Kyoto figures receive pass mark

An independent review of officials' estimates of New Zealand's Kyoto liabilities has given them a qualified thumbs up.

Revised estimates showed in June the country was likely to exceed its target by 36 million tonnes of carbon dioxide equivalent between 2008 and 2012, during the climate change treaty's first commitment period. The Government would need to buy carbon credits from other Kyoto countries to cover the shortfall.

That was a big turnaround from last year's estimate, which had the country 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.

Climate Change Minister Pete Hodgson commissioned an independent review by a British consultancy, AEA Technology.

It looked at the methodologies used to estimate greenhouse gases emitted, or removed from the atmosphere by trees growing in "Kyoto" forests, finding them "generally sound and reasonable".

AEA was not asked about the monetary cost, which will depend on the international price of carbon credits and the exchange rate.

It said the two main areas which could cause relatively significant further revision to the projections were land use change/forestry and energy demand in the transport sector.

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.

AEA suggests the pessimistic scenario on deforestation may be too optimistic and that the estimate for afforestation (10,000ha a year, half the previous estimate) may be too optimistic as well.

It notes inconsistencies between estimates of land use change in the context of forest sinks and in calculating agricultural emissions. It also has reservations about the modelling of energy demand and related emissions, describing the treatment of the transport sector, especially diesel use, as relatively simplistic.