Climate Change

NZ uses accounting trick to seem climate-friendly

Activists say the Government is using an accounting trick to make New Zealand appear climate-friendly. Marc Daalder reports the nation is actually on track to be up to 15 million tonnes over its Paris Agreement target. That's three million cars' worth of exhaust fumes each year.

New Zealand's emissions targets under the Kyoto, Copenhagen and Paris climate accords have used an accounting trick to make them appear more significant than they actually are, activists say. Now, as the Government prepares to announce a new Paris target for emissions reductions, organisations like Greenpeace New Zealand are asking it not to reuse gross-net accounting.

"It's totally misleading. If your target is a net figure, then the base year needs to be a net figure as well," Russel Norman, Greenpeace's executive director, told Newsroom. "They need to be clear about what their target is for gross emissions and what their target is for net emissions."

It was being done "in order to make it look like they're cutting emissions when they're not. The Government's been consistently and, I think, deliberately misleading on it."

New Zealand is currently overshooting its targets by between four and 15 million tonnes of greenhouse emissions a year. Cutting 15 million tonnes of CO2 would be the equivalent to taking three million cars off the road for a year.

What is gross-net?

The current Nationally Determined Contribution (NDC) under the Paris Agreement states: "New Zealand commits to reduce greenhouse gas emissions to 30 percent below 2005 levels by 2030". While this target is in reality a multi-year commitment, covering the years 2021-2030, it is frequently framed as a single-year target for 2030. Newsroom will adopt this framing for this article due to the insufficiency of data surrounding emissions for each year in the target period.

In the fine print, the NDC specifies that negative emissions from land use, land-use change and forestry (LULUCF) - essentially, the carbon absorbed by plants - will be counted in its target. However, it doesn't make clear that the 2005 benchmark will be gross emissions.

In other words, New Zealand emitted 83.27 million tonnes of CO2 equivalent greenhouse gases (CO2e) in 2005. That's the gross emissions benchmark that the NDC commits us to reducing by 30 percent by 2030.

The 2019 biennial report, a UN-mandated report containing estimates of future emissions, projects that New Zealand will emit 74.7 million tonnes of CO2e in 2030. However, New Zealand plans to count the 10.69 million tonnes of CO2e that will be removed from the atmosphere by LULUCF in 2030 towards its Paris goal.

At the same time, New Zealand isn't counting the 28.81 million tonnes of CO2e removed from the atmosphere by LULUCF in 2005 towards its benchmark. The Government has been using two separate measures for emissions, gross (total) and net (including forestry removals) in order to make it look like we're cutting emissions more than we actually are.

If New Zealand were to make the Paris commitment of reducing emissions by 30 percent from 2005 levels under a gross-gross accounting scenario, that would require cutting gross emissions to around 60 million tonnes by 2030, more than 14 million tonnes below where forecasts say we'll be. If we were to attempt the same target under a net-net accounting scenario, that would require cutting net emissions to around 38 million tonnes, after accounting for LULUCF removals. Instead, the biennial report predicts New Zealand's 2030 net emissions will be 64.01 million tonnes, or almost double where they need to be.

Gross-net targets "creative accounting"

When New Zealand set its first NDC for lowering emissions under the Paris Agreement in 2015, observers noted it would use gross-net accounting to set lower emissions reductions targets for itself while appearing to commit to drastic change.

Climate Change Minister James Shaw, then in opposition, condemned the NDC as "one of the world’s weakest and most embarrassing climate targets". He instead called for nearly quadrupling the reduction - but that same NDC remains in place more than two years after the Greens joined the Government.

Climate Action Tracker, a coalition of international climate science groups that independently analyses government climate policies, determined at the time that New Zealand would "deploy creative accounting to allow emissions to rise".

However, little fuss has been made of the potentially misleading accounting since Shaw became Climate Change Minister in 2017. In a statement to Newsroom, Shaw defended the practice and did not comment on whether the new NDC would retain gross-net accounting.

"Gross-net accounting is useful for showing what our overall impact on the climate is," he said. "The starting point, or the baseline, is communicated as ‘gross’ emissions as this tells us the total amount of CO2 equivalent we released into the atmosphere in a given year.

"We know that to solve climate change we need to reduce and remove emissions from the atmosphere, which is why we communicate our target as ‘net’. A ‘net’ target means we can show the impact of a breadth of climate policies."

Net emissions to rise under Paris target

The full ramifications of gross-net accounting become apparent when examining the current NDC. The Government has set itself a 60 million tonne net emission target, based off 2005's gross emissions. The current Paris target actually calls for New Zealand to "reduce" net emissions to a level above what they were in 2005, at 54.47 million tonnes.

"If you do it on a like-to-like basis, then New Zealand went to the Paris climate meeting, said it really cared about climate change, then gave a commitment to increase net emissions by 10 percent in 2030 above 2005 figures. That really doesn't cut it, so they came up with a way to make it look like they're cutting," Norman said.

There's another problem. Even when using gross-net accounting, New Zealand is forecast to fall four million tonnes short of its Paris goal. That will be made up for with carbon credits purchased from the global carbon market that the Paris Agreement calls for.

Similarly, the Government will fall short of its Copenhagen commitment, made in 2010, to reduce emissions for the period 2013-2020 to reduce emissions to five percent below 1990 levels. Even after using gross-net accounting to reduce its commitment by 136 million tonnes over the eight-year period, New Zealand will still fall short of its goal by 27 million tonnes, to be paid for with almost-worthless Kyoto carbon credits.

In fact, far from falling by five percent, emissions skyrocketed since 1990, from 65 million gross tonnes and 34.51 million net tonnes to an annual average of 80.7 million gross tonnes and 67.2 million net tonnes over the eight years.

"The New Zealand Government has not acted in good faith, because it's using hot air to meet its 2020 targets," Norman said.

"We've profoundly failed. There's been a huge surge in both net and gross emissions between 1990 and 2017. Plainly, we have deliberately pledged not to cut either gross or net emissions."

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