviews Climate Cheats II and concludes that while it's about time we had some transparency over Government and corporate shenanigans with emissions trading, we mustn't forget that these are symptoms of the root problem - the uncapped design of the New Zealand emissions trading scheme.

Shock Newsflash Horror! The Morgan Foundation and Geoff "Wild-Shirt" Simmons have done it again! They have just released another tell-all critique of corporate emissions trading shenanigans! A sequel in the franchise they started in April 2016 with the report Climate Cheats. As we know, 'Cheats I' outlined this sad course of events:

  • the 'flood' of low-cost and low-integrity Russian and Ukrainian emissions reduction units into the NZ emission unit market
  • which then crashed the domestic emission unit price
  • which allowed NZ emitters to meet emissions trading obligations for next to nothing
  • which allowed the Government to own surplus (but dodgy) units
  • which meant Paula Bennett could claim 'form over substance' compliance with climate charge targets out to 2020
  • not withstanding the real increases in both gross and net NZ emissions of greenhouse gases.

Weighing in at a thankfully concise 16 pages, the wonderfully named 'Who’s the Real Cheat Here? Climate Cheats II: The Dozen Dirty Businesses' starts with a simple question. Which companies had the most dodgy Russian and Ukrainian emission units? Well, here they are.

Simmons and co then note that Minister Bennett has refused requests to cancel the surplus dodgy units the Government holds, giving the excuse she is 'seeking advice' (That would seem to be a perpetually applicable excuse!). So they ask 'who owned and used dodgy emission reduction units?' The dirty dozen corporates, of course.

The report then discusses three types of liability (physical, liability and transition) that may fall on companies who used the emission reduction units. To paraphrase, Simmons is thinking 'did they really think this would never come back and bite them?' And he is making the point that if Government is failing to act ethically, then why don't we shine a spotlight on our corporate citizens and ask them to shoulder some of the responsibility for the dodgy unit fiasco?

Simmons assigns highest culpability to New Zealand Steel and Fonterra. Because they are emitters who received generous free allocations of NZ units but who also owned dodgy emission reduction units. Referencing a blogger (meaning me!), the report notes New Zealand Steel booked $4.4 million Australian dollars of profit from emissions trading that is probably from arbitrage trading of their free NZ units while also owning dodgy units.

Five forestry companies are on the dozen list. Some sympathy is due to some of them as the unit price crash devalued their allocations of units. But none is due to any foresters who carried out 'forest re-registration arbitrage' in the ETS. This was exiting and re-entering the same forest in and out of the ETS several times. For each ETS 'exit', the forester would 'square-up' the refund of carbon liabilities with emission reduction units costing several cents each. For each 're-entry' to the ETS, the forester would be given an allocation of free NZ emissions units worth a few dollars each. The result being instant no-effort windfall profits. The Government took far too long to clamp down on this practice.

Finally, energy companies get their turn in the spotlight. BP, Chevron, Z Energy, Contact Energy and Genesis Energy all owned and used some dodgy international units. Did these companies price their products to NZ customers on the basis of the higher NZ unit prices or the lower dodgy unit price? The Morgan Foundation approached the energy companies for comment which is in an appendix. All give worthy statements saying they followed the rules and of course they put customers first. However, Mobil shows up the fine words of the others. Mobil never owned any dodgy international units and managed to supply fuel just as competitively as the others.

Climate Cheats II concludes by suggesting that the companies who owned dodgy international units and lowered their costs (as well as those who made windfall profits) have two options to put things right.

  1. They could voluntarily cancel NZ units to match the dodgy units used
  2. They could alternatively pressure Paula Bennett to cancel the surplus units the Government holds.

With NZ emission unit prices now hovering between $17 and $18 per tonne, the latter option will hurt much less than the former.

In summary, it's hard not to like a Morgan Foundation report that references me! But leaving that bias/good taste aside, Climate Cheats II is a concise readable summary of the abject state of New Zealand's emissions targets and trading policies and practices. As Kevin Anderson would say, we need to see clearly where our rose-tinted spectacles have brought us. Climate Cheats II mostly does that.

However, if anything, the report, by focusing on the top dozen owners of the dodgy international units, underplays the pervasiveness of the ownership and use of those international units. Most entities with emissions trading accounts owned some dodgy units. In 2013, more than 400 entities (out of 496 account holders) owned some share of the almost 35 million emission reduction units in private hands. You can check this with this Google sheet of Kyoto Units obtained from the Emission Unit Register at the EPA.

Finally, I have one concern which is perhaps more about how 'Climate Cheats II' will be received rather than what message it has. It seemed to me that the media response to initial splash of 'Climate Cheats I' (they loved the emotive framing - 'fraud!' - 'cheating!') really missed the fundamental point that I think both reports support, and that other assessments of the ETS support, that an emissions trading scheme that has no cap on emissions, that earns no revenue and that isn't economy-wide, is an excuse and rationalisation for doing nothing and not an effective mitigation policy at all.

08 August 2016

Where is the Two Degrees Celsius Carbon Budget for New Zealand?

I have been thinking about carbon budgets on and off since the Paris Agreement at COP21 last December.

By 'carbon budget' I mean "a finite amount of carbon that can be burnt before it becomes unlikely we can avoid more than two degrees of global warming". And I have been asking myself "where is New Zealand's carbon budget that is consistent with no more than two degrees Celsius of average global warming"?

There is a Canadian "2C"-consistent carbon budget. I read that Canadians Simon Donner and Kirsten Zickfield asked themselves similar questions in two blog posts Canadas contribution to meeting the Paris temperature targets and Can Canada live up to the promise of the Paris Agreement? The chart on the left shows three Canadian 'temperature' budgets/emission pathways under a share of emissions approach.

In short, Donner and Zickfield calculated several "2C"-consistent carbon budgets, based on a range of temperature goals, a range of probabilities of success, and a range of sharing principles used for allocating part of the global carbon budget to Canada. They wrapped that up in a short 3-page paper "Canada’s Contribution to meeting the temperature limits in the Paris Climate Agreement".

Simon Donner also wrote a more policy-oriented summary What do the temperature targets mean for Canada?

This is their summary table of budgets by temperature targets and probabilities.

Simon Donner's conclusion from Can Canada live up to the promise of the Paris Agreement is:

The analysis in our report suggests that the current Canadian target of a 30% reduction below 2005 levels by 2030 could be consistent with maintaining a likely chance (66%) of limiting warming to less than 2°C globally, but only if Canada is given a generous allocation of the world’s “remaining” future carbon budget (based on the present fraction of the world’s emissions). A target consistent with a likely (66%) chance of avoiding 1.5°C of warming globally is extremely limited regardless of the method of allocation. Even under a generous allocation to Canada, national net CO2 emissions would need to decline 90-99% below 2005 levels by 2030.

Simon Donner also notes that "The 1.5°C limit is at best unrealistic, at worst politically impossible.”

Simon Donner is also highly aware that 'sharing-on-current-emissions' unfairly favours developed highly carbon-intensive OECD countries like Canada (or New Zealand) over the developing countries with much lower greenhouse gas emissions per capita.

Allocating the remaining carbon budget based on present-day emissions places an unfair burden on developing and rapidly industrializing countries that historically have had low per-capita emissions. Despite being far less responsible for climate change to date, and currently having low per-capita emissions, countries like India would essentially be asked to bear an equal part of future mitigation efforts.

Good work Canada! But where the bloody hell is New Zealand's 2C consistent carbon budget?

25 July 2016

Kevin Anderson Beyond Dangerous Climate Change Does Paris Lock-out 2 Degrees?

There is another new talk by Kevin Anderson. The image is his title page and the title is Beyond Dangerous Climate Change: Does Paris Lock-out 2 Degrees?.

Kevin Anderson gave the talk on 9th of March 2016 to the Institute of International and European Affairs which is Ireland’s leading think tank on European and International affairs. They describe his message in this way.

In his presentation, Kevin Anderson revisited the scale of the climate challenge, arguing that whilst the science of climate change has progressed, there has been no corresponding acknowledgement of the rate at which our emissions from energy need to be reduced. He suggested that the Paris Agreement exemplifies this duality. Similarly, he argued that the focus on green growth continues to eclipse analysis which demonstrates the need for radical social as well as technical change. Prof. Anderson developed a quantitative framing of mitigation, based on IPCC carbon budgets, before finishing with more qualitative examples of what a genuine low-carbon future may contain.

Anderson's key message is that due to the constant privileging of economic analysis over physics, the finite carbon budget consistent with no more than two degrees Celsius of average global warming will only be achievable with an "outside" probability of 33% if the developed countries suppress energy demand and reduce carbon dioxide emissions by 10% each year and fully de-carbonise their energy sectors by 2035.

The talk is available as a podcast in mp3 format. Also available is Kevin Anderson's slide presentation.

The talk is also available on Youtube in two parts. Part One has had 1,975 views. Part Two has had 664 views.

I usually browse with Firefox and I have installed an add-on called Down load helper. That enables me to download talks as mp4 files I can listen to later.

There are two differences from the talk given to the University of Sheffield. The sound is a bit boomy and not as clear as the University of Sheffield recording. And when Kevin Anderson says "people with grey hair or no hair have failed the generation born since the IPCC was established", the grey-hairs seems to be the audience from the two in the foreground.

19 July 2016

New Kevin Anderson talk Delivering 2 Degrees Triumph and Tragedy in Paris

The other day I noticed that Kevin Anderson has tweeted a new talk.

Anderson spoke at the University of Sheffield on 28 April 2016. Anderson's host was the Carbon Neutral University Network Sheffield and they provide a fulsome description of Anderson's 47 minute talk.

However, you should watch it for yourself or better still download the talk from Youtube. The sound quality is very good.