Transcript Infrastructure Regulatory Review for Government of Vanuatu

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The Kyoto Protocol
WASHINGTON DC 20006
United States of America
The Economic Reality for New Zealand
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PO Box 10-225
WELLINGTON
New Zealand
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19 July 2006
7 Rue Claude Chahu
PARIS 75116
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Content
 Kyoto Protocol Framework and Country Commitments
 New Zealand – Economic Cost of achieving target is unacceptable
 New Zealand is set to miss its target
 Fiscal Cost for New Zealand range from:
-
Minimal, if Kyoto collapses
NZ$3 billion, if Kyoto succeeds
1
Kyoto Protocol - Status
Ratified, with Commitment
Ratified, no Commitment
Ratification Pending
Ratification Declined
Not a party
2
Total Emissions in 2003
Total GHG Emission (mt CO2 equivalent)
8000
Not Ratified
Emission Transfer
7000
6893
6000
Ratified, with
Commitments
Ratified, No
Commitments
5000
4237
4057
4000
4179
(1994 Data)
3046
3000
1872
2000
1339
1000
1214
1187
515
61
0
US
Australia
EU
Japan
3
Russia
75
NZ
China
India
Kyoto Target for a Typical Country with a Commitment
CO2 Emissions
1st
Commitment
Period
(in tonnes)
2nd
Commitment
Period
•buy units
•or earn units
5%
1990
2000
•or carry forward
with 30% Penalty
Target
2008
4
???
2012
2018
New Zealand’s Emissions
150
140
140
130
120
120
110
110
Actual GDP
100
90
90
Requires:
80
• Change in economic structure
80
70
• Increase in energy efficiency
70
Target
60
60
50
Actual Net Emissions
50
40
40
30
30
20
10
1st
2nd
Commitment
Period
Commitment
Period
0
20
10
-
5
GDP (NZ$billion)
100
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
GHG Emissions (mt CO2 equivalent)
130
New Zealand’s Emissions by Sector 2010
90
4.4
2.3
GHG Emission (Tg
(mt CO2 equivalent)
80
(4)
-9.2
(1)
70
16.6
Excess 12.8
Target: 61.6
60
(4)
20.4
50
40
(4)
To close the gap:
30
4 + 4 + 1 + 4 = 13
20
39.9
10
0
Agriculture
Energy
Transport
6
Industry
Other
Sinks
Electricity Sector
Wholesale
Electricity Price
(c/kwh)
Coal
12
Demand
Wind
Coal
8
Wind
A tax on coal could increase
electricity prices by 25%
Gwh per annum
7
50,000
10.0
45,000
9.0
40,000
8.0
7.0
Actual emissions from cars
30,000
6.0
25,000
5.0
Actual car-kilometres
20,000
4.0
Required to:
15,000
• Drive less
3.0
• Use smaller cars
10,000
• Increase energy efficiency
1st
Commitment
Period
2nd
Commitment
Period
2.0
5,000
1.0
0
0.0
19
9
19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
20 5
0
20 6
0
20 7
0
20 8
0
20 9
1
20 0
1
20 1
1
20 2
1
20 3
1
20 4
1
20 5
1
20 6
1
20 7
18
Kilometers
Kilometres (million)
35,000
8
Emission from Cars (mt)
Transport
Example
Holden 6 Cylinder Fuel Consumption
25
1600
City
Mass
1500
1400
15
Highway
1300
10
1200
5
1100
0
1000
VH 1981 VK 1984 VL 1986 VN 1988 VP 1992 VR 1993 VS 1995 VT 1997 VTII 1999 VX 2000 VXII 2001 VY 2002
3.3L
3.3L
3.0L
3.8L
3.8L
3.8L
3.8L
3.8L
3.8L
3.8L
3.8L
3.8L
Model
9
Mass (kg)
Litres/100 km
20
Area Planted
(000 ha)
Forestry
4 mt CO2 requires
reduction in deforestation
of 5,000 ha
Kyoto Protocol
Signed 1998
Planting Year
10
Likely Outcome
 Political recognition that the cost of complying is extremely high
 Electricity prices, reduced travel, reduced conversions from forestry
 New Zealand likely to miss target
 Government’s latest figure 64 million tonnes CO2
11
Net Excess Emissions During the First Commitment Period (M tonnes CO2)
2010
First commitment
period
2008 - 2012
Gross emissions
83.6
418
Sinks
(9.2)
(46)
Net emissions
74.4
372
Assigned amount
61.6
308
Excess emissions
12.8
64
12
Price of Emission Units
 Emission Trading Schemes
 Settlement Price depends on expectations for CP II
-
Low, if low expectations for CP II
High, if high expectations for CP II - $US30 per tonne
 Flexibility mechanisms
 US $ 6 per tonne CO2 last year
13
Fiscal Cost of Buying Compliance
Excess Emissions Quantity x Price of Unit = Fiscal Cost
64 million
units
x
USD/Unit
NZD/Unit
NZD
$0
$0
$0 million
$6
$10
$30
$50
14
=
If Kyoto fails
$640 million
$3 billion
If Kyoto succeeds
How Did This Happen?
 Belief that energy use was inefficient
 Belief that new economy would see us right
 Belief that we could avoid leakage and reduce emissions
 Belief that we would have credits from forests
15
Conclusion
 The growing economy and population have generated a rapid growth in
emissions over the last 25 years
 As long as economic growth continues, the same pattern is likely to
continue in the future
 There is no realistic set of policies which would BOTH:
-
Reduce the total level of emissions back to 1990 levels, AND
Be consistent with continued economic growth
 The costs of meeting the target are likely to be unacceptable to New
Zealanders
 That leaves us with a fiscal cost:
-
minimal, if the Kyoto Protocol collapses
as high as $3 billion, if the Kyoto Protocol were to succeed
16