[extropy-chat] FWD (PvT) Kyoto bill creates $1 billion deficit

[Terry W. Colvin]

The Greenies of New Zealand were panting to ratify Kyoto because they 
thought they'd make a killing selling carbon credits to other 
countries. But then...

http://www.nzherald.co.nz/index.cfm?mode=headlines&c_id=3&ObjectID=10331130

Thursday June 30, 2005  

Kyoto bill creates $1 billion deficit

17.06.05

By Brian Fallow

Taxpayers will be at least $1 billion worse off under revised 
Government estimates of the costs of the Kyoto treaty to combat 
global warming.

National's environment spokesman, Nick Smith, says the party, if 
elected, will consider pulling out of the Kyoto Protocol, despite the 
cost to New Zealand's international reputation, given the "hammering" 
the economy will take under the latest numbers. "It's a huge 
stuff-up." [Yes. Yes it is. --BW]

Revised projections released by the Climate Change Minister Pete 
Hodgson yesterday show we are likely to exceed our Kyoto target for 
net emissions of greenhouses gases by 36 million tonnes of carbon 
dioxide during the treaty's first commitment period, 2008 to 2012.

New Zealand would have to buy carbon credits from other Kyoto 
countries to cover that shortfall.

That is a big turnaround from last year's projections which had us in 
credit to the tune of 33 million tonnes.

At an indicative carbon price of $15 a tonne (the value used to set 
the carbon tax due to come into effect in 2007), that is a switch 
from a gain of nearly $500 million to cost of more than $500 million, 
which would fall to the taxpayer.

Taking the current price of $34 a tonne taxpayers would need to find 
$1.23 billion to buy credits on the international market.

The biggest change from last year's estimates is a 24 per cent or 38 
million tonne increase in the emissions expected from vehicle 
exhausts and smokestacks, especially the former.

That is driven by more refined modelling of the impact of economic 
growth on energy use.

Petrol and diesel represent about 35 per cent of energy demand and 
there has been little observable improvement in the efficiency with 
which those fuels are used.

The other major change is on the credit side of the ledger, where 
Kyoto's rules allow credits for the carbon dioxide taken out of the 
atmosphere by forests planted on land not previously forested.

The benefit from these forest sink credits has been revised down by 
24 million tonnes or 25 per cent.

Most of that, 15 million tonnes, is because pine trees planted on 
land previously covered with scrub are not now to be counted as 
eligible for credits.
But it also reflects a collapse in the rate of new planting of 
commercial forests and an increase in deforestation, which creates a 
liability under Kyoto's rules.

The 36 million tonnes deficit is officials' "most likely scenario" estimate.
The outcome could be up to 25 million tonnes better or worse than 
that, depending on the assumptions made.

But even the optimistic scenario has New Zealand as a net buyer of 
carbon credits in the end.

When we ratified Kyoto in 2002 one of the reasons Hodgson gave for 
doing so was that not to ratify would be to set fire to "a very big 
cheque". Then we were assumed to have a net credit position of 55 
million tonnes.



-- 
"Only a zit on the wart on the heinie of progress." Copyright 1992, Frank Rice


Terry W. Colvin, Sierra Vista, Arizona (USA) < fortean1 at mindspring.com >
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