Embed Size (px)
Citation preview
1
Submission on the:
Climate Change Response (Moderated Emissions Trading) Amendment Bill
Nigel Taptiklis 20 Emerson Street Petone Ph 04 973 6551 Mbl 021 043 6554 [email protected]
I wish to appear before the select committee to present my submission
Contents Opening Statement ………………………………………………………………… Page 2 Summary ... ………………………………………………………………………... Page 3 Summary of a recent economic study ……………………………………………... Page 4 Background ……………….…………………………………………...……..……. Page 5 Brief analysis ………………………………….…………………………………… Page 7 Specific recommendations ………………………………………………………… Page 9 Appendix …………………………………………………………………...……...Page 10
2
Opening Statement - What Price for Pollution?
The Government has recently been reviewing the Emissions Trading Scheme and has proposed changes that will provide increased protection for polluters.
Paying a fair price for one’s pollution, rather than passing the cost onto others is a fair expectation. Especially since those who pollute the least, are least able to cope with the costs of a changing climate. While some quibble and refuse to internalize and address the costs of their pollution, more and more people loose their homes, crops and lives to increasing floods and droughts.
When firms are required to pay to pollute, they will pollute less, and less polluting technology and products will emerge. Such a transition is becoming increasingly urgent, and scientists say that our GHG emissions must peak in the next few years and then begin to decline, or we face passing tipping points that could trigger runaway climate change.
Passing the costs of pollution to taxpayers through pollution subsidies blunts the incentives to reduce that pollution, while suppressing innovation of new and cleaner technologies and the opportunities these will provide for emerging businesses. This is essentially a self reinforcing double negative for society. We will end up shielding and protecting a self-destructing system, from the opportunity to create a more sustainable one. To achieve a fair, efficient and sustainable economy and future, we must all internalize the costs of our own pollution.
3
Summary
1.1 I have an involvement in a number of groups through my interest in climate change mitigation, policy and economics, but I am representing my own views in this submission. I am currently studying for a master’s degree in environmental studies, and am married with three small children. My submission focuses on the effect that this ETS will have on emerging technology, businesses and people seeking opportunities and a safe level of CO2 from a low carbon future for NZ Inc.
1.2 The General Policy Statement and Objectives of this bill make no mention of the need to reduce emissions and transition NZ Inc. to a low carbon economy. If this bill passes into law, new low carbon innovation and opportunities for NZ Inc. will be suppressed. Innovators, low carbon entrepreneurs and young people with the fresh skills and knowledge required to achieve a low carbon transition will be absorbed by opportunities overseas. New Zealand will be a technology importer, such as we are with wind turbines. This bill even seeks to remove the innovation fund that would recycle revenue from polluting activities into clean alternatives. 1.3 In assisting the transition to a low carbon future of the UK, EU or the US, New Zealand’s expat low carbon innovators will therefore contribute to NZ Inc.’s growing account deficit. NZ Inc.’s potential to catch this new wave would be enhanced by a sound ETS, but retarded by this ETS. This legislation would set up a double whammy on taxpayers and emerging businesses, and kick them while they’re down by removing the household and innovation funds while subsidising polluters.
1.4 With the 1.3% phase out of allocations defined in the Bill, an EITE business that gets 100 free credits in 2014 can expect to still get 81 credits in 2030, 62 credits in 2050 and 27 free credits in 2114. A 1.3% phase out, along with other measures in this bill establishes an economic framework to preserve the status quo, rather than provide some legitimate transition time. Such measures equate to a defection, since in no way will such an ETS reduce emissions enough or at a sufficient rate to meet international obligations.
1.5 A key benefit of an ETS is that firms can access the cheapest emission units through linkage with other countries. However linkage with other countries except Australia is unlikely with this bill. A $25 per tonne CO2-e carbon tax would be a more simple and effective measure, with lower burdens on small businesses, citizens and Government than this proposed ETS. If this is the best ETS NZ can come up with, it would be better to scrap emissions trading for New Zealand altogether and use a tax instead. However a tax like an ETS is simply a tool, and it is the design and use of an economic instrument that will define its efficiency, equity, effectiveness and legitimacy. 1.6 GHG mitigation and adaptation to Climate change is a rapidly developing area. The policy framework must adapt to the growing urgency, and increasing global efforts to prevent catastrophic climate change. A sound ETS must have measures for frequent review and amendment to reflect the emerging understanding of the global scientific community.
4
1.7 As I argue within this submission, I oppose the Climate Change Response (Moderated Emissions Trading) Amendment Bill and in particular:
1. I oppose intensity based allocations of free credits. 2. I oppose the price cap on carbon. 3. I oppose the 2 for 1 carbon credit deal. 4. I oppose legislating for the protection of EITE industries beyond 5 years. 5. I oppose further delays to the entry of agriculture. 6. I oppose Clause 6, to repeal section 223 of the Act relating to the Household
Fund. 7. I oppose Clause 22 which removes the provision for the Innovation Fund.
1.8 I wish to support the following proposals
8. I support that the carbon measurement of indigenous forestry should be fixed, based on existing science.
9. I support all of the Parliamentary Commissioner for the Environment's recommendations, particularly the full and transparent publication by the Auditor General of the number and value of all allocations (free or otherwise) distributed under the scheme.
10. I support the inclusion of an appropriate Treaty clause in the legislation. 11. I support fixing the wilding pines problem. 12. I support the new categories for agriculture to allow farm level participation for
different agricultural sectors to start at different times. 13. I support having targets in legislation, these should be based on international peer-
reviewed science, and avoiding 2 degrees of warming.
5
Summary of Ackerman et al., October 2009. The Economics of 350: the benefits and costs of Climate Change
Executive Summary
“We cannot afford a little climate policy, half-measures that would leave us all vulnerable to the immense risks of an increasingly destructive climate. We need a big initiative, a comprehensive global deal on protecting the earth's climate by rapidly reducing emissions of greenhouse gases. Because the status quo is not sustainable, the most economical choice is to change, as quickly, cost-effectively, and comprehensively as possible”
Costs of emission reduction: a literature review
“Suppose that the cost of climate protection turns out to be 2.5 percent of global GDP, toward the high end of the global scenarios just discussed. In an economy that is growing at 2.5 percent per year, a rate that is common for developed countries, spending 2.5 percent of GDP on climate protection each year would be equivalent to skipping one year’s growth, and then resuming. Average incomes would take 29 years to double from today’s level, compared to 28 years in the absence of climate costs. In an economy experiencing 10 percent annual growth, as China has in many recent years, imposing a cost of 2.5 percent per year is equivalent to skipping 3 months of growth; if 10 percent growth is sustained, average incomes would reach twice the current level in 86 months, compared to 83 months in the absence of climate costs. Consider another comparison: military spending is greater than 2.5 percent of GDP in 68 countries around the world; it is greater than 4 percent of GDP in both the United States and China. It is difficult, therefore, to believe that we are unable to remove this amount from current consumption in order to defend against a remote but dangerous threat to our way of life. On the strength of a different narrative about potential dangers we already do so, year after year.”
Conclusions and policy recommendations
“The most important conclusion involves what we did not find. There are no reasonable studies that say that a 350 ppm stabilization target will destroy the economy; there are no studies that claim that it is desirable to wait before taking action on climate protection. On the contrary, there is strong, widespread endorsement for policies to promote energy conservation, development of new energy technologies, and price incentives and other economic measures that will redirect the world economy onto a low-carbon path to sustainability.”
“What we cannot afford is too little climate policy, too late.” Economics for Equity and the Environment http://www.e3network.org
http://www.e3network.org/papers/Economics_of_350.pdf
6
Background
Emissions Trading - Overview
3.1 Establishing either an emissions trading scheme or a carbon tax are economically efficient ways to change to a low carbon economy, in line with international efforts to avert catastrophic climate change (by avoiding 2 degrees of warming). While implementing a tax provides security of price but not quantity of emission reduction. An Emissions Trading Scheme (ETS) can provide certainty over the quantity of greenhouse gases (GHGs) released into the atmosphere, but less certainty regarding the per-unit emission price. 3.2 International carbon trading in the compliance market enables countries facing high abatement costs, trade emissions units with countries with surplus low-cost abatement units. Trading therefore enables more GHG reduction per dollar spent on abatement, and the cost of abatement is set by the supply and demand characteristics of the market. When the price to emit a tonne of carbon dioxide equivalent (CO2-e) increases, so do incentives to bring more abatement units to the market, and reduce emissions (such as through more efficient technology, or renewable energy). Therefore a large and diverse international market will moderate the emissions price. 3.3 Efficiency is achieved in that more GHG is avoided or removed from the atmosphere per dollar spent; an optimal price to avoid or remove GHGs is established by the market; and a large and diverse international market provides increased price security. By connecting to other national level emissions trading schemes, such as the EU ETS, NZ could access this price moderation effect, as well as attract private investment in local GHG abatement and technology.
Change brings Opportunities
3.4 The technological shift created by the internet and office computers revolutionised business and communications, creating companies and brands such as Apple, Google, IBM, Facebook and Trademe. Fresh opportunities abound for innovators and entrepreneurs in a globalised economy seeking to shift to sustainable and low carbon energy and consumption. The success of Danish wind turbine manufacturer Vestas is no surprise. Vestas has 28% market share, and between 2007 and 2008 its annual revenue grew nearly 25% to 6 billion euros. With arguably the world’s best wind resource, coupled with first class engineering, materials and innovative capacity, why has New Zealand not also seized this opportunity? In the absence of a sound ETS New Zealand will miss many more such opportunities in the rapidly growing global market for low carbon solutions.
Strategic behavior and the atmosphere as a global commons
3.5 The atmosphere can be viewed as a global commons; a simple analogy is one of commons grazing land. The land (atmosphere) provides enough annual grazing (GHG assimilation capacity) for 10 families to graze 2 cows and 10 sheep and goats (per capita GHG emissions). There is an incentive for families to defect from the system and graze more animals, since they can then sell more meat, milk of fiber. However if they did this
7
the whole system would collapse, since other families would also defect and the commons would be unable to support the 10 families. For a commons to be shared successfully, institutions must be developed so incentives to defect are discouraged and incentives to comply encouraged. 3.6 Behavioral studies highlight that where the community of participants is easily identified and there are reciprocating relationships, the presence of ‘strong reciprocators’ in that community ensures that defectors are punished. In a commons situation, such as with the global atmosphere, where the various nations are fixed, easily identified and have strong reciprocal relationships such as through trade, defection can therefore be discouraged relatively easily. 3.7 The effect of strong reciprocators will apply differently to a country such as Australia, which largely trades minerals and resources on the commodity market; than it will to New Zealand, which trades in products such as wine, food and tourism to wealthy discerning consumers. It will be much easier for strong reciprocators to penalise New Zealand, than it will be for them to penalise Australia, since New Zealand produces consumer products, rather than raw materials.
Environment and Technology Policy - Compliments
3.8 Incentives provided by environmental policy mechanisms affect the rate and extent which technologies will be adopted and diffuse into the market. The presence of externalities indicates a market failure in that since the externality is not priced, the associated economic activity with be either suboptimal or socially damaging. For example while pollution creates a negative externality, innovation creates a positive one. Therefore due to the existence of the externalities, a likely consequence is that even where policies to correct external environmental costs are in place, the level of environmental R&D in GHG mitigation is likely to be too low. Environmental and technology policies are therefore compliments and both are required in order to efficiently mitigate GHG emissions. 3.9 Agricultural GHGs comprise 48% of New Zealand’s emissions profile. Technological development of primary sector GHG mitigation in New Zealand is supported through the Pastoral Greenhouse Gas Research Consortium (PGgRc) and the recently announced primary sector Greenhouse Gas Research Centre. In addition the Prime Minister recently reported that the United States is interested in providing funding for R&D into agricultural GHG mitigation. While this support for R&D in GHG mitigation appears sound, GHG mitigation options that are available now, are currently under utilized. Therefore without sufficient and efficient environmental policy, both the technological development and the utilisation of new mitigation options will be suboptimal. The utilisation of mitigation options developed through considerable New Zealand investment, along with associated international market opportunities from their development will therefore be muted.
8
Climate Change Response (Moderated Emissions Trading) Amendment Bill
Brief Analysis 4.1 Considerable efficiency benefits exist through linkage with a large and diverse global carbon trading market. The EU ETS is the most linked ETS, as well as the most experienced ETS. However the EU won’t link to countries with design elements that undermine environmental goals, or to countries linked to such schemes. Such design elements include intensity based allocations of free credits, since this essentially removes the ‘cap’ for emissions intensive industries. I therefore oppose intensity based allocations of free credits. 4.2 Transitional assistance is warranted for genuinely trade exposed industries, with a considerable long term commitment to New Zealand, and a commitment to reducing their emissions. A price cap or ’safety valve’ can be used either to prevent exposure to price spikes, or for political acceptability. If the goal is political, the cap will be set near or below the marginal abatement cost – thus undermining the scheme’s environmental integrity. If a safety valve, the cap will be well above the marginal abatement cost – preserving environmental integrity whilst protecting against price volatility. A minimum price is also useful to protect the investments of abatement entrepreneurs. For example the US Waxman-Markey sets a minimum auction price of US$10. In comparison this bill proposes a $25 cap, which is cut to $12.50 by the ‘2 for 1’ deal for big industries. This is likely a suboptimal minimum price, let alone a maximum cap. I therefore oppose the price cap on carbon, and the 2 for 1 carbon deal. In addition the proposed and existing transitional assistance measures are too generous and too long. Transitional assistance for Emissions Intensive Trade Exposed (EITE) industries should be regularly reviewed and adjusted according to international developments. Continued and ongoing protections for decades such as the 1.3% reduction in allowances should not be put into legislation. An 80% subsidy in 2030 is not transitional assistance, it is extended protection. This bill would legislate a defectors ETS. 4.3 New Zealand has a considerable opportunity to lead the world in agricultural GHG abatement technology. Emerging technologies including IRL’s recent activated lime breakthrough, biochar, the cross-slot direct drill, high sugar grasses, animal genetics, and laminated timber beams could all provide significant GHG mitigation and/or revenue streams for emergent New Zealand business. As previously discussed, this opportunity will be muted without complementary environmental and technology policy. I therefore oppose further delays in bringing agriculture into the emissions trading scheme, and removing the innovation fund.
4.4 As previously discussed, the nature of New Zealand’s international trade is very different to that of Australia’s. New Zealand is considerably more exposed to strategic behavior from strong reciprocators than Australia. With caps inconsistent with
9
international compliance obligations, intensity based allocations and price caps, Australia’s Carbon Pollution Reduction Scheme (CPRS) is essentially a defectors ETS. In addition it may not even become law.
I therefore generally oppose maximising the “degree of harmonisation with the Australian CPRS”, since while this may suit EITE industries, such measures will be bad for NZ Inc.’s opportunities in a low carbon future.
Specific Recommendations
5.1 I recommend the committee amends Sections 81, 82, 83, 85, 85A, 86, 86A which deal with how free allocations are given to industry and agriculture. These must place sensible limits on the amount that businesses can get. A 1.3% phase out is not credible.
5.2 I recommend the committee deletes Section 61 which inserts new sections 222A to 222G into the law. These sections spell out the "2 for 1" deal and price cap that industries and petrol companies get until the end of 2012.
5.3 I recommend the committee deletes or amends Clause 57 which delays for a further two years the date that agriculture comes into the scheme.
5.4 I recommend the committee deletes Clause 62 which would repeal section 223, relating to the household fund for insulation, energy efficiency, and clean heating.
5.5 I recommend the committee deletes clause 22 which removes the provision for an innovation fund.
5.6 I recommend the committee endorses amending the indigenous carbon look-up tables in the forestry regulations as soon as possible, to make them consistent with the best available scientific information.
5.7 I recommend the committee establish when the amended carbon look-up tables will be available.
5.8 I support all of the Parliamentary Commissioner for the Environment's recommendations, particularly the full and transparent publication by the Auditor General of the number and value of all allocations (free or otherwise) distributed under the scheme.
5.9 I recommend that the Auditor-General report annually on the number of carbon credits (NZUs) that are allocated to different sectors of the economy at the expense of the taxpayer.
5.10 I support the inclusion of an appropriate Treaty clause in the legislation.
10
5.11 I support fixing the wilding pines problem.
5.12 I support the new categories for agriculture to allow farm level participation for different agricultural sectors to start at different times.
5.13 I support having targets in legislation, these will need to change to reflect the current IPCC assessments of the required cuts necessary to avert catastrophic climate change.
Appendix
Following is a recent case study on biochar, looking at the implications of technology and environmental policy for the development of GHG mitigation technology.
11
ENVI 528: Climate change Issues
Implications of New Zealand’s Policy Framework for the development of Biochar
Nigel Taptiklis Graduate Programme in Environmental Studies, School of Geography Environment and Earth Sciences, Victoria University of Wellington, PO Box 600, Wellington, New Zealand. [email protected]
Abstract Agriculture is currently a net source of greenhouse gas (GHG) emissions, yet climate scientists say that improved agricultural and forestry practices, and simultaneous GHG mitigation policy will enable us to avert catastrophic climate change. Biochar, a stable form of carbon that can be incorporated into soils, is an emerging GHG mitigation technology. While GHG emissions are an example of a negative externality, innovation provides a positive externality. Both environmental and technology policy interventions are therefore required to efficiently mitigate GHG emissions. This study surveys New Zealand’s climate change policy framework and assesses the implications for the development and utilisation of biochar for GHG mitigation. New Zealand’s policy framework contains some excellent provisions to promote and support GHG mitigation technologies, and address barriers that these technologies may face. However New Zealand avoided committing to obligations under Article 3.4 of the Kyoto Protocol, which is critical to the focus and effort placed on sequestering carbon in agricultural soils. And while an efficient Emissions Trading Scheme is crucial environmental policy, New Zealand’s ETS may become further weakened. Therefore, despite the seemingly significant R&D support for the development of biochar, this investment, along with the future utilisation of biochar for GHG mitigation, and therefore the return on this R&D investment, will very likely be sub-optimal.
Keywords: New Zealand; Climate change; Policy; Biochar; greenhouse gas; mitigation; agriculture
Introduction While nearly half of New Zealand’s greenhouse gas (GHG) emissions arise from the agricultural sector (MfE 2008a), statements made by climate scientists such as NASA’s James Hansen suggest that with the right incentives agriculture could become a net sink for CO2:
“A reward system for improved agricultural and forestry practices that sequester carbon could remove the current CO2 overshoot. With simultaneous policies to reduce non-CO2 greenhouse gases, it appears still feasible to avert catastrophic climate change” (Hansen et al. 2008).
12
Through the removal of CO2 from the atmosphere by plants and soils, and by displacing fossil fuel emissions with energy from renewable biomass, agriculture and forestry can offer significant GHG mitigation opportunities. Some GHG mitigation opportunities also enable concurrent co-benefits for multiple issues. For example forests prevent soil loss to wind and water erosion, and forests and soils also oxidise methane (Van Zwieten et al. 2009, ICF 2008). The opportunity to address multiple issues also extends beyond the climate crisis into financial, energy, and sustainable development concerns:
“Mobilizing and re-focusing the global economy towards investments in clean technologies and 'natural' infrastructure such as forests and soils is the best bet for real growth, combating climate change and triggering an employment boom in the 21st century” (UNEP 2009). “What is needed in this 21st century of ours, clearly, are solutions that deal with several of our major problems at once. And they must be deliverable quickly, and at a scale able to make a difference.” (Flannery, in: Lehmann and Joseph 2009a, foreword).
One GHG mitigation technology that potentially addresses multiple issues is biochar, a stable form of carbon that can be produced through the pyrolysis of wood and crop residues (Sohi et al. 2009, Lehmann and Joseph 2009a). Biochar can provide renewable energy, enhance beneficial soil functions, and sequester carbon, while utilising wastes and improving primary productivity (Sohi et al. 2009, Lehmann and Joseph 2009a). Incentives provided by environmental policy mechanisms affect the rate and extent to which technologies will be adopted and diffuse into the market (Jaffe et al. 2005). While pollution creates a negative externality, innovation creates a positive one (Jaffe et al. 2005); therefore even where policies to correct external environmental costs are in place, the level of environmental R&D in GHG mitigation is likely to be too low (Söderholm and Lundmark 2009). Therefore environmental and technology policies are complements and both are required in order to efficiently mitigate GHG emissions (Söderholm and Lundmark 2009). In this context, this study assesses the implications of New Zealand’s climate change policy framework for the development of biochar for GHG mitigation.
Background Roles of biochar in agricultural GHG mitigation and soil sequestration of carbon Soils form a fundamental part of the global carbon cycle, such that the entire atmospheric stock of CO2 is cycled through soils once every 14 years (Lehmann and Joseph 2009b). While the bulk of organic carbon added to soil is rapidly released back to the atmosphere as CO2, more stable fractions take decades, centuries, or even millennia to break down (Gaunt and Cowie 2009). Conversion of biomass to biochar through pyrolysis increases the quantity of biomass converted to stable fractions. When incorporated into soils the residence time of this carbon is increased, resulting in a net withdrawal of atmospheric CO2 (Lehmann et al. 2009). Physical properties include high porosity and surface area,
13
which assist soil functions such as aeration, water and nutrient retention, and microbial activity (Downie et al. 2009). Biochar applied to soils can also increase the carbon sink capacity, influence nitrous oxide emissions, increase the oxidation of methane as well as provide crop nutrients (Van Zwieten et al. 2009).
Figure 1. Summary of different pyrolysis processes, feedstocks and products and their uses and applications (Sohi et al. 2009).
Key links between biochar and other GHG mitigation options
• Plantation forests provide the bulk of NZ’s current carbon sink activity and could also be a significant source of biochar feedstock, for example 700,000 tonnes of forest harvesting residues are left at landing sites every year (Neilson 2008).
• Both soils and the application of biochar to soils can sequester carbon, oxidise methane, and influence nitrous oxide emissions (Van Zwieten et al. 2009).
• Much like other sources of renewable energy such as wind, biochar feedstocks in the form of crop and forest residues are unevenly distributed around the country, i.e. they are geographically diffuse.
Carbon negative bioenergy? Greater utilisation of biomass resources, including wastes such as municipal sewerage and organic waste streams, and timber and crop residues have the potential to supply significant proportions of national energy requirements (Hall et al. 2009, Perera et al.
14
2005). Such biomass can be converted to biochar through pyrolysis, where it is heated to around 500°C, causing exothermic decomposition and the release of a variety of combustible gases (Lehmann 2007a). Both heat and gases can be captured and converted to electricity, bio-oil or hydrogen (Lehmann 2007a). When pyrolysis is optimised for biochar production around half of the carbon in the wood could be captured for application to soils; therefore “Biochar offers the chance to turn bioenergy into a carbon-negative industry” (Lehmann 2007b). While the technicalities of the term ‘carbon negative’ are debated (e.g. Bruun and Luxhoi 2008), pyrolysis does provide both low carbon bioenergy and stable sequester-able carbon.
Figure 1. Fossil carbon, low carbon bioenergy, and pyrolysis. Biochar can result in a net removal of carbon from the atmosphere (Sohi et al. 2009).
15
Aim The aim of this study is to answer the following question: What are the implications of New Zealand’s GHG mitigation policy framework for the development and utilisation of biochar?
Methods This research question was addressed by firstly identifying key aspects of New Zealand’s environmental and technology policies relevant to the development of biochar for GHG mitigation. The implications of this policy framework for the development of biochar is then discussed. Information was gathered from government, industry, university and Crown Research Institute publications, websites and personnel (Ministry for the Environment, Bioenergy Knowledge Center, Bioenergy Association of New Zealand, International Biochar Initiative). Peer-reviewed journal articles were accessed through Web of Knowledge, Web of Science and Science Direct databases.
Results
Climate Change Response Act 2002 and the Kyoto Protocol
The purpose of the Climate Change Response Act 2002 is to enable New Zealand to meet its obligations under the Kyoto Protocol and the United Nations Framework Convention on Climate Change (UNFCCC). Article 2 of the Kyoto Protocol sets out national level policy obligations, including the protection and enhancement of sinks and reservoirs, the promotion of beneficial forestry and agricultural practices, and:
“(iv) Research on, and promotion, development and increased use of, new and renewable forms of energy, of carbon dioxide sequestration technologies and of advanced and innovative environmentally sound technologies;
(v) Progressive reduction or phasing out of market imperfections, fiscal incentives, tax and duty exemptions and subsidies in all greenhouse gas emitting sectors that run counter to the objective of the Convention and application of market instruments;” (UNFCCC 2009).
Article 3.3 of the Kyoto Protocol requires parties to report post-1990 changes in GHG emissions from “direct human-induced land-use change and forestry activities, limited to afforestation, reforestation and deforestation.” While Article 3.3 is mandatory for the first Kyoto commitment period (KP1) from 2008-2012, Article 3.4, which could include similar accounting and reporting for “changes in greenhouse gas emissions by sources and removals by sinks in the agricultural soils” is optional. New Zealand did not include Article 3.4 in its Kyoto commitments (MfE 2009).
16
Sustainable Land Management and Climate Change Plan of Action (SLMCCPOA)
The SLMCCPOA provides a platform for government to develop GHG mitigation technology in partnerships with horticulture, agriculture and forestry sectors (MFE 2008c). This policy framework encompasses obligations under part (iv) and (v) of the Kyoto Protocol, including $10 million for research, development and commercialisation of biofuel, biochar and energy efficiency opportunities (MfE 2008c), and a five-year work programme aimed at addressing barriers which hinder the private sector from capitalising on climate change opportunities (MAF 2007).
“The Government will engage with the forestry, agriculture, horticulture and arable farming sectors, Mäori and local government to develop joint work programmes under the Plan of Action to achieve a combined sector-government response to climate change. This will be accompanied by significant government investment in key areas.” (Anderton, in: MAF 2007, Foreword).
New Zealand Emissions Trading Scheme (ETS)
A domestic ETS was added to the Climate Change Response Act in September 2008, “to apply an economy-wide price signal to activities that contribute to climate change” (Dunne et al. 2009). This scheme covers GHG-emitting activities in all major sectors of the economy and would be phased in by 2013 (Dunne et al. 2009). However with the recent change of Government the ETS has been reviewed. The ETS Review Committee has put forward a range of recommendations for an ETS that are relevant to the development of biochar. These include:
• Initially placing the point of obligation on agricultural processors, but moving towards placing the point of obligation at the farm gate.
• All sectors included “so that no sector is required to be subsidised by others in the longer-term, or by the taxpayer… A broader scheme will also be more effective in achieving abatement across a number of sectors, enabling firms to become more efficient and to reduce costs.”
• If a short-term price cap is introduced, a clear exit strategy is critical. • Further research and development on forestry sequestration, soil carbon
sequestration, farm-level GHG accounting, adverse effects and opportunities in principal sectors, mitigating agricultural emissions and improving efficiency in pastoral systems.
(Dunne et al. 2009). Four parties submitted minority reports, which included the following concerns:
• Late entry for agriculture and high levels of grandparenting will impact badly on forestry. The exemption from a carbon price for farmers will tend to be capitalised in land prices, raising the value of marginal land so that it becomes unaffordable for forestry.
17
• Linking with the proposed Australian scheme (if it is passed) would distort our market by capping the price and allocating on an intensity basis.
Resource Management Act 1991 and Proposed National Policy Statement on Renewable Electricity Generation Section 7 of the RMA includes provisions requiring “all persons exercising functions and powers” under it to have “particular regard” to:
(i) the effects of climate change: and
(j) the benefits to be derived from the use and development of renewable energy.
The proposed national policy statement (NPS) on renewable energy “sets out an objective and policies to enable the sustainable management of renewable electricity generation” under the Resource Management Act (RMA) 1991 (MfE 2008d). This proposed NPS recognises the need to reduce GHG emissions associated with the production and use of energy in responding to growing energy demand, and that in this context the development and generation of renewable energy is a matter of national importance (MfE 2008d). Renewable electricity generation for the purposes of this NPS is defined as the generation of electricity from solar, wind, hydro, geothermal, biomass, tidal, wave, or ocean currents. Key aspects of the proposed NPS on renewable electricity energy are:
• Helping achieve a renewable electricity target; 90% by 2025. • Acknowledgement of constraints inherent in measures to avoid, remedy or
mitigate the adverse environmental effects of renewable electricity generation activities.
• Regard for the relative reversibility of the adverse environmental effects associated with different renewable electricity generation technologies.
• Enabling identification of renewable energy generation possibilities. • Supporting small and community-scale renewable electricity generation.
18
Discussion Implications of the Kyoto Protocol and the Climate Change Response Act 2002 (CCRA)
A range of research and development initiatives have been established in accordance with NZ’s obligations under Article 2 in the Kyoto Protocol. These are discussed under the Sustainable Land Management and Climate Change Plan of Action. An area of concern for soil carbon sequestration practices and technology is the decision not to report on changes in GHGs through Article 3.4 of the Kyoto Protocol (regarding agricultural soils). This decision was based on concerns that soil loss from highly eroding young soils such as from catchments in the East Cape and Manawatu, and activities such as cropping, would lead to a huge deficit (Fitzsimons, Chapman, 2009: pers comm.), and due to difficulties in quantifying the carbon flux of agricultural soils (Tate, 2009: pers comm.). The outcome of this decision is that any activity that reduces emissions from, or enhances agricultural soils as sinks will not count towards New Zealand’s Kyoto obligations, and is outside intergovernmental and domestic emissions trading (Weaver 2009: pers comm.). If such activity does not count towards NZ’s emission targets, it is unlikely that mitigation options for soil sequestration will be fully exploited. The methodology for GHG accounting in the Land use, land use change and forestry (LULUCF) sector is outlined in K.1.3(d) of decision 11/CP.7 of the Marrakesh Accords, and requires that “direct human-induced changes in carbon stocks and greenhouse gas emissions by sources and removals by sinks” are differentiated from:
“changes in carbon stocks and greenhouse gas emissions by sources and removals by sinks due to indirect human-induced and natural effects, and effects due to past practices in forests.” (Penman 2006).
With increasing use of no-till techniques; potential for the utilisation of biochar; the deforestation of eroding catchments primarily occurring prior to the 1990 base year; and erosion planting and forestry conversion to mitigate soil loss; the inclusion of NZ’s agricultural soils in a post 2012 global climate agreement needs to be reconsidered. In the interim voluntary carbon market opportunities are emerging for soil carbon sequestration (Weaver 2009: pers comm., ICF 2008). However the scale of mitigation driven by corporate and social responsibility would not match the possibilities within an international compliance market.
Implications of the Sustainable Land Management and Climate Change Plan of Action
A key outcome of Government R&D funding is the Massey University biochar initiative, established to support a biochar industry cluster. This initiative leads biochar related research and development in pyrolysis engineering, soil science and GHG mitigation strategies (Pigneri, 2008). Wider primary sector GHG mitigation is supported through the Pastoral Greenhouse Gas Research Consortium (PGgRC) and the recently announced primary sector Greenhouse Gas Research Centre (Carter 2009). Therefore it appears that the development of primary sector GHG mitigation initiatives is well supported. Research
19
into the mitigation of agricultural nitrous oxide and methane has received considerable attention, including completion of a world first project to map the genome of a rumen methanogen (PGgRC 2008).
Implications of New Zealand’s Emissions Trading Scheme (ETS)
The recommendation of the ETS Review Committee for a broad scheme, and that no sector is subsidised “in the longer-term” is positive. The primary benefit to renewable electricity generators of an ETS should be an increased competitiveness against fossil fuel electricity (SKM 2008). However in the short to medium term any subsidies and delays for entry of fossil fuel energy will reduce this effect, and therefore also reduce levels of investment in renewable energy generation. Likewise delay in bringing in agriculture will reduce the conversion of marginal hill country land to forestry, and therefore the quantity of available pyrolysis feedstock in the future. Similarly capping the price of emissions, and intensity based allocations will stifle the development and utilisation of low carbon energy and GHG mitigation opportunities.
Implications of the Resource Management Act 1991 and Proposed National Policy Statement on Renewable Electricity Generation The Government has recently passed changes to the RMA to “untangle unnecessary red tape for New Zealanders and enable essential infrastructure to be built in a more timely way” (Smith 2009). Some of these changes will make it easier for the developer of projects such as pyrolysis plants or wind turbines, including the threat of costs being awarded against objectors, and streamlined processes for proposals of national significance. Under the RMA the use and development of renewable energy is likely to be given ‘particular regard’ where it offers benefits with respect to climate change. However the NPS clearly biases “electricity” generation over renewable energy in general, by explicitly referring to and using “electricity”, rather than ‘energy’, although some switching to “energy” does occur. This would be fine for pyrolysis or cogeneration plants intending to produce electricity, but pyrolysis plants designed to produce liquid fuels would be hindered in comparison. Changing the focus from “electricity” to ‘energy’ in general would rectify this and enable equal treatment of liquid fuel projects. Grid access for distributed biomass cogeneration plants, and the removal of barriers to this will be essential for the development of pyrolysis cogeneration plants. Pyrolysis plants would be distributed around the country and build on a scale to suit the size of the feedstock resource in different locations such as city sewerage dewatering plants, arable cropping regions, or forest harvest residues.
Overall Analysis: New Zealand’s Technology and Environmental Policy Framework New Zealand has significant technological initiatives in place to develop GHG mitigation options, including The Massey Biochar Initiative. However environmental policy support for soil carbon sequestration is very weak, with indications that it may get even weaker. Under such conditions investment in, and utilisation of biochar will be inhibited. This is
20
in line with wider evidence showing that actual levels of GHG mitigation achieved through various mitigation options are generally far lower than their technical potential (Smith et al. 2007: 8.6.1). Faced with the prospect of catastrophic climate change, it is frustrating that even currently available mitigation opportunities are severely underutilised. Likewise with policy instruments; arguably the most efficient policy instrument for GHG mitigation is an emissions tax or cap-and-trade system (Jaffe et al. 2005). However, in practice such polices, even where they do manage to survive the political gauntlet and become legislation, often emerge weak and ineffectual. This can be seen with suggestions for capping the price on carbon, in order to link NZ’s ETS with the Australian version. Australia’s proposed ETS, already weakened by an initial cap of AUS$10 per tonne, is struggling to pass its political hurdles, despite polling showing 75% of Australians agreeing that the ETS should place tougher conditions on high-polluting industries (Sydney Morning Herald, 03.08.09). In New Zealand we also see a weak ETS flailing against political distortion. Söderholm and Lundmark (2009) argue that environmental and technology policies are compliments and both are needed in order to achieve more socially optimal levels of R&D in GHG mitigation technology; and Jaffe et al. (2005) highlight that using technology as a substitute for, rather than complement, to environmental policy can be a costly approach. Therefore the utilisation of mitigation options developed through considerable New Zealand investment will be muted without complimentary environmental policies. Efficient and complimentary environmental policy involves a sound ETS.
Conclusion This study has shown that the Kyoto Protocol, the Climate Change Response Act and the Sustainable Land Management Plan of Action contain sound provisions to promote GHG mitigation technology, support it with R&D funding, and address barriers that such technology may face. However as discussed, New Zealand has avoided Article 3.4 of the Kyoto Protocol, which is critical for carbon sequestration in agricultural soils, and our weak ETS will likely become weaker. As noted by Smith et al. (2007: 8.6.1) GHG mitigation options that are available now are currently underutilised. Therefore without sufficient and efficient environmental policy, both the technological development and the utilisation of mitigation options such as biochar will also be underutilised. While technology policy support for New Zealand’s future GHG mitigation options seems strong, with inadequate environmental policy, current investment in GHG mitigation, and the return on this investment will be sub-optimal. For technology and practices such as biochar application to soils to have a sufficient role in helping mitigate climate change, the political barriers to effective environmental policy must be addressed.
21
References Bruun, S., and Luxhøi, J., 2008. Is biochar production really carbon-negative?
Environmental Science & Technology. March 1, 2008. Carter D., 2009. Leap Forward for Greenhouse Gas Research. Government press release
02.06.09 http://beehive.govt.nz/release/leap+forward+greenhouse+gas+research Chapman, R., 2009. Personal Communication, email, 08.09.09. Downie, A., Crosky, A., and Munroe, P., 2009. Physical Properties of Biochar. In:
Lehmann, J. and Joseph, S., 2009b. Biochar for environmental management: science and technology. Earthscan, London.
Dunne, P., et al. 2009. Resource Management (Simplifying and Streamlining)
Amendment Bill. As reported from the Local Government and Environment Committee.
Fitzsimons, J., 2009. Personal Communications, email, 05.08.09. Gaunt, J., and Cowie, A., 2009. Biochar, Greenhouse Gas Accounting and Emissions
Trading. In: Lehmann, J. and Joseph, S., 2009b. Biochar for environmental management: science and technology. Earthscan, London.
Hall, P., Hock, B., Palmer, D., Kimberly, M., Pawson, S., Walter, C., Wilcox, P., Jack,
M., Giltrap, D., Aussiel, A., Ekanayake, J., Newsome, P., Dymond, D., Todd, M., Zhang, W., Kerr S., Stroombergen, A., (2009). Bioenergy options for New Zealand, analysis of large-scale bioenergy from forestry Productivity, Land use and Environmental & Economic Implications. Scion, Landcare Research, Motu, Infometrics.
Hansen, J., Sato, M., Kharecha, P., Beerling, D., Masson-Delmotte, V., Pagani, M., et al.
(2008). Target atmospheric CO2: Where should humanity aim? The Open Atmospheric Science Journal, 2, pp.217-231. http://pubs.giss.nasa.gov/docs/2008/2008_Hansen_etal.pdf
ICF International, 2008. Final Report: Voluntary Carbon Market Opportunities – Soil
Carbon Management in New Zealand. Report for the Ministry of Agriculture and Forestry.
Jaffe, A.B., Newell, R.G., Stavins, R.N., A tale of two market failures: Technology and
environmental policy. Ecological Economics 54 (2005) 164– 174 Lehmann, J., 2007a. Bio-energy in the black. Frontiers in Ecology and the Environment
5, 381-387.
Lehmann, J., 2007b. A handful of carbon, Nature, vol 447, pp143- 144.
22
Lehmann, J., Czimczik, C.I., Laird, D., Sohi, D.L.S.P., 2009. Stability of biochar in the
soil. In: Lehmann, C.J., Joseph, S. (Eds.), Biochar for environmental management: science and technology. Earthscan.
Lehmann, J., and Joseph, S., 2009a. Biochar for environmental management: science and
technology. Earthscan. Lehmann, J. and Joseph, S., 2009b. Biochar systems. In: Lehmann, C.J., Joseph, S.
(Eds.), Biochar for environmental management: science and technology. Earthscan.
MAF (Ministry of Agriculture and Forestry), 2007. Government investment initiatives under the Plan of Action. http://www.maf.govt.nz/climatechange/slm/investment-sheets/business-opportunities.htm accessed 12.09.09.
MfE (New Zealand Ministry for the Environment), 2009. Net Position report http://www.mfe.govt.nz/publications/climate/net-position-report-2009/html/page3.html accessed 07.09.09
MfE, 2008a. New Zealand’s Greenhouse Gas Inventory 1990 – 2006: An Overview
(online version) http://www.mfe.govt.nz/publications/climate/greenhouse-gas-inventory-overview-apr08/html/figure-5.html accessed 02.09.09.
MfE, 2008b. National Environmental standards for Air Quality.
http://www.mfe.govt.nz/laws/standards/air-quality-standards.html accessed 11.09.09. MfE, 2008c. Other government sustainability initiatives with climate change benefits -
Sustainable land management (agriculture and forestry) http://www.mfe.govt.nz/issues/climate/policies-initiatives/government-initiatives-climate-benefit/land-management.html accessed 11.09.09
MfE, 2008d. Proposed National Policy Statement for Renewable Electricity Generation.
http://www.mfe.govt.nz/publications/rma/nps-renewable-electricity-generation-section-32/html/page7.html accessed 11.09.09
Nielson, P., 2008. Opportunities for Bio-Oil from Pyrolysis. BANZ and Massey Energy
Workshop, March 2008. http://www.bioenergy.org.nz/documents/Workshops/Auckland/BANZ%20and%20Massey%20Energy%20Research%20workshop%20-%2012%20March%2008/afternoon%20session/OpportunitiesforBioOilfromPyrolysis%20-%20P%20Nielsen%20Scion.pdf
Penman, J., et al. 2006. Chapter 1. Overview. In: IPCC Good Practice Guidance for
LULUCF. [Penman, J. et al. (eds)]. Institute for Global Environmental Strategies (IGES) for the IPCC.
23
Perera, K.K.C.K., Rathnasiri, P.G., Senaratha, S.A.S., Sugathapalaa, A.G.T, Bhattacharyab, S.C., Abdul Salamb, P., 2005. Assessment of sustainable energy potential of non-plantation biomass resources in Sri Lanka. Biomass and Bioenergy 29 (2005) 199–213.
Pigneri, A., 2008. Massey University Biochar Initiative. BANZ and Massey Energy
Workshop, March 2008. http://www.bioenergy.org.nz/documents/Workshops/Auckland/BANZ%20and%20Massey%20Energy%20Research%20workshop%20-%2012%20March%2008/afternoon%20session/MasseyUniBioCharInitiative-APigneri.pdf
PGgRc (Pastoral Greenhouse Gas Research Consortium), 2008. New Zealand leads world
breakthrough in methane research. PGgRc press release 02.06.08. http://www.pggrc.co.nz/News/tabid/43/mid/376/newsid376/4/New-Zealand-leads-world-breakthrough-in-methane-research/Default.aspx
SKM (Sinclair Knight Merz), 2008. High Level Review of Business Opportunities
Arising from an ETS. Report for the New Zealand Business Council for Sustainable Development.
Smith, N., 2009. Streamlined Resource Management Law Passed. Government Press
release 09.09.09. http://www.national.org.nz/Article.aspx?articleId=30821 accessed 11.09.09
*Smith, P., et al. 2007. Agriculture. In: Climate Change 2007: Mitigation. Contribution
of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [B. Metz, O.R. Davidson, P.R. Bosch, R. Dave, L.A. Meyer (eds)], Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.
Söderholm, P., and Lundmark, R., 2009. The Development of Forest-based Biorefineries:
Implications for Market Behaviour. Forest Products Journal; Jan/Feb 2009; 59. Sohi, S., Lopez-Capel, E., Krull, E., Bol, R., 2009. Biochar, climate change and soil: A
review to guide future research. CSIRO Land and Water Science Report 05/09 February 2009.
Sydney Morning Herald, 03.08.09. CSIRO says carbon price cap may hit power supply. Tom Arup August 3, 2009. http://www.smh.com.au/environment/global-warming/csiro-says-carbon-price-cap-may-hit-power-supply-20090802-e5v5.html accessed 13.09.09
Tate, K., 2009. Personal communication, phone conversation 16.09.09.
24
UNFCCC (United Nations Framework Convention on Climate Change), 2009. Kyoto
Protocol. http://unfccc.int/kyoto_protocol/items/2830.php accessed 06.09.08 United Nations Environment Programme (UNEP), 2009. UNEP Green Economy
Initiative. http://www.unep.org/greeneconomy/ accessed 21.05.09 Van Zwieten, L, Singh, B., Joseph, S., Kimber, S., Cowie, A., and Yin Chan K., 2009.
Biochar and Emissions of Non-CO2 Greenhouse Gases in Soil. In: Lehmann, C.J., Joseph, S. (Eds.), Biochar for environmental management: science and technology. Earthscan.
Weaver, S., 2009. Personal Communication, email 07.09.09.
