Minister for Climate Change Issues Paula Bennett and the surplus emission units

A wee while ago, back on 23 May to be precise, I wrote an open letter to Minister for Climate Change Issues Paula Bennett calling on her to cancel the surplus Kyoto emission units held by the Crown.

I received an undated reply from Bennett on Monday 4 July 2016.

To crudely sum it up, Bennett's reply is "No we won't cancel any surplus units. Those bad bad Ukrainian units! It was bad. But we stopped being bad, we won't be bad again, at any rate no more bad than any one else!"

Here is the text of Bennett's letter. For context, I have put the text of my open letter to Bennett at the bottom of this post.

Thank you for your letter of 23 May 2016 about surplus Kyoto Protocol assigned amount units.

As you say, the Government has a surplus of 123.7 million Kyoto Protocol emission units which were left over after we retired units to meet our target for the first Kyoto commitment period.

I accept that there were up to 97 million Emission Reduction Units (ERUs) bought and surrendered in the New Zealand Emissions Trading Scheme (NZ ETS) before the Government stopped accepting them. That was within the rules, but we now know many of the ERUs are likely to have had poor environmental integrity. We are not accepting international units now, and we are working hard to make sure any international units traded in the NZ ETS in the future are of high environmental integrity. We are reviewing the NZ ETS to make sure it will be fit for purpose in the future.

As we have said in the past, we will meet our target of -5 per cent by 2020 using a combination of domestic abatement, forestry removals, and some international purchasing. There is information about the target on the Ministry for the Environment website at www.mfe.govt.nz.

We have not made a decision about what to do with any Kyoto units that are left over after we have met the 2020 target.

Nearly all other Kyoto developed countries also have surpluses. Some of them have said they will cancel units, but haven't actually cancelled them yet. There is no urgency to do anything with these units, and the fact that we are not cancelling them at this stage doesn't put us out of step with other countries.

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Let's look a little harder at three statements in Bennett's letter.

1. "We are not accepting international units now"
   Bennett is implying that the New Zealand Government made an express decision to stop the importing of some low-integrity international emission units. In fact, New Zealand ended up with no access to international carbon markets when Tim Groser told the UNFCCC that New Zealand was not going to have a formal emissions reduction commitment under the Kyoto Protocol for 2013 to 2020. Ms Bennett and the Ministry for the Environment should stop implying that some positive decision was made. Its just not true.
2. "we will meet our target of -5 per cent by 2020 using a combination of domestic abatement, forestry removals, and some international purchasing."
   The translation of this spin back into plain language is 'we will still be using creative carbon accounting' to pretend we are reducing emissions when we know we are not. Bennett should really stop saying such a disingenuous statement. The Ministry for the Environment's 2020 Net Position Statement still explicitly shows the 123.7 million surplus units plugging the gap.
3. "not cancelling them... doesn't put us out of step with other countries"
   Heaven forbid that New Zealand should be out of step with the many other countries who are also doing nothing about climate change!

My open letter to Paula Bennett - Your ethical duty to cancel 124 million surplus assigned amount units

Dear Minister,

I see that last Friday (20 May 2016) the Ministry for the Environment released New Zealand's Greenhouse Gas Inventory 1990–2014 and the summary 'Snapshot'.

I see that in the Snapshot summary on Figure 5, page 5, that New Zealand is still intending to use 123.7 million emission units (Assigned Amount Units or 'AAUs') that were 'surplus' from the Kyoto Protocol first Commitment Period to meet the 2020 emissions reduction target and still have a surplus of 92.6 million units.

You are aware that the Morgan Foundation's report 'Climate Cheats' and the Stockholm Environment Institute report (Kollmuss, Schneider and Zhezherin 2015) set out a persuasive case that the 97 million Emission Reduction Units ('ERUs') that were imported to New Zealand were “questionable or of low environmental integrity”. Those ERUs were surrendered by NZETS participants into Crown holding accounts.

According to the Kyoto Protocol 'True-Up' Report, in December 2015, the Ministry for the Environment cancelled (transferred Crown-owned units to cancellation accounts) 373 million emission units to comply with the Kyoto Protocol. The numbers and types of units cancelled were: the 97 million imported ERUs, 16 million imported Certified Emission Reduction units ('CERs'), 81 million removal units ('RMUs'), and 179 million AAUs . The 'surplus' units remaining in Crown holding accounts were 124 million AAUs.

In a nutshell, the only reason New Zealand (the Crown) has so many 'surplus' AAUs is because of the inflow and use of the dubious ERUs in the NZETS. Each dubious imported ERU has allowed one additional AAU to be carried forward in a Crown holding account as a 'surplus' unit. Because the ERUs have no credibility, the AAUs no longer represent carbon safely stored out of the atmosphere. No emissions were reduced. Therefore to use these surplus AAUs to comply with the national 2020 emission reduction target is simply an exercise in creative carbon accounting. It is simply unethical.

I put it to you that as Minister for Climate Change Issues, you are morally obliged to cancel these surplus units owned by the Crown. Will you cancel the units? It may hopefully to some small extent restore New Zealand’s very tarnished reputation with respect to mitigating climate change policy.

Yours sincerely