Treaties for which NZ is DepositaryTrade law and free trade agreementsTreaty making processEngagement with MaoriInternational Treaties ListNational Interest AnalysesRecent Treaty ActionsTreaty CriteriaTreaty registerLaw of the Sea and FisheriesInternational Humanitarian LawInternational Courts and TribunalsPrivate International LawDiplomatic Privileges and ImmunitiesSecurity Council SanctionsSpeeches and Events
Start writing the country or territory name in the box. Typing more letters narrows the search. Click "go" or hit "Enter" to go to the information paper on the country or territory.
(We don't have information papers on all countries and territories.)
Although we have tried to use plain English content on the site, you may come across specialist terms and acronyms. Find out what they mean in our glossary of terms.
If you come across a term that isn't included in the Glossary please send us an email.
The implementation of the Kyoto Protocol would require New Zealand to ensure that it could meet its obligations. These obligations, described earlier and in Appendix 2, fall into several broad groupings:
New Zealand is already required to report national inventory data under the Framework Convention, to the extent that its capacities permit. At present information is collected from a variety of sources, with collection being voluntary in some instances and mandatory in others. However:
The Government’s intention regarding emissions monitoring and inventory is therefore to formalise the arrangements for collection and collation of information relating to greenhouse gas emissions and removals within a Climate Change Response Bill. The Bill will state the functions of the national inventory and will include:
The primary function of the register (or registry agency) is to account for changes in New Zealand’s assigned amount (matched by corresponding changes in holdings of emission units), such as those that could accrue through development of forest sinks or through use of the Protocol’s flexibility mechanisms. An accurate record of assigned amount is essential for enabling New Zealand to demonstrate, internationally, compliance with its obligations under the Protocol.
The Government’s intention is to establish a register of assigned amount and provide for the appointment of a registrar under a Climate Change Response Bill. The Bill will set out the features of the register and the functions of the registrar, which will include duties to record the issue, holding, transfer, acquisition, cancellation and retirement of emission units, and the power to carry over emission units to subsequent commitment periods.
New Zealand has existing obligations of this type under the Framework Convention, and can extend its measures under the Framework Convention to include those required under the Protocol.
New Zealand made a commitment at the resumed COP-6 meeting in Bonn to provide financial assistance of US$2.5 million (NZ$6.1 million) per year to developing countries by 2005. This represents assistance for commitments in relation to both the Framework Convention and the Kyoto Protocol, and has not been apportioned between them.
The Climate Change Response Bill will provide powers for the Crown to engage in international trade in emission units, as a possible mechanism to ensure that New Zealand is able to comply with its obligations under the Protocol. This mechanism will ensure that the Crown complies with the constitutional convention that New Zealand be placed in a position to meet its international treaty obligations before proceeding to ratification.
However, it is not intended that New Zealand rely on the Crown’s trading power under the Climate Change Response Bill to meet its obligations. A proposed package of measures that would be used to:
is currently being developed for a further round of public consultation during the first half of 2002. Those measures will provide the principal means by which New Zealand will meet its obligations under the Protocol.
New Zealand’s emission obligations for the first commitment period are likely to be partially but not fully met by a number of programmes that are already underway or in the process of being developed.
Some programmes that do not have greenhouse gas emissions reduction as their sole or principal purpose, but which will have the effect of reducing New Zealand’s greenhouse gas emissions, are already being implemented or planned. These include:
It is estimated that, if the targets that have been established are met, the National Energy Efficiency and Conservation Strategy will reduce New Zealand’s greenhouse gas emissions by between 18 and 22.5 million tonnes of carbon dioxide-equivalent during the commitment period, relative to the emissions that would have otherwise occurred. Estimates of emissions reductions are not yet available for the other strategies.
In addition, the following programmes targeted directly at greenhouse gas emissions reduction are underway or in preparation:
Projections of New Zealand’s likely emissions between 2008 and 2012 suggest that the measures described above will not be sufficient in themselves to meet New Zealand’s emissions obligations.
The balance of New Zealand’s emission obligations could be met using a number of different approaches involving domestic greenhouse gas emissions reductions, use of the Protocol’s flexibility mechanisms and the use of “removal units” (sink credits) from forest sinks. Criteria for the design of an approach, a range of possible greenhouse gas emissions reduction measures, and options for the use of removal units, were put forward for the public consultation that took place from October to December 2001.
The possible approaches and measures are:
- an emissions charging system with different options for revenue use, to apply to some range of greenhouse gas emitting activities throughout New Zealand,
- a domestic emissions trading system that would interface with the international emissions trading system under the Protocol, and/or
- a levy and rebate system for industry sectors, to apply to activities not directly related to emissions in order to raise funds to purchase emission units to cover emissions from those sectors
- with the Government applying other measures to greenhouse gas-emitting activities that are not included in the system applied.
Introduction of a project-based initiative system under which the Government would grant emission units or financial assistance to businesses or groups who reduced emissions or enhanced sinks beyond an agreed baseline.
Extension of the negotiated greenhouse agreement programme into the commitment period for major emitting businesses.
Hybrids between the above market-based measures and between market measures and those non-market measures that are already underway or planned.
The possible approaches that were put forward in relation to removal units from forest sinks were:
Removal units from forest sinks could be used to meet any residual cost of excess emissions if other policies do not sufficiently reduce New Zealand’s emissions during the commitment period.
Following the first round of consultation on possible policy measures, the Government’s intention is to develop a preferred policy package informed by the findings of the public consultation, and based on criteria of:
These criteria have been further interpreted following public consultation and assessment of economic modelling results, and a broad policy direction based on these criteria is discussed in “Economic effects of the Protocol entering into force for New Zealand”.
The preferred policy package will be put forward for further public consultation in April and May 2002. A decision on the final policy measures to be adopted will be taken following that round of public consultation.
If legislation is required to implement some or all of those policy measures, the Government will implement those policy measures via an amendment to the Climate Change Response Bill or other legislation as required.
Fiscal costs refer to the direct costs to the Crown to ensure that New Zealand’s obligations under the Protocol are met.
There are two types of fiscal cost:
These costs are essentially administration costs associated with meeting the minimum requirements to comply with the Protocol, along with the costs of the commitment New Zealand has made to support developing countries. Specifically, these are the costs of:
The total estimated administrative cost is approximately $1 million up front, with an ongoing cost of $1.4 million per year. This is made up of:
However, it should be noted that these costs have not been through a full budgetary process and as such are only estimates, not confirmed costs.
In addition, financial commitments made by New Zealand to developing countries under both the Framework Convention and the Kyoto Protocol are expected to reach US$2.5 million (NZ$6.1 million) per year by 2005. This has not been apportioned between the two agreements.
Fiscal costs related to greenhouse gas emissions measures are heavily dependent on the actual measures adopted within New Zealand. While there are fiscal costs for implementation of strategies that will reduce greenhouse gas emissions, specifically the National Energy Efficiency and Conservation Strategy, the Waste Minimisation Strategy and the New Zealand Transport Strategy, those costs can be attributed to the Protocol only partially (if at all).
Crown purchase of emission units
The largest potential fiscal cost that could be incurred under the Protocol would occur if the domestic policy measures adopted were such that the Crown was required to purchase, at international prices, additional emission units to ensure that New Zealand’s assigned amount balanced its emissions at the end of the commitment period.
In such circumstances, the direct fiscal cost of emission unit purchase to the Crown would depend on decisions about the allocation of responsibility for greenhouse gas emissions and sink activities, in particular:
The fiscal effect of compliance would therefore depend on whether the Government held a surplus or a deficit of emissions units for those emissions for which it retained responsibility, although in practice this effect could be offset if cost recovery mechanisms were established under the policies chosen. In the longer term, if the Government retained removal units to offset first commitment period emissions, some or all would need to be replaced when Kyoto forests were harvested.
Independent of the emission unit costs above, there would also be a cost to the Crown of establishing and administering domestic policy measures. For example, these costs could include the costs of establishing and running a domestic emissions trading system or emissions charging system, preparation and dissemination of information material, negotiating and monitoring the performance of negotiated greenhouse agreements, and so on. These costs are not currently quantified but, in comparative terms, are not expected to be large.
The economic effects of entry-into-force of the Protocol for New Zealand will not be confined to the first commitment period only, but will be long-term. The choices that New Zealand makes for managing its greenhouse gas emissions during the first commitment period will partly determine the economic effects of the Protocol for New Zealand in subsequent commitment periods.
In particular, the policy choices New Zealand makes ahead of, or during, the first commitment period will determine how well New Zealand is positioned if New Zealand faces more stringent emissions limitation and reduction targets in subsequent commitment periods (that is, doing less now could increase future costs).
If New Zealand ratified the Protocol, there could be a signalling effect on investment. The nature and magnitude of any such effect would depend on two main factors:
Uncertainty on policies at the time of ratification could result in investors deferring investments until there is more certainty on policies. As the Government intends to announce the preferred policies that will be used for meeting New Zealand’s commitments prior to ratification, this effect should be able to be largely avoided.
Assuming that the Protocol does enter into force, the nature of policies will be the key factor in determining economic effects and therefore investment decisions. The Government has already indicated that economic efficiency and competitiveness will be key dimensions that will be used by the Government to determine its preferred policy approach, along with equity, feasibility and environmental integrity. Accordingly, the impact on investment will be a key consideration when the Government makes decisions on policies for meeting New Zealand’s commitments.
The first commitment period commences in 2008 and ends in 2012, during which time participating Annex I countries will be obliged to take actions to meet emissions targets under the Kyoto Protocol.
In that situation, there will be two sources of economic effects on New Zealand:
As discussed below:
The domestic economic effects depend largely on New Zealand’s choice of domestic policies for meeting its Kyoto commitments.
However, there are likely to be some domestic economic effects (for example, in forestry) as a result of the Protocol’s entry-into-force affecting international markets, regardless of New Zealand’s decision to ratify or not ratify the Protocol.
National income could be maintained or increased due to the ability to sell New Zealand’s likely surplus of emission units (including removal units) over projected emissions.
Domestic economic activity would be likely to show slower growth in response to a domestic emissions price measure, but (depending on decisions about use of removal units) would not necessarily cause a fall in national income during the commitment period.
Emissions price measures would cause some contraction in activity in emissions-intensive industries, if those producing tradable goods and facing competition from countries without domestic emissions price measures were exposed to the full price of emissions or some part thereof. The extent of contraction would depend largely on the level of the domestic emissions price faced.
Emissions price measures would cause expansion in activity in non-emissions-intensive sectors, such as service industries.
Progress can be made toward meeting New Zealand’s Kyoto commitments under the National Energy Efficiency and Conservation Strategy at no net economic cost or better.
The results of economic modelling (described below) and public consultation have been used to develop a goal and principles for the choice of policies required to lower greenhouse gas emissions. The goal is:
This goal means:
The principles agreed by the Government are set out below. These are intended to clarify the five criteria set out in the October 2001 consultation document Kyoto Protocol: Ensuring our Future, and will guide the selection of a preferred policy response.
Policies must result in permanent reductions in emissions over the long term
Policies must achieve real and sustainable reductions in emissions across all commitment periods – both to protect New Zealand’s international credibility and to ensure that we are prepared for future commitment periods.
Policies should avoid carbon leakage. This will protect the objectives of the Protocol pending the creation of a truly global emissions regime.
Policies will aim for long-term permanent changes in behaviour.
Policies need to be responsive to the changing international context
Policies need to be consistent with a growing and sustainable economy
Policies will not disadvantage the vulnerable in our society
In broad terms, the principles suggest that the Government should neither:
The effect of implementing this policy direction would be to moderate the potential economic and competitiveness effects associated with the Kyoto Protocol.
