Assessing the impacts of Motu’s Low-Emission Future Programme

by Catherine Leining, Ceridwyn Roberts, and Suzi Kerr of Motu Economic and Public Policy Research Trust.

In November 2016, Motu surveyed 360 people interested in climate change policy and had 81 responses. The survey was designed to help assess the impacts of Motu’s programme ‘Shaping New Zealand’s Low-Emission Future’ and its cross-stakeholder Emissions Trading Scheme and Low-Emission Future Dialogues as well as inform future programme planning. As a ‘thank you’ to all those who took part Motu will purchase and plant six trees through the Wellington City Council’s ‘Two Million Trees’ initiative.

We feel encouraged that more than three quarters of respondents agree or strongly agree that Motu’s work has enhanced the quality of policy discussion on climate change mitigation and that more than four fifths of respondents regard Motu as a credible source of independent expert information on climate change mitigation.

New emissions reduction plan business as usual

By Ralph Sims. Reprinted with permission from Carbon News

The Government’s plan to cut the emissions intensity from industrial heat generation  by 1 per cent a year is just business as usual, and will do little to achieve New Zealand’s Paris Agreement commitment.

Ralph Sims is Professor of Massey University’s School of Engineering and Advanced Technology, an IPCC lead author and consultant to the International Energy Agency. He is an expert on renewable energy deployment and policies, distributed energy (including smart grids), biomass supply chains and bioenergy conversion, biofuels for transport andclimate change and renewable energy scenarios.

There is a major disconnect between New Zealand’s international commitments under the Paris Climate Agreement and the recently released draft for consultation of the NZ Energy Efficiency and Conservation Strategy for 2017 to 2022.

Forestry in the Emissions Trading Scheme

by Tom Carver, Motu Intern

The New Zealand Emissions Trading Scheme (NZ ETS) is “the Government’s principal policy response to climate change”.[1] It has been operational since 2008; however, much of the information and data that is are necessary to evaluate its performance and model the future evolution of the ETS and its implications for meeting future targets haves not been publicly released by the government. 

Earlier this year Motu requested information on:

• Clarification for how forestry will be accounted for under New Zealand’s Paris INDC targets, and any associated modelling;
• Forecasts of afforestation, emissions and removals from ETS registered forests;
• Extra details on forestry that had not yet been made public:

1. Age and size profile for ETS registered forests;
2. Area weighted average age of deforestation for pre-1990 forests;
3. Region, age and species of land removed from the ETS;
4. Other technical details: The extent of ETS exemptions for tree weeds and owners with less than 50 hectares of pre-1990 forest, distinctions between data reporting in voluntary vs. mandatory returns, forest area involved in forest offsetting provisions (enabling landowners to avoid ETS deforestation liabilities if they establish a comparable forest elsewhere), and the proportion of NZUs in the ETS bank that are attached to future liabilities for post-1989 forest.

MPI officials withheld information on the first point on the grounds that negotiations for these rules are still being finalised after the Paris agreement last year and that these are therefore sensitive. The information they provided is available on the Motu website.

Creating Trust and Transparency in Fossil CO2 Emissions Reporting

by Jocelyn Turnbull, Senior Scientist, GNS Science

Marcus Trimble and Margaret Norris using the GNS Science high-tech grass sampling method near the Kapuni plant in Taranaki. A GPS, a plastic bag and a marker pen are all that is required. And perhaps a pair of gumboots! Photo credit: Jocelyn Turnbull, GNS Science.

Last year, I wrote about how we can use atmospheric measurements to determine whether nations and industries are meeting their fossil fuel CO₂ emission reduction goals. With the Paris Agreement, the stakes have gotten higher, with most nations agreeing to reduce their emissions, and a recognized need for “trust and transparency” amongst nations in emissions reporting.

This week, GNS Science published a new research paper taking the concepts I talked about in my previous post, and turning them into a specific method that evaluates emissions from individual power plants to better than 10% accuracy. This is key because power plants are the biggest emission sources (the huge Taichung coal-fired power plant in Taiwan produces more fossil fuel CO₂ than all of New Zealand!). This makes them an obvious target for regulating and reducing emissions. 

In the past there have been considerable barriers to measuring emissions rates from power plants. Radiocarbon measurements that need to be used in this process are time-consuming and expensive. Additionally, the atmospheric models used to translate fossil CO₂ concentration measurements to emission rates from the power plant are most accurate when averaged over long time periods.

To remove these barriers, the scientists at GNS came up with the idea of using living grass as sample collectors. There is no special field sampling equipment required, and grass effectively collects a radiocarbon sample averaged over the many days it grows. A single grass measurement tracks a week or so of emissions and is a perfect complement to the optimal model averaging period. These innovations allow us to measure the power plant emission rate to 10% accuracy. This is a marked improvement over the ~20% reported by individual power plants (based on their methods). That ~20% also doesn't take into account any bias in the plants' self-reporting. 

Grass growing in farmland near the Vector Kapuni plant in Taranaki makes an ideal sampler for fossil CO₂ emissions. Photo credit: Jocelyn Turnbull, GNS Science.

This simple and low-cost method was developed using the Kapuni processing plant in Taranaki as a test case and can be readily applied around the world. 

"Climate Cheats II": The Return of New Zealand’s ERU Controversy

by Catherine Leining, Motu Economic and Public Policy Research

In the tradition of dramatic sequels, the Morgan Foundation has just released "Climate Cheats II," this time with a focus on the 'dirty dozen' NZ ETS participants who used the most 'hot air' Emission Reduction Units (ERUs).[1]

The issue at the heart of both “Climate Cheats” reports is vitally important: New Zealand must safeguard the integrity of its contribution to climate change mitigation and the operation of the NZ ETS. The environmental, economic and reputational consequences of doing otherwise would be severe. The past choices made by the New Zealand government and NZ ETS participants followed the letter of the law internationally and domestically but not the spirit of the quest for a stable climate system. Importantly, those choices have a troubling legacy in the form of surplus Kyoto units of questionable integrity and international status, and a large participant-held bank of NZUs.

I have three key points in response to "Climate Cheats II." 

1. New Zealand didn’t cheat, but the climate got cheated by a global agreement with weak targets.

NZ government to restore a full unit obligation in the NZ ETS

By Suzi Kerr and Catherine Leining, Motu Economic and Public Policy Research

Under its Budget 2016 package, the New Zealand government announced today that it will progressively phase in a full unit obligation for non-forestry sectors in the New Zealand Emissions Trading Scheme (NZ ETS) over a three-year period. 

According to the media release from Hon Paula Bennett, Minister for Climate Change Issues, “The current 50 per cent unit cost will increase to 67 per cent from 1 January, then 83 per cent from 1 January 2018, with all sectors in the ETS paying the full market price from 1 January 2019. The current price ceiling which caps units at $25 will remain.”

Restoring a full unit obligation in the NZ ETS represents an important step forward for incentivising domestic mitigation but future emission prices remain uncertain in the absence of broader decisions on future unit supply.

Banking ideas for climate solutions

by Catherine Leining, Ceridwyn Roberts, and Suzi Kerr of Motu Economic and Public Policy

"How might New Zealanders help to reduce climate change?"

People who are increasingly concerned about climate change want to know what practical steps they could take to be part of the solution. Motu has released a new information resource which could help: an Idea Bank of Pathway Milestones for New Zealand’s Low-Emission Future.

During the past two years, participants in Motu's Low-Emission Future Dialogue have explored possible pathways toward a successful low-emission economy for New Zealand.  Participants engaged in their personal capacity, not as organisational or sector representatives. Detailed ideas that emerged from the process are captured in this “idea bank” document, which is offered in the spirit of sparking discussion, not as recommendations. While acknowledging the vital role that forestry will play, the participants focused on the stationary energy, land transport and agriculture sectors. Additional outcomes from the process are presented in the synthesis report New Zealand’s Low-Emission Future: Transformational Pathways. 

Can Engineers Change the World? Energy Transition Engineering

Dr Susan P Krumdieck is Professor in Mechanical Engineering and Director of the Advanced Energy and Material Systems Lab, University of Canterbury, New Zealand.

Can technology solve the climate problem? Dr Krumdieck outlines her work on a new interdisciplinary practice called transition engineering: changing course one innovative project at a time.

Business leaders recognise that the biggest risk to their business is energy transition. The most popular concept of this transition involves a substitution of renewables for fossil fuels and development of elusive tail-pipe technologies like carbon-capture and storage. This concept is comforting and simple. But it is also profoundly wrong. There is no way to achieve an energy transition without completely reworking every aspect of our infrastructure, industry and economy to vastly reduce energy demand. Changing the global economy to nearly eliminate the use of fossil fuels is a “wicked problem” – a problem with no known solution. This is why the new field of energy transition engineering is emerging. 

Can engineers change the world?

Charting a course toward New Zealand’s low-emission future

by Catherine Leining, Policy Fellow, Suzi Kerr, Senior Fellow, and Ceridwyn Roberts, Communications Director, Motu Economic and Public Policy Research.

When Captain Cook set out to observe the Transit of Venus in the South Pacific, it was a part of Earth so poorly explored by westerners that European mapmakers couldn’t agree if he would find a giant continent there or not. Cook steered across miles of open ocean, fighting storms and scurvy to reach Tahiti.

These days there’s similar trepidation awaiting those who try to map the future landscape of climate change solutions.

Over the last two years, Motu Economic and Public Policy Research has convened the Low-Emission Future Dialogue, engaging a group of cross-sector stakeholders in their personal capacities to explore options for a successful zero-net-emission economy in New Zealand.  The goal was creative problem solving, not consensus on recommendations.  The outcomes are a collection of ideas not necessarily endorsed by individual participants, their affiliated organisations, or programme funders.  

Finding the best cure for a "hot air" hangover

By Catherine Leining, Policy Fellow at Motu Economic and Public Policy Research

When it was introduced in 2008, the New Zealand Emissions Trading Scheme (NZ ETS) pioneered many design features. Among these was replacing the conventional ETS cap on emission units and constraint on offset credits with an unconstrained buy-and-sell linkage to the global cap set by the Kyoto Protocol. This gave participants the option to increase their own emissions while contributing to global mitigation by buying overseas Kyoto units if that was the most efficient outcome.  The history of why this policy choice was made and how it has impacted on the system’s outcomes alongside other design features and historical events is detailed in Motu’s new working paper entitled Lessons Learned from the New Zealand Emissions Trading Scheme.

Emissions Trading in Practice : A Handbook on Design and Implementation

As the world moves on from the climate agreement negotiated in Paris, attention is turning from the identification of emissions reduction trajectories—in the form of Nationally Determined Contributions — to crucial questions about how these emissions reductions are to be delivered and reported within the future international accounting framework. 

The experience to date shows that, if well designed, emissions trading systems (ETS) can be an effective, credible, and transparent tool for helping to achieve low-cost emissions reductions in ways that mobilize private sector actors, attract investment, and encourage international cooperation. However, to maximize effectiveness, any ETS needs to be designed in a way that is appropriate to its context. 

Time Travelling on the NZ ETS

by Catherine Leining, Policy Fellow, Motu Economic and Public Policy Research Trust

Both the New Zealand Emissions Trading Scheme (NZ ETS) in operation today and the world in which it is operating are markedly different from those anticipated by policy makers when designing the system back in 2007-2008. As the New Zealand government reviews the NZ ETS, history can be a powerful teacher. What might we learn by looking back in time at how and why we arrived at today’s NZ ETS?

Motu Economic and Public Policy Research has compiled an interactive timeline for the development and implementation of the NZ ETS from 2005 to 2015. It is intended as an information resource for:

• policy makers, 
• NZ ETS participants, 
• researchers, and 
• ETS practitioners from other countries who wish to learn from New Zealand’s experience. 

The Paris Climate Change Agreement: text and contexts

by Adrian Macey, New Zealand’s former Climate Change Ambassador and a Senior Associate of the Institute for Governance and Policy Studies.

When French foreign minister Laurent Fabius brought down the gavel on the Paris Agreement on 12 December 2015, the international community reached a goal that had eluded it for six years: an updated and universal climate change agreement. It owed much to France’s diplomacy over the preceding 12 months, together with efficient, firm and innovative handling of the conference itself.

Fundamental to the success of the Conference of the Parties (COP21) was the commitment at all levels from President Hollande down to engage with the broadest range of parties and non-state actors. The fruits of France’s engagement were nowhere more apparent than in the small island states’ comment in the final plenary that this was the first time they felt they had been listened to at a COP.

ETS Review Submission from Adrian Macey

Guest Post by Adrian Macey, Senior Associate, Institute for Governance and Policy Studies, Adjunct Professor, New Zealand Climate Change Research Centre, Victoria University of Wellington, Vice Chair then Chair, UN Kyoto Protocol negotiations 2010-2011, New Zealand Climate Change Ambassador 2006-2010, Chief Trade Negotiator 2000-2002.

This is a direct transcript of Adrian Macey's submission to the ETS Review. You can also check out Motu's submission and that of Z Energy.

General points

The discussion paper is a good overview and addresses some important longer term issues. The minister’s introduction correctly identifies the purpose of the ETS as the gradual transition to a low emissions economy.  

The Paris Agreement shifts the focus to domestic measures more than international compliance, and this needs to be reflected in the fundamental orientations of the ETS.

NZ ETS and manageable costs

by Suzi Kerr, Senior Fellow at Motu Economic and Public Policy Research Trust

In my last post I examined what we need to consider in setting an NZ ETS price consistent with an efficient long-term transition (at least in expectation). Given that price, are there any reasons to protect some sectors from the full price?

If we have chosen an NZ ETS price (or price corridor) we expect will lead to the most efficient adjustment path for the New Zealand economy, what arguments could there be to treat some sectors more leniently by, for example, extending a partial unit surrender obligation?

What ‘should’ the ETS price be?

by Suzi Kerr, Senior Fellow at Motu Economic and Public Policy Research Trust

The government is seeking input on whether all sectors in the New Zealand Emissions Trading System (NZ ETS) should move to full surrender obligations (i.e. all sectors must surrender one unit for each tonne of emissions) and how to manage the costs of moving to full surrender obligations. To address these questions, we need to consider what current NZ ETS price would be consistent with an efficient long term transition (at least in expectation) to a low-emission economy, and what is likely to happen to the NZ ETS price if full surrender is implemented.   

This blog follows on from Catherine Leining’s, which set the wider context for these decisions.

What ‘should’ the ETS price be?

The fundamental purpose of an ETS is to constrain emissions and hence set an emissions price path that facilitates a gradual, cost-effective transition to a low emissions economy. This is a long-term objective and the investments and behavioural changes that will drive the transition are long term, so the system has to be thought of over a long period – not just in terms of current issues.

The Five A’s of an Effective NZ ETS Review

by Catherine Leining, Motu Economic and Public Policy Research Trust

Public consultation is underway on the government’s 2015/2016 review of the New Zealand Emissions Trading Scheme. The first stage of submissions (due 19 February) focuses on whether non-forestry sectors should face the full unit obligation per tonne (compared to 50% under current rules) and invites comments on the scope of the review. The second (due 30 April) focuses on how the government should manage unit supply, emission prices and exposure to emission costs and invites comments on other issues.

Ministry for the Environment officials have been blunt about the system’s impact to date: “Research for this evaluation, and evidence from the interviews, found no sector other than forestry made emissions reductions over the Kyoto Protocol Commitment Period One (2008-12) (CP1) that were directly caused by NZ ETS obligations.” On the basis of participants' purchases of Kyoto units and some improvement in net forestry emissions, officials concluded that the system has delivered on its two-fold purpose to assist New Zealand in meeting its international climate change obligations and reducing net emissions below business-as-usual levels.

In this case, we are hitting the target but missing the point. Limiting temperature rises below 2 degrees C requires a transition to net zero global emissions by the end of the century, with peaking of global emissions in the near term. So far under the NZ ETS, the short-term emission price has been too low and the long-term emission price too uncertain to support the strategic decarbonisation of New Zealand’s economy.  Both gross and net emissions are projected to rise significantly through 2030 under current settings.

The government’s review would benefit from inviting stakeholder input on five “A’s” essential to reforming the NZ ETS: Ambition, Architecture, Alignment, Acceptance and Agriculture.

Family and the Fossil Carbon Safety Margin

by Dr. Susan P. Krumdieck, Professor in Mechanical Engineering, University of Canterbury

In my previous blog, I translated the current language of the 2^oC climate change target into an engineering concept of a global warming “failure limit” associated with carbon fuel production.  For this part of the analysis, I will use the units more commonly used by the media – GtCO2 – which means the cumulative emissions failure limit to maintain temperature rises below 2^oC is around 3000 GtCO2 with a probability greater than 66%.

Suffice it to say that a 2^oC temperature rise would pose an unacceptable risk to our civilization and most of the world ecosystems. That seems quite a dramatic claim, but there is pretty good certainty that the heat input involved in that 2^oC temperature change would be sufficient to melt global ice, raise the sea level and cause uncertainty enough to risk, alter, damage, or destroy 80-90% of the investment in real estate, infrastructure, agriculture and organization that humanity has made to date. It will also mean a mass extinction of species and climate chaos. By “climate chaos” I mean the occurrence of storms, droughts, high temperatures, low temperatures, rainfall, hail stone size, and tornado size that are “unprecedented” and can’t be managed by historical hazard mitigation measures.

I wanted to make this personal by considering the history of CO2 emissions against the human scale of seven generations of my family. As an engineer, I don’t think of safety limits as “targets.” Failure to reduce fossil fuel production to nearly zero in my lifetime will mean unacceptable hardship for people I know. So how did we get to this point?

Fossil Carbon Safety Margin

by Dr. Susan P. Krumdieck, Professor in Mechanical Engineering, University of Canterbury

To me, as an engineer and a person with a family, the language of climate change action – for example setting “targets” for emissions – seems to be dangerously at odds with the science.

It seems obvious that the engineers of the world have a lot of work to do in changing everything that uses fossil fuel to use much less to no fossil fuel. However, this discussion is not really taking place. 

The science is clear, so I wanted to look at how we might use the language of engineering to understand the way forward. The latest IPCC Fifth Assessment Report gives conclusive modelling and science observation that profoundly affects every person on the planet. However, the general population doesn’t seem to understand the message.