End forest tradeoffs for CO2: PCE climate report

New Zealand has shifted 3 billion tons of carbon from the land to the atmosphere by clearing forests for farming, says a report by Environment Commissioner Simon Upton. Now Upton thinks farmers should have dibs on planting new trees to offset their greenhouse emissions – arguing CO2 from cars and industry is too long-lived to be dealt with using forestry credits.

Even before the embargo lifted on Simon Upton’s long-awaited climate policy report, the Minister for Climate Change had ruled out its boldest suggestion.

The Parliamentary Commissioner for the Environment proposes stopping New Zealand’s carbon dioxide emitters from using forestry planting as a convenient way to avoid cutting their actual emissions, as they’ve been doing ever since New Zealand signed up to the Kyoto Protocol.

Upton proposes shutting carbon emitters out of purchasing tree-planting credits -- instead ring-fencing the nation’s forest sinks for the exclusive use of farmers.

From the perspective of the climate, there’s logic to this: carbon dioxide can stick around warming the planet for centuries, while forests, particularly plantation pine forests, come and go.

In Upton’s view this makes tree planting better suited to off-setting the climate effects of more temporary greenhouse gases, such as farming’s methane and nitrous oxide.

Without any forest offsets to help them get to net zero emissions, people and industries making carbon dioxide from cars, coal, steel-making and other things would need to make even deeper cuts, and likely couldn’t reach absolute zero emissions by 2050. Upton says 2075 might be a more realistic date to get to absolute zero.

Methane and nitrous oxide, meanwhile, would be cut by whatever amount the Climate Commission deems best, but at least by 20 percent, under the report's modelling.

If New Zealand continues with its current plan of lumping all gases and sinks together it risks claiming hollow “accounting victory” over its emissions, and cutting real carbon emissions slower than we would if we couldn't rely on using forests to count against our carbon emissions, he says.

Reactions were divided: Beef + Lamb NZ quickly commended the plan, saying fossil emitters should take responsibility for their own sector’s pollution (farming and trees, from this viewpoint, must belong to a single sector -- agriculture).

Ivan Diaz-Rainey, Co-Director of the Otago Energy Research Centre, said it was sensible to split up carbon and biological emissions and reduce our reliance on carbon sinks, but the government would need to make sure there were strong incentives to reduce farming emissions, rather than just relying on sinks to counter those.

Euan Mason from the University of Canterbury’s School of Forestry, on the other hand, said the plan risked giving agriculture a “free pass” and leaving forestry to clean up farmers’ mess. He also questioned the assumption that forests couldn’t be a reliable long-term reservoir for CO2.

Greenpeace saw the idea as letting farmers off the hook: "We expect the champagne corks will be popping at Ravensdown and Dairy NZ this afternoon.”

Even DairyNZ, which welcomed the report, wasn’t willing to commit to shutting CO2 emitters out from forestry: “We think there is a role for forestry to offset carbon dioxide.”

But the biggest reason why Upton's idea likely won’t be turned to policy is the pure administrative headache it would cause. Motu policy fellow Catherine Leining, an ETS expert, said businesses were already too heavily invested in a single ETS to engineer a “complicated transition” now – and that bigger climate gains would be achieved by getting cross-party support for developing, and fixing the problems in, the current scheme. (National has yet to agree to the Zero Carbon Bill, for example, while ETS fixes have been slow in coming).

Politically, the proposal to keep forest sinks for farmers was instantly deemed a no-go. An hour and a half before the embargo on Upton’s report was due to lift, at 2pm, Climate Change Minister James Shaw put out a pre-emptive press release (with a matching 2pm embargo) saying there simply wasn’t time to go back to and re-construct the ETS into two schemes: one for forestry sinks, methane and nitrous oxide; and another one for carbon. Was he starting again, things might be different. 

“For the sake of providing policy stability and predictability for emitters and the forestry sector, the Government is committed to retaining the use of forestry off-sets for carbon dioxide and other greenhouse gas emissions,” says Shaw.

Shaw says the time window to keep the world within 1.5C of warming is now “so narrow that planting trees to offset emissions is a necessity,” although he agrees with Upton there needs to be a stronger focus on reducing real-world domestic carbon emissions, rather than relying on sinks to counteract them. Nothing in the report has changed his plan to do that inside the current ETS and proposed Zero Carbon Bill, though.

Shaw’s response was likely pragmatic. Upton is proposing creating two separate Emissions Trading Schemes just as the Government is finally getting near to introducing a round of changes to make the existing ETS stronger, after much consultation and elaborate review.

But the fact it likely won't happen doesn’t make the comprehensive proposal a waste of electronic "paper". It highlights the meaningless way in which countries can meet their emissions targets on paper, but not in the real world, and includes modelling showing what parts of rural New Zealand might look like under different ETS schemes. Under any strong emissions policy the landscape will be unrecognisable. An enormous swathe of the country will be converted to trees, likely causing a bonus improvement in fresh water quality – but under Upton’s plan the trees take over less land, especially from meat farming.

Here are a few of the report’s interesting points in more detail:

1. Forestry sceptics were right, says Upton.

The report begins unusually, with a personal statement from Upton taking responsibility for his part in New Zealand’s failure to properly tackle greenhouse emissions. As National’s Minister for the Environment in the 1990s he was criticised by Greenpeace and others for helping create a climate policy that allowed emitters unlimited access to forestry credits, in place of reducing their fossil fuel use.

When New Zealand had vast swathes of new, rapidly growing plantations forests it seemed attractively cheap to count them against as big a share as possible of domestic emissions, he says. Upton was then a young minister in his mid-30s, and he says he always knew the cheap credit supplied by forests was likely to run out by roughly 2020. “But I don’t mind admitting that the sheer scale of forest sinks at the time (and the eternity that a date 16 years away represents when you’re only 36) made offsetting a very attractive policy response.”

The trees were supposed to be a bridge to a low emissions future, buying time while the world awaited new technologies to solve the emissions problem.

Well, the critics were right, says Upton. Emitters didn’t use the time the forestry credits bought them to radically reduce their actual emissions from cars, housing or industry. 

New Zealand’s gross emissions increased by nearly 20 percent between 1990 and 2016, yet because of policy settings, we are still on track to technically meet our international commitments.

“Looking forward, heavy reliance on forest sinks to claim a net zero emissions target in some future year risks masking the reality that gross emissions of fossil carbon dioxide could easily remain stubbornly high,” says Upton’s report. “Modelling for the Productivity Commission suggested that even if New Zealand met a target of net zero emissions by 2050, gross emissions would still only be roughly 40 percent below their 2015 level,” it says.

“A key question for policy-makers then is the extent to which they want to construct emissions reduction targets and climate policies around an accounting outcome, or want to clearly signal and incentivise a real and enduring transition to a truly low- emissions economy.”

2. Upton wants two ETSs – one for forests and farming, and one for fossils

Today, Upton’s view is that trees should only be used to offset comparatively short-lived emissions, namely the methane and nitrous oxide produced by farming.

Most countries wouldn’t bother considering a whole ETS framed around managing those two gases, but New Zealand is unusual in that they make about half our emissions. 

It’s worth noting nitrous oxide lasts considerably longer in the atmosphere than methane, so even climate scientists who support going lighter on methane have tended to assume that nitrous oxide would be in the same policy basket as carbon dioxide. Upton doesn’t think so.

About two-thirds of methane disappears within 12 years, while it takes about 120 years to break down two-thirds of nitrous oxide. Both gases are much more potent than CO2, in the short-term, though CO2 can stick around for many centuries.

Upton says nitrous could go either way, but he favours putting it in with methane, making a special grouping of what he calls the “biological” gases (gases from animals’ bodily process, cropping and the like).

Right now, older climate agreements such as Kyoto convert every molecule of greenhouse gas into units of carbon dioxide, so, for example, a molecule of methane is worth about 30 times a molecule of CO2, and nitrous oxide is worth about 300 times. This approach treats greenhouse gases as generic units, or a kind of uniform currency, that can be converted into equivalent units of forest or other carbon sinks.

But in reality, carbon is the big long-term problem, and it shouldn't be given an easy way out with forest offsets. Only the shorter biological gases should be allowed to be offset with trees, says Upton.

New Zealand could do this under the 2015 Paris Agreement, because while the agreement sets high-level goals it leaves it up to countries to determine how they go about achieving them.

While the actual target for reducing biological gases would be set by the Climate Commission, Upton envisages reducing them by a minimum of 20 percent while allowing for some ongoing emissions to enable New Zealand to keep producing food. Fossil emissions would go to zero as quickly as possible.

Fossil fuel-emitting industries are usually keen for all emissions and sinks to be tradable with each other and across national borders, because it means that the cheapest available method of countering greenhouse gases can be purchased by emitters anywhere, lowering costs.

Reducing emissions domestically tends to cost more – and would cost more again if forestry wasn’t available.

But Upton says that while the short-term costs might be cheaper if fossil fuel emitters use forest sinks, in the long run the world will be a warmer and more expensive place if it meant emissions didn't fall so quickly.

Plus, there’s a risk that cuts to methane and nitrous oxide will be used to replace CO2 cuts, unless the ETS discriminates somehow, he says.

Beef and Lamb are all for Upton’s idea: “The Commissioner has recommended a science-based approach which fits with the principle of each sector being responsible for its own emissions, and for tackling them. Different sectors should not be able to off-load the impact of their emissions onto other sectors,” they say.

Upton’s modelling suggests that one major difference between his plan and the current policy would be that the current policy would result in a much bigger reduction in beef and sheep farming (replaced by trees off-setting CO2).

3. Trees aren’t forever, but CO2 is (kind of).

Upton’s argument is that forests can’t be relied on keep carbon stored safely for as long as required to counteract long-lived fossil emissions.

“While forests can be long-lived, they cannot be regarded as permanent. Their increasing exposure to climate change impacts through…pests, pathogens and erosion, further underscores their impermanence,” the report says, “the carbon stored by trees and other terrestrial ecosystems can be quickly released back into the atmosphere…Continuing to emit fossil carbon dioxide on the basis that an equivalent amount of carbon is being sequestered by biological sinks therefore carries significant risks.”

Upton notes that native forests last longer than pine plantations, but says risks such as increasing fire hazards in dry regions -- such as Canterbury, where economic models suggest many new trees will be planted – make them a risky proposition, too.

How long a felled log holds onto its carbon depends what it was harvested for – the report says if the tree becomes part of a building it may remain out of the atmosphere for many decades, but if the same tree is turned into paper, the carbon may return to the atmosphere in a matter of months.

“Most logs are exported to China, India and South Korea where they are converted into products with varying lifetimes ... when aggregated, the decay curves for these logs indicate that in just over two years half the carbon in exported logs has been returned to the atmosphere,” says the report. “Storing the waste from fossil emissions in forest sinks is simply delaying the inevitable.”

But Mason, the forestry professor from Canterbury University, says that while overall the report is useful, it’s debatable to say that forests are just short-term reservoirs.

“Forests in aggregate are often maintained over millennia, and the question of what average level of carbon storage they represent can be predicted quite accurately…” he says. "If we follow his recommendations we would inevitably have to abandon our commitment to greenhouse gas neutrality by 2050.”

In a sense, says Mason, pairing fossil fuel/carbon emissions with forest sinks makes more sense than linking forests to farming, because both sectors produce and store the same gas – CO2 – making the conversion easy. "From an international perspective, (under Upton’s proposal) New Zealand would still be polluting the atmosphere with methane and nitrous oxide, while claiming that our carbon dioxide sequestration was off-setting those gaseous emissions. We'd still be faced with the prospect of comparing greenhouse effects of CO2 with those of methane and nitrous oxide, while ignoring the obvious and easy balance between CO2 sequestration and CO2 emissions.”

4. The trees are coming, either way, but sheep and beef shrink less under Upton's plan

Modelling done for the report by Motu suggests a big change to the landscape is coming, under either the current plans or Upton dual-ETS plan.

No matter which way we go, New Zealand will (at least partly) undo the massive forest clearance people carried out to make way for farming -- impressive tree-felling effort that the report says has contributed more to climate change than any ongoing emissions from farming, and about seven times more than our fossil fuel emissions.

More than three billion tons of carbon were shifted to the atmosphere from the land by forest-felling, it says.

The biggest difference between Upton’s two-ETS system and the current policy scheme is the amount of forest that would be replanted.

If fossil emitters have unlimited access to forest sinks, 5.4 million hectares of land would be switched to forest cover.

At most, Upton's alternative approach would see between 1.6 million (for a 20 percent reduction target for farming's biological emissions) and 3.9 million hectares planted (for net zero biological emissions).

The planting would be skewed to Manawatū-Whanganui, Canterbury and Otago, and those last two regions would also have extreme fire risk from climate change, he says.

“New Zealand is not exactly short of land. It can easily accommodate more forestry. But making all land potentially available for storing carbon (as a substitute for not emitting it) will inevitably limit land use choices and options.”

Emissions prices would be much higher under either system – but even higher for carbon under Upton’s proposal.

Keeping an all-gas ETS, prices might increase from around $25 per tonne of carbon dioxide equivalent today to up to $203 by 2075.

If fossil emissions did not have access to forest offsets, the price would be higher: $350 per tonne of carbon dioxide by 2075.

Farming’s biological emissions, meanwhile, would have a lower price under the dual-ETS plan: between $48 and $141 per tonne, depending how strict a target was set.

All the scenarios would see sheep and beef farming replaced by trees to some extent (although scrubland would be planted in forest first).

But under the least ambitious target using Upton’s approach, sheep and beef farming would still dominate over forestry. Under every other scenario, forestry would dominates. Dairy would also be replaced to various extent by horticulture.

Simon Upton has provided a thought-provoking document ... and the Government welcomes it as part of our overall consideration of climate strategies,” was Shaw's reply. "Future technology may provide other options but, until then, trees are our best option, alongside emissions reductions." The new-look ETS would include a sinking lid on emissions, said Shaw.

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