Reducing emissions

The Press had a story this morning about our skyrocketing greenhouse emissions, based on the National Inventory Report. Overall emissions have grown 22% since 1990, with significant growth in both the transport and energy sectors. And while much of this will be offset by forest sinks, it is still likely to cost us between $600 million and $1.2 billion over five years to purchase carbon credits to cover the increase. Unless, of course, we do something about it. But what?

In order to plan greenhouse policy, we need to look at our numbers. In 2003, our emissions were divided as follows:

• 49.4% agriculture
• 42.9% energy
• 5.3% industrial processes
• 2.3% waste
• 0.1% solvents

According to the Ministry of Economic Development's Energy Data File, the "energy" component of the above in 2003 comprised (by CO₂ share):

• 41.6% domestic transport
• 21.0% electricity generation
• 18.6% industry
• 3.8% other energy transformation industries
• 10.5% other

So, doing the numbers, transport comprises 17.8% of total emissions, electricity generation 9%, and industrial heat 8%.

We also need to look at the areas of fastest growth. The inventory report Q&A gives these as follows:

Our total greenhouse gas emissions have increased by 22.5% since 1990. The major component of the 22.5% increase is emissions from road transport (7.4%). Other large contributors are methane emissions from dairy cows (5.8%), emissions from electricity generation and heat production (4.7%), and emissions from the use of nitrogenous fertilisers (3.1%).

So, what should we target? It's fairly clear that the real growth (and real culprit) is in agriculture, followed by transport. With electricity generation, we can ensure that future demand growth is met from renewables - something the market (as incentivised by carbon taxes and an uncertain gas supply) seems to be doing quite well at present.

Agriculture seems untouchable, given its centrality to our economy and export earnings. But there is one avenue of reducing emissions, and that is nitrates. Animal urine breaks down to release nitrous oxide, a far more powerful greenhouse gas than carbon dioxide, and one which makes up approximately 17% of our emissions total (it's classified under "agriculture" above). The same process leads to nitrate runoff which pollutes our waterways (a significant problem in New Zealand). The problem is compunded by nitrogen-based fertilisers, which are now being used to promote grass growth for grazing animals such as cows. Reducing the number of animals or the amount of fertiliser used would have a large effect on our greenhouse emissions, but would obviously lower agricultural productivity. However, there is a technological solution: nitrate inhibitors. These slow the breakdown of nitrogen compunds in the soil, resulting in less nitrous oxide, less nitrate runoff, and (best for the farmer) more uptake by plants (allowing reduced fertiliser use). The government is funding research into these, and results are encouraging. The inhibitors reduce nitrous oxide emissions by up to 75% - meaning that if they are widely used, and if the IPCC accept that they result in a real reduction (a political as well as scientific argument), then that is our excess emissions problem solved right there. Policywise, one solution is to regulate so that inhibitors must be added to fertiliser sold in New Zealand. Another is to incentivise the market with a "nitrous tax" on fertilisers which do not include them. The downside of both policies is that farmers will end up wearing the cost. But on the other hand, it is their pollution, and the cost should be internalised so that the polluter pays.

(I'll also note that even if the IPCC doesn't recognise nitrogen inhibitors for Kyoto purposes, we should encourage their use anyway, in order to mitigate damage to our waterways...)

As for transport, one policy suggestion is to target fuel efficiency. We have a relatively old (meaning inefficient) vehicle fleet, and we renew it with second-hand Japanese imports. Barring the oldest of these will gradually raise our average fuel efficiency, though it will take time to have an effect. Another obvious option is to start substituting with biofuels. Biodiesel - essentially fats or vegetable oils - can be blended into normal diesel, and ethanol (fermented from vegetable matter or whey) can be blended into petrol. These are carbon neutral, the carbon having come out of the atmosphere, and renewable. Many countries already use blended petrol and diesel, and Brazil runs its entire car fleet on ethanol. There are limiting factors to do with engine type (another reason to encourage newer vehicles) and starting in cold temperatures, but New Zealand's vehicle fleet could easily handle a 5% blend of renewables in our petrol or diesel. This would reduce net annual emissions by about 0.9% - or just under 10% of our excess over the five year Commitment Period.

At present the government is pursuing other policy options - notably a carbon tax to provide an incentive for fuel efficiency, and Negotiated Greenhouse Agreements providing exemptions from that tax in exchange for concrete emissions reductions. Both will have an effect, but if the government wants to seriously tackle our emissions and lower its financial exposure to the carbon market, it needs to start looking seriously at the above policies.