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More than any other developed nation, New Zealand depends for its prosperity on an equable and stable climate. The New Zealand economy is grounded in primary production. The strength of the primary sector is due in large part to New Zealand’s excellent climate for pastoral farming.
Increased climate change is predicted if global emissions of greenhouse gases continue to grow without constraint. These emissions are projected to increase atmospheric greenhouse gas concentrations significantly, producing increases in global mean temperatures over time. The resulting climate change threatens to have significant long-term adverse effects on the global economy, societies and ecosystems.
New Zealand’s economic base in primary production means it is particularly vulnerable to climate change. Threats to human health, land and water quality, infrastructure, biosecurity and native ecosystems are also significant. New Zealand has a clear and direct interest in supporting efforts to minimise climate change.
Climate change is a global problem and effective action to counter it is beyond the ability of any single country. The United Nations Framework Convention on Climate Change is the global response to climate change and it has been ratified by almost all countries. The Kyoto Protocol is the next development of this Convention. It will introduce legally binding commitments for countries to limit greenhouse gas emissions, as voluntary commitments agreed under the Framework Convention were not successfully implemented. No viable alternative international approaches to the Kyoto Protocol have been developed or proposed, and any alternative would likely involve many more years of delay in reducing greenhouse gas emissions.
New Zealand has taken an active and constructive role in more than ten years of international negotiations leading to the formulation of the Kyoto Protocol. Continued commitment to the Protocol will maintain New Zealand’s standing and influence in future negotiations. Abandoning the Protocol would have the contrary effect, damaging New Zealand’s credibility and its reputation as a global citizen – not only in climate change forums but also over a wide range of international issues.
New Zealand’s effectiveness in climate change negotiations means it is one of the few developed countries that stands to make a small net economic gain from the first Kyoto Protocol commitment period. This gain arises because the carbon sink credits New Zealand will receive in recognition of the greenhouse gas absorbing properties of its plantation forests will more than offset the emissions reductions required to meet New Zealand’s emissions target. Carbon sink credits will be an internationally tradable asset.
Economic benefits of the Kyoto Protocol are also likely to include technology and energy efficiency improvements. Limits on greenhouse gas emissions will create incentives for Protocol countries to develop and adopt new energy technologies less reliant on fossil fuels. Energy efficiency incentives will also be enhanced, producing the double benefit of lower emissions and higher productivity per unit of energy. Rejection of the Protocol would carry the contrary risk of falling further behind competing nations in energy efficiency and trailing a significant shift in energy technology rather than helping to lead it.
The Kyoto Protocol would require New Zealand to ensure that total greenhouse gas emissions for the first commitment period (the five years from 2008 to 2012) are no higher than five times New Zealand’s 1990 level of emissions, or that we have taken responsibility for any emissions over this level through the flexibility mechanisms and sinks provisions of the Protocol.
Taking responsibility means that, for excess emissions, New Zealand would be required to obtain equivalent credit from domestic forest sink activities or from emissions reductions made elsewhere in the world through the Protocol’s trading and project mechanisms.
Other obligations for New Zealand would be to:
Over the first commitment period, it is projected that New Zealand will emit between 415 and 440 million tonnes of carbon dioxide (or the carbon dioxide-equivalent of other gases, mainly methane and nitrous oxide).
New Zealand’s initial assigned amount (translating into a corresponding holding of “emission units”) for the commitment period is 365 million tonnes of carbon dioxide equivalent. This is equal to five times the 73 million tonnes that New Zealand emitted in 1990, times 100%, which is New Zealand’s target under Annex B of the Protocol.
New Zealand is projected to gain, during the commitment period, additional assigned amount (“removal units”) of 110 million tonnes of carbon dioxide-equivalent due to the growth of trees planted on land that has been converted (or reverted) to forest since 1990.
Removal units can be counted against first commitment period emissions in New Zealand or sold internationally during that period, but doing so would establish a contingent liability for emission units if the post-1990 forests from which they were generated were subsequently harvested.
Excluding removal units, New Zealand’s first commitment period emissions are estimated to exceed its assigned amount of emission units by 50 to 75 million tonnes of carbon dioxide-equivalent.
Counting removal units, New Zealand’s commitment period emissions will be less than its total assigned amount of emission units by an estimated 35 to 60 million tonnes. While removal units from sinks are likely to provide a significant benefit to New Zealand, the amount of this benefit will depend on future new planting scenarios, whether forests are replanted, future harvesting scenarios and how much scrub has regenerated since 1990.
Ratification and entry-into-force of the Protocol would have economic effects on New Zealand. The effects would largely depend on the domestic policy measures chosen by New Zealand to meet its obligations under the Protocol. The effects would not be determined by ratification itself.
General equilibrium modelling studies suggest that New Zealand’s gross national income would increase during the Protocol’s first commitment period if removal units (sink credits) from post-1990 forest plantings were sold overseas.
The studies also suggest that application of emissions pricing measures would lead to a slight contraction of domestic economic activity, equivalent to a small reduction in the growth that would otherwise have occurred.
Application of an emissions pricing measure could cause contractions in output from emissions-intensive sectors and expansion of output from non-emissions-intensive sectors, depending on policy decisions about the sectoral coverage and application of such a measure.
There would also be economic effects on New Zealand if the Protocol entered into force without New Zealand having ratified it, as a result of the adjustment of global markets.
Direct environmental effects of entry-into-force of the Protocol, in the form of avoided climate change, will be negligible during the first commitment period because of the inertia of the climate system. But the Kyoto Protocol’s first commitment period is the initial key step in a long-term process. Longer-term effects depend on future emissions beyond the first commitment period. Modelling studies indicate that:
A wide range of ancillary (non-target) environmental benefits and damages could occur due to domestic climate change policies. These ancillary effects strongly depend on domestic policy choices, their specific implementation, and interaction with other environmental objectives. Hence they are not determined by entry-into-force of the Protocol itself.
Social and Cultural
Like ancillary environmental effects, social and cultural effects are not determined by ratification or entry-into-force of the Protocol, but are an indirect outcome of domestic policies and measures. Because New Zealand can choose its own domestic policies, it is considered that:
Some submitters supporting a delay in ratification included as reasons:
Some submitters supporting ratification included as reasons:
There is a low level of real understanding within the wider community about what the Kyoto obligations entail; in particular, responses in written submissions suggested that a number of smaller stakeholders were not familiar with the issues and concepts on which consultation was based.
With regard to the wider public, preliminary results from a public survey carried out by UMR from 19-20 January 2002 show:
Ratification could have a negative signalling effect on investment if there is uncertainty as to the domestic policies that New Zealand will use to help meet its commitments under the Protocol.
A significant proportion of submitters considers that New Zealand should delay ratification until further analysis of potential effects is carried out. Some consider that ratification should be delayed until the positions of trading partners and competitors are better understood with regard to ratification and related policy measures.
Some submitters are concerned that emission reductions under the Protocol’s first commitment period will not themselves make a significant contribution to a reduction in global warming unless they are followed by further reductions in future commitment periods.
Climate change has long-term implications and potentially substantial costs for New Zealand. As a climate-dependent, primary producing country with significant concentrations of population and infrastructure in coastal areas, climate change presents a significant risk to our way of life. The Kyoto Protocol provides a means by which, over the long term, those risks can be mitigated.
Implementation of the Protocol itself also has potential for economic and consequent social effects. The Government aims to minimise adverse effects and maximise positive effects through the design of domestic policy measures, and through maintaining a proactive stance at international negotiations for the second and subsequent commitment periods.
Therefore, the Government considers that it is in New Zealand’s national interest to ratify the Kyoto Protocol.