Euan Mason, Canterbury University professor at the New Zealand school of forestry, has criticised plans to continue using carbon credits in the ETS that are not backed by carbon sequestration schemes or technology.
Mason has submitted strongly against the proposal as the government seeks input to proposed changes.
“My concern is that people buy credits because they want to offset their carbon emissions while they continue to emit, believing action by someone else is absorbing their emission. This would mean purchasers could genuinely call themselves ‘greenhouse gas neutral’.
“That is not the case if the credits are not actually cleaning up the emissions.”
The ETS is based on such credits and proposed amendments to it will not change this, he said.
The failure of ETS to make a substantial difference to NZ’s net emissions is already apparent, with an increase of 54% from 1990 to 2016 and gross annual emissions of 80 million tonnes.
Under current ETS terms emitters are grandfathered carbon credits called NZ Emissions Units (NZUs) for allowed pollution.
The price of these units took a hit in 2011 when NZ began importing cheap “hot air” credits, or European Units, from eastern Europe.
The Ukrainian credits were a legacy of original thin air credits known as AAUs, or assigned amount units, established under the original Kyoto agreement in 1990.
These had no genuine carbon reducing technology or actions backing them and still don’t.
They flooded global markets pulling the NZU price to as low as 17c a unit. They were outlawed in 2015 by the National Government.
However, under proposed changes to the ETS the Government appears intent on continuing to allow use of credits not backed by technology, trees or other actions, and will change little, Mason said.
He said backed by an auction system the ETS was even more flawed. The auction system gives government a lever with which to appease politically strong interest groups, while also adding some cash to government funds.
The potential for appeasement only undermined attempts for NZ to meet its targets.
“Auctioning promotes the fundamental irrationality that has plagued our ETS so far. Fraudulent credits are always going to be cheaper to manufacture than those with environmental integrity. This is so obvious it is astonishing auctioning is going ahead.”
Mason has challenged Ministry for Environment (MfE) officials on the lack of substance behind the revised NZ credits and the auction system being used to distribute them.
In response MfE officials have stated the purpose of the ETS is not to make covered sectors carbon neutral, but to help deliver the Government’s emission reduction targets and meet associate emissions budgets.
Near term emission budgets allow for some emissions to continue and with that NZ ETS credits will continue to be released onto the market, and not backed by actual sequestration.
In their response officials maintained this is the way nearly all emissions trading schemes work, including the EU, USA, and South Korea.
But Mason is less than impressed.
“The argument that ‘everyone else is doing it’ carries no weight when global anthropogenic (man-made) GHG emission are rising as rapidly as ever. Clearly what everyone else is doing isn’t working terribly well.”
Mason is proposing a “gold standard” approach to credit issuing, where they are only issued if backed by actual sequestration technology, or forest plantings that absorb carbon.
“So if you want people to emit without purchasing a credit, just say that they can emit 90% credit free, then they have to purchase the remaining 10% of real credits.
“At present that 90% has credits issued to it that are simply hot air credits.”
Given there is a 30 year time line remaining for NZ’s 2050 zero carbon target the reductions would not be overly drastic each year.
“I do not think it would be terribly painful to reduce by one 30th every year in a linear way.
“Companies will either pay to actually mitigate their carbon emissions, or if the cost of doing so is greater than purchasing a genuine credit, then they will purchase the credits instead.”
