Forestry and the Emissions Trading Scheme - August
International news
The United Nations Framework Convention on Climate Change (UNFCCC) international climate conference (COP21) will be held in Paris this December. The agreed objective of the conference is to achieve a new international agreement on climate, applicable to all countries, that will keep global warming below 2°C. All countries are expected to nominate their own targets for greenhouse gas reductions that will contribute to this objective. In the lead up to Paris, countries have been releasing their Intended Nationally Determined Contributions (INDC).
So how do the INDC of the largest emitting countries compare with the INDC of New Zealand and the INDC of our closest trading neighbours in the Asia Pacific region?
China-
The intention of the government of China is to reduce emissions intensity by 60% to 65% by 2030 to below 2005 levels, and peak in emissions by 2030 or earlier.
USA-
The intention of the USA is to lower emissions by 32% by 2030 against 2005 levels.
European Union-
The intention of the European Union is to reduce emissions by at least 40% below 1990 levels by 2030.
New Zealand-
As discussed in Clarky’s comment last month, the New Zealand intended emissions target is a 30% reduction below 2005 levels by 2030.
Australia-
The intention of Australia is a target emissions reduction of between 26% and 28% by 2025, and around 41% by 2030 compared to 2005 levels.
Japan-
The intention of Japan is an emissions reduction of 25% on 2005 levels by 2030.
South Korea-
The intention of South Korea is to reduce greenhouse gas emissions by 37% below business-as-usual levels (emissions of 850.6 MtCO2e ) by 2030.
So with the differing targets, benchmark years and timeframes, how do these INDC targets compare? The Climate Action Tracker is an independent scientific analysis produced by four research organisations tracking climate action and global efforts towards the globally agreed objective of holding warming below 2°C. The Climate Action Tracker rates INDCs, pledges and current policies against whether they are consistent with a country's fair share effort to holding warming to below 2°C.
Of the above listed countries, the Climate Action Tracker ranks the INDC of China, USA and the EU as ‘sufficient’ (fully consistent with the below 2 degrees limit), and Australia, Japan, South Korea, Japan and New Zealand as ‘inadequate’.
If all governments put forward inadequate positions, warming is likely to exceed 3-4 degrees.
According to Climate Action Tracker, New Zealand is not doing its fair share towards international emissions reductions and as such we can expect scrutiny of our targets in Paris in December.
Domestic News
This week Simon Watt of Bell Gully released an interesting recommendation that the ETS review, scheduled for 2015, be deferred to 2016 after the outcome of the Paris negotiations is known:
“Our view would be that scheduling the bulk of the review for after the Paris conference would make sense. Any review that is looking to harden ETS settings will be affected by New Zealand’s position relative to key trading partners.
“So much depends on the emissions profile of the relevant economy, their government’s policy in terms of how they will meet the target and where the burden will sit.”
As yet the timing of the ETS review, scheduled for 2015, has not been announced.
Price Update
The NZU market continues to trade on low volumes around $6.70 - $6.80 per NZU.
The figure below shows the recent carbon credit prices for EUAs, CERs, NZUs and ERUs. Note that from 1st June 2015 only NZUs or New Zealand AAUs are valid units in the NZ ETS. EUAs are valid units for trading within the European Union.
Carbon price series (EUAs, CERs, NZUs and ERUs)