Wednesday 22 September 2010

Kyoto obligations

I argued that New Zealand ought to withdraw from Kyoto and work instead to achieve greater greenhouse gas reductions by pouring R&D funding into agricultural biotech that would be shared without charge with the rest of the world.

The alternative is that we stop taking Kyoto seriously - as have most other countries, as best I can tell. What are the consequences of not meeting Kyoto targets by 2012? Let's check the scary notice they've sent to Canada for its potential non-compliance:
13) Non-compliance with emissions targets is not an issue that can come before the enforcement branch until after the end of the commitment period in 2012.
a. A country in non-compliance with its 2012 target has 100 days after the expert review of its final emissions inventory to make up any shortfall (i.e., to buy credits).
b. If such a country still misses its target, it must make up the difference, plus 30%, in the second commitment period after 2012. It is also suspended from selling emissions credits in the emissions trading mechanism and within 3 months, it must submit a plan on the action it will take to meet second commitment period target.
14) There are no financial penalties under the Kyoto Protocol, nor is there any consequence which involves loss of credits (although there is a loss of access to the carbon market).
So the consequence of not meeting the target is that the similarly non-binding next round's target is going to be even tougher. Well slap me with a wet bus ticket.

It's no surprise then that Canada seems to be ignoring Kyoto.

As far as I can tell, New Zealand seems the only country in the world that is ready to impose serious costs on itself for carbon mitigation. Somebody PLEASE correct me if I'm wrong about this. Are there other countries with potentially large Kyoto liabilities that are actually going to buy credits to get out of the problem come 2012? Europe has an emissions trading system, but is chock full of cheap credits from defunct Soviet industry. Otherwise, I can't think of any example of anything more than lip-service. It's even arguable that NZ wouldn't buy credits in 2012 to meet its deficit, but we'll see. TVHE argues in favor of NZ's ETS on the assumption that the government would be picking up the tab if a system weren't in place; I'd like to see an iPredict contract on whether the government WILL buy credits to meet the expected deficit. I'd be shorting at prices higher than $0.50 given the latest polling numbers.

I really don't buy arguments of the form "Oh, we have to do it because of our international obligations, and everybody will hate us if we don't." Folks have jumped up and down a bit about Canada's thumbing its nose at Kyoto, but can anybody point to a single bit of hard evidence that it's done any real harm to Canada? Or, that anybody actually is paying attention to what we are doing? Heck, the Wikipedia article on government action in response to Kyoto doesn't even mention NZ's emissions trading scheme, though somebody may now go and change it. The burden of proof ought be on the folks warning about serious international sanction. When somebody points to a carbon tariff being placed on Canadian goods, I'll start taking these arguments seriously.

I find it implausible that the NZ government can do more good by cutting aggregate emissions through an ETS than by funding more work on things like GE clover that reduces methane emissions. These kinds of technological improvements reduce our GHG emissions AND help reduce everybody else's too, especially if we release the tech under some form of Creative Commons licence. Our research comparative advantage, and our national comparative disadvantage in terms of GHG emissions, is in agriculture.

We could plausibly argue that other countries' GHG reductions achieved through use of our tech should count towards our meeting our Kyoto obligations, if we wanted to stay within Kyoto. At least it would be lip service towards Kyoto while doing something real about emissions, unlike most other countries' lip service.


  1. How much is NZ's green image worth? OR How much would we lose if our reality fails to catch up to our image and people notice? What is this cost compared to keeping up with Kyoto? My feeling is that if we opt out of KP targets, we better damn well do something as you suggest in other areas (to live up to our image or at least keep up appearances)

  2. I think we should drop the image completely and just focus on R&D agri biotech. Though personally I object to the government funding it on principle, I can certainly live with that as opposed to the ETS

  3. @Cam: I'm less worried about appearances, since I think they're vastly overblown, but am worried more about actually implementing policies likely to give best bang for the buck. Ag R&D seems the best way for us to do good.

    @John: First best if there were thick markets in NZ would be for the govt to provide prizes for scientific achievements in this area so long as they were released to the Commons. The prize compensates the innovator for what he could have earned via patent and more, and ensures that the tech gets broadest possible distribution.

    But there aren't thick markets for that kind of R&D work here, so I think it would have to have some grant elements to it.

  4. Yar, if politicians want to go to the public and say we are reneging on our Kyoto obligations then that is fine - not ETS is needed.

    However, I'm against saying we shouldn't have an ETS when current policy states that we are committed to meeting our obligation ;)

  5. The other issue is that if everyone is just ignoring Kyoto, or a future agreement, how will spending money on ag R and D help anyone? Without binding targets or a carbon price, the new technologies will still raise costs of production no?

  6. @Matt: What would you pay for a contract paying $1 if NZ pays it's Kyoto bill in 2012?

    @Cam: That's why we have to give away the tech without patent. You have to make it cheaper for people to choose low-carbon tech.

  7. @Eric: Testing my faith in the government to be transparent - good point ;)

    Given current policy objectives I would gladly pay up to 80c on the contract (although I probably wouldn't want too much exposure) - is there one up?

    If the government has the intention of reneging they should say - but as long as that isn't the intention they should introduce the best policy for their given intent right.