National and the Greens are accusing the government of massively underestimating the cost of our Kyoto deficit, to the tune of $1.2 billion. And they're backed on this by Murray Ward, the former head of the climate change office. So, are they right? Is the government cooking the books?
Partly. One factor in the estimate is using a carbon price of NZ$30 per ton rather than the US$9.65 per ton used by Treasury. Treasury's price is based on carbon prices now, but those prices are expected to rise, and as a result Treasury's estimate is regarded as being on the low side (this also has policy consequences, BTW - lowballing the cost limits the measures the government will take). But the other factor is to look at MAF estimates for expected deforestation. These estimates show forest owners are planning to permanently deforest 47,000 hectares, rather than the 27,000 used in the projected balance of emissions. However, that estimate is in the absence of policy, and as you may be able to tell by the squealing, the government is planning to do something in this area - specifically, limiting deforestation through a deforestation permit system. If enacted, this will limit deforestation to about 27,000 hectares, and ensure that forest-owners pay the full cost of any excess.
So, the government doesn't seem to be cooking the books on the level of emissions, but should at least signal that we face a lot of risk over price - and construct policies accordingly.
Meanwhile, it's a little rich to see this criticism coming from National - a party whose "solution" to deforestation is to let it happen while giving away a billion dollars to their donors in the forestry industry. It would be nice to see the major opposition party actually present some serious solutions for once, rather than trying to actively make things worse for the benefit of their rich mates.