Wednesday, July 13, 2005

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.


and how will paying a billion dollars to the russians help us lower emissions?
would that money not be better off spent on lowering our emissions and increasing our productivity?

Posted by Anonymous : 7/13/2005 04:59:00 AM

Yes, it would. And if we spend it like that, we don't need to give it to the Russians.

That is exactly what the international carbon market is supposed to do: provide a solid incentive to actually do something about the problem.

Posted by Idiot/Savant : 7/13/2005 08:59:00 AM

and you think that will happen?
do you honestly think we won't have to pay money to the russians?

Posted by Anonymous : 7/13/2005 09:06:00 AM

I am very ambivalent about measures like the carbon tax supposedly giving people incentives to improve fuel efficiency. It's all very well for people who can afford to for eg. buy a more fuel efficient car but not everyone has the option. It seems to me like a measure that could fall very hard on the not so well off

Similarly I have concerns about the idea using the cost of electricity as a means of encouraging people to improve the energy efficiency of their housing. If you own your house and can afford extra insulation & a solar panel etc thats fine but not so fine if you are a tenant and landlord has no incentive to keep the cost of your powerbills down.

I'm not saying we shouldn't reduce emissions, of course

Posted by Amanda : 7/13/2005 10:03:00 AM

Anon: Whether or not we have to buy credits (from the Russians or anybody else) depends on whether the government acts. At present, the government is acting. Whether they are doing enough is an open question - it's a hard problem, and not every seemingly intuitive solution is actually worthwhile - but they are on the right track. The opposition OTOH refuses to acknowledge even that the problem exists, is hostile to the ideas of regulation, market incentives, or cost internalisation, and has promised to repeal and reverse what action has so far been taken. So one thing I can be sure of is that we will be paying more under them than we would be under the current government.

Posted by Idiot/Savant : 7/13/2005 10:23:00 AM

is there an irony in persons who favour market-driven responses to problems whining when the market (i.e, the carbon-trading market, as relatively artifical as it is) decides that we aren't performing adequately, and therefore lose money?

Posted by Anonymous : 7/13/2005 11:05:00 AM

So, how you going to break it to the vintage car community that they're not allowed to use their vehicles, then?

I prefer to use older cars - they're easier for me to maintain, more sturdily built and resist damage better, and are much, much cheaper than modern vehicles. For the cost of one new hybrid, I can buy and use about ten or fifteen older secondhand vehicles. Also, older engines are more easily backyard converted to other fuels, such as biodiesels and methanol.

Posted by Weekend_Viking : 7/13/2005 11:09:00 AM

Oh, yeah, and the problem with biofuels: production energy efficiency. With biodiesel and ethanol/methanol, at the moment the production efficiency seems to be about 1 energy unit in for every 1.1 produced, which is not that hot. If you factor in the oil-derived fuels used in agricultural production of biodiesel crops, it can come out as a negative sum. We're going to have to GE a massive level of oil production into a seed crop to get a good energy in to energy out ratio on that one.

Posted by Weekend_Viking : 7/13/2005 11:22:00 AM

Viking: The suggested ban is on importing older vehicles, not on driving them. It's effectively the same thing we do with tightening the building code - it applies to new houses, not existing ones. The aim is to speed the gradual improvement the market is supposed to provide (and OTOH, SUVs are new, and not an improvement - but an average fuel efficiency limit is harder to manage)

Another option - suggested by United Future - is to pay people to take older, less efficient cars permanantly off the road. I'm not sure whether this works out for the sort of small payments they're suggesting, but its probably worth some investigation.

As for collectors and vintage car enthusiasts, they're a minor tweak. I'm suggesting broad policy, not the nuts and bolts.

Posted by Idiot/Savant : 7/13/2005 11:34:00 AM

Viking: production efficiency isn't a problem if you use wastes. In New Zealand, we look likely to make our biodiesel from surplus animal tallow (which I guess means vegetarians won't be able to drive trucks). I'm not sure what is most likely for ethanol, since there are more options.

Posted by Idiot/Savant : 7/13/2005 11:48:00 AM

Then if the Govt is acting to ensure we don't have to pay a billion dollars to the russians, why didn't we just implement these policies anyway without signing up to Kyoto and not risk giving putin a christmas present??

Posted by Anonymous : 7/13/2005 01:19:00 PM

Anon: we've already signed up for Kyoto - and we wouldn't be doing anything at all unless we had.

While we could do a Bush and "unsign" it, we've built our entire foreign policy for the last 50 years on being a nation that keeps our word. The consequences both for our general foreign policy and our trade access to Europe would be utterly disastrous.

Posted by Idiot/Savant : 7/13/2005 01:39:00 PM

Bush did not "unsign"
they simply have not ratified- BIG DIFFERENCE.

Posted by Anonymous : 7/13/2005 01:42:00 PM

It goes beyond "simply not ratifying" to announcing his intention never to ratify. For all practical purposes the US has withdrawn from Kyoto - and the world recognises this.

And in any case, we have ratified Kyoto. Withdrawing would seriously damage our credibility with other deals. As a small country with a mana-based foreign policy, we simply cannot afford to do that.

Posted by Idiot/Savant : 7/13/2005 03:09:00 PM

Destroying our credibility?
We did that a while ago- backtracking over the purchase of aircraft from the US

Posted by Anonymous : 7/13/2005 05:06:00 PM

Absolutely! It's clear to all of us that deciding not to buy some planes we didn't need anyway was far worse for our credibility than giving the world the finger over global warming would be...

Posted by Anonymous : 7/13/2005 10:15:00 PM

I wonder how valuable "credibility" is...

For example if we signed an international treaty to donate a random amount of money to, lets say Ireland (similar living standards etc not much reason to, or not to, donate), forever - at what number would we decide to reconsider this offer. (lets say 2 billion turned up on the random number generator)

Presumably that is the value of our credibility.

Posted by Anonymous : 7/14/2005 06:47:00 AM