Cars and cows: reviewing Kyoto

With the Kyoto Protocol coming into force today, I thought I'd review the treaty and the policies implemented in response.

Firstly, the treaty itself. Under the Kyoto Protocol, New Zealand has committed to reduce its net emissions of certain greenhouse gases to 1990 levels over the period 2008 - 20012 (the first commitment period, or CP1). We must do this either by actual reductions in emissions, or by offsetting emissions with "carbon credits". The latter can be gained either by planting trees, which lock up carbon and act as "sinks"; by purchase from countries who are emitting less than they are entitled to; or by creating sinks or reducing emissions in Annex 2 (poor) countries (the "clean development mechanism").

Currently, our carbon emissions are about 20% over 1990 levels, with most of the growth coming from transport and farming. However, there's also been a lot of trees planted since 1990 - some by fools who believed that this would give them a right to carbon credits - and these more than offset the growth. Even with recent trends towards cutting things down rather than planting, New Zealand is still expected to be a net seller of carbon credits between 2008 and 2012, and to gain a small amount of revenue from this.

Policywise, then, the New Zealand government could afford to do nothing - except that this would go against the spirit of the agreement, and probably leave us in a very bad position if further emissions reductions are agreed for post-2012. So it has attempted to encourage emissions reduction - not by an outright ban, but through market incentives. A small number of projects, chiefly in the energy sector, are rewarded with carbon credits if they result in lower emissions than would occur under "business as usual". So far, this has rewarded energy efficiency measures, geothermal projects, microhydro, and most of New Zealand's windfarms. In addition, the government has also negotiated agreements with major industries to curb emissions growth.

However, the above is essentially tinkering around the edges. As Pete Hodgson pointed out in Parliament today, the energy sector is responsible for only 8 - 9 percent of our greenhouse emissions. Our main sources are actually transport and agriculture - "cars and cows". And in these areas they have done very little. The government has exempted farmers from any responsibility for their emissions (in other words, the farmers get their free ride - again), and is instead betting on changes in farming practices, fertiliser use, or animal feed to reduce emissions in this area (which is already bearing some fruit). In the transport sector, the government plans to impose a "carbon tax" - a charge on fossil fuel emissions - which should provide some incentive for change. However, it has not taken the simple, obvious step of setting minimum fuel-efficiency standards on new and imported vehicles, or even of requiring such information be made available to consumers (though it is considering the latter). Such policies would be worthy in their own right, and no more difficult to implement than vehicle safety standards, yet they do not yet seem to have been seriously considered. But if we want to actually reduce our emissions, then that has to change.

Will the protocol work? That depends on how you measure success. No credible climate scientist believes that the currently agreed reductions in emissions are anywhere near enough. However, it is a start. It will help get governments moving in the right direction, and help build trust for the next round of cuts. But more importantly, if backed by the right policies, it will help push the market in the right direction. We already have the core of a low-emission technological package which is compatible with modern western lifestyles - wind and solar power, smaller and more efficient cars, fuel-cell or hybrid engines, high efficiency gas turbines rather than low-efficiency coal, even nuclear power - all we have to do is make the switch. Kyoto will effectively create a market for these technologies (as it has already done for wind in New Zealand and Europe), and help push them towards ubiquity. And in the long run, that can only be a Good Thing.