New Zealand's first environmental accounts show greenhouse gas emissions rose slower than economic growth in the last 25 years, but the planting of forests to absorb carbon has slowed dramatically since 2013. Thomas Coughlan reports on where we're going wrong.
Statistics New Zealand released the Environmental Economic Accounts on Tuesday and they made for sobering reading. The most important statistic relates to New Zealand’s emissions of carbon dioxide equivalent, which includes methane emitted by agricultural industries. It does not include households, and is a gross figure, meaning it does not take into account the amount of carbon absorbed by our forests.
New Zealand’s greenhouse gas emissions grew by 24 percent in 25 years from 61 million tonnes in 1990 to 76 million tonnes in 2015. Our commitment under the Paris Agreement is to reduce greenhouse gas emissions to 11 percent below 1990s levels by 2030, although this reduction will include credits from carbon sequestered by forests.
There was some good news in the report. Whilst total emissions are increasing, they are increasing more slowly than GDP growth. This means that New Zealand is becoming more productive in the way that it emits greenhouse gasses. This measurement is called greenhouse gas intensity.
“What that shows is that it is possible for you to have economic development and at the same time, reduce greenhouse gas emissions,” said Minister of Statistics, James Shaw.
“The net number is still increasing. That’s the bad news, but we know that it is possible to actually reduce, per unit, the amount of production,” he said.
Agriculture, transport and storage, and electricity, gas, water and waste services, which accounted for 76.5 percent of industry emissions in 2015, declined in emissions intensity over the 1990-2015 period. Agriculture’s carbon dioxide equivalent emissions increased 0.6 percent over the year, while its GDP increased 1.4 percent.
Manufacturing, food, beverages petroleum and tobacco product manufacturing all increased in greenhouse gas intensity over the same period. Their emissions grew faster than their respective industries.
Wrong or right direction
Another area captured by the report was the carbon efficiency of the different sectors of our economy. This is where the report’s findings are likely to be controversial.
Services, which accounted for 69.1 percent of economic activity in 2015 contributed only 11.9 percent of industry emissions, showing that the value from those emissions to the economy was relatively high. Primary industries, by contrast contributed just 7.4 percent of economic activity, but 61.4 percent of industry emissions, mainly due to the methane emissions of agriculture.
However, Adam Tipper, Senior Analyst for Stats NZ said important parts of the agricultural value chain were not included under primary industries, including the processing of milk into cheese or milk powder.
These were counted towards the goods-producing sector of the economy, where emissions were relatively in line with the size of the sector’s economic output; the goods-producing sector of the economy was 23.5 percent of the economy in 2015 and contributed 26.7 percent of industry emissions.
The other worrying trend in the data is the slow growth of our forests, the carbon sinks that sequester carbon from industry. Overall, the amount of land covered by trees in New Zealand increased 2.2 percent from 1996 to 2012 to 199,527 hectares.
The bad news is in New Zealand’s forestry stocks available for harvesting. The area covered by new trees and the number of trees planted to restock harvested trees both increased from 2008 until 2012-2013 following the introduction of the emissions trading scheme, while the area of trees removed plateaued. That meant forest stocks grew overall.
But beginning in 2013, the number of new trees planted plummeted to negligible levels, the number of restocked trees plateaued and the number of trees removed increased.
Catherine Leining, Policy Fellow at Motu, said that this change was the result of a confluence of factors.
“At the end of 2012 the government announced that it would be taking its post-2012 climate change commitments outside of the Kyoto Protocol,” Leining said.
“That was the first signal to the market that we might be de-linking and this both added to domestic policy uncertainty and led to a divergence between the values of domestic ETS units and overseas Kyoto units, creating an arbitrage opportunity,” she said.
At the same time, a confluence of factors caused the global price of carbon to decrease, creating a disincentive to keep land planted in forest and an incentive to convert it to other productive use, like dairying.
“There is a twofold incentive from the price of carbon: the first is to deter deforestation and the second is to incentivise afforestation and the low price of carbon affected both of those. At the same time there were high commodity prices for alternative land use products like dairy so the combination led to increased deforestation for agricultural production,” she said.