Felicity Wolfe, Energy News – Thu, 27 Apr 2017
New Zealand’s renewable electricity experts may be able to earn carbon offset overseas once multi-lateral trading systems are set up. Kay Harrison, the Ministry for the Environment’s lead carbon markets negotiator, says New Zealand’s industry expertise is an opportunity to participate in large-scale projects that increase other countries’ renewable capacity.
Local companies, including Infratec Renewables, What Power Crisis and PowerSmart Solar, have carried out large-scale solar projects overseas. Other hydro and geothermal firms are also working on developments around the Asia-Pacific region.Harrison says international renewable generation projects in the future may be able to contribute towards New Zealand’s Paris Agreement emission reduction commitments, if the right agreements are in place. That is an “interesting prospect,” she told a BusinessNZ Energy Council seminar yesterday.
Harrison heads an MfE project working alongside the Ministry of Foreign Affairs and Trade to develop international carbon trading platforms.
“These markets don’t just exist out there. There is nowhere you can just go and buy emissions reductions and then claim them towards your Paris target.”
But “more and more” emissions trading schemes are developing globally. New Zealand’s first steps towards linking to these include cooperative exchanges with a number of countries including China and South Korea. “We are talking to many, many communities about this important aspect of the Paris Agreement.”
Harrison spoke alongside Paris Agreement ad-hoc working group co-chair Jo Tyndall at the first in a ‘Meet the Climate Leaders’ series planned by BEC.
Harrison says formal agreements allowing access to other carbon markets remain some way off. But there are several other approaches being considered.
Japan is working to develop emissions reduction projects in other countries under joint crediting mechanisms. Government-to-government arrangements could also allow countries to achieve greater emissions reductions if outside purchasers are willing to open up a part of their economy outside their nationally determined commitments.
She says there is also potential for a central instrument similar to the Kyoto Protocol’s clean development mechanism “if the negotiators can stop arguing about what it is and actually put the rules together”. “In our project we are exploring all of the options that may be available to our government.”
New Zealand’s cumulative emissions would be about 800 million tonnes over the next 10 years if current rates do not increase. That includes about 400 million tonnes of agricultural emissions. Harrison says New Zealand’s target is to get down to about 600 million tonnes. “That’s 150 to 200 million tonnes of reductions we’ve got to find either by reducing our emissions at home, sequestering carbon in trees, or purchasing abroad.” She says the target is stronger than commitments made in the two previous treaties. Given our high percentage of agricultural emissions and the already high penetration of renewable electricity, access to international markets will be necessary. The Government’s position, consistent with the Paris Agreement, is that the target can be met through markets, as well as local reductions and planting forests. Meeting it entirely at home would have “twice as much of a cost on the economy”.
“You may like to wear a hair shirt and think that’s a good idea. But we did not think that was necessary since, as far as the world is concerned, what we want is volume of emissions reductions.” Spending $10 million overseas to enable a large emission reduction is better for the environment than spending the same sum here for a smaller reduction, Harrison says. The split is between what can be done to get the transition to a lower-carbon economy underway, what the pace of that should be, and how much of an impact New Zealand is prepared to take “on our export-led economy”.
“How we juggle those things are live questions.” Record-breaking treaty Tyndall says the ratification of the agreement last year “broke all records” for an international treaty.
“I think everybody had thought it would take three years, maybe, to hit that threshold and we would have a good amount of time to work on the Paris rulebook.” Instead the threshold was reached last October and the agreement came into force on November 4. As a result, the time frame for completing the agreement’s rules has been “truncated” to December next year. Those rules will provide “how, when and with what consequences parties to the treaty will be transparent and accountable for their obligations”. Getting that right will allow parties to operate with mutual trust, confidence and clarity about the progress, “whether that’s individually or collectively, that is being made”.
Trump, leadership Tyndall says the US played a big role getting the agreement ratified. But the election of President Donald Trump – four days after the agreement came into force – could have a “chilling effect” in coming years. Trump promised to “cancel the agreement”, but Tyndall notes that some coal and oil companies have urged him to instead use it to promote fossil fuels and further work on carbon capture and storage technology. She says that “as of this week” it seems the US will remain part of the agreement, but its target will likely reduce. Whatever happens with the US, Tyndall says a virtuous cycle towards cleaner energy has begun with renewables and natural gas now “highly price competitive”.
“Changes in the energy market are a bit unstoppable, regardless of where politicians might stand.”With the US unlikely to remain a driving force, Tyndall says China has been “up-front” in its desire to take over climate change leadership. Its domestic actions support that, but its calls for binary differentiation between developed and developing countries means its potential role internationally “is not quite so clear”. The European Union has also indicated it would “step into the breach”. But Tyndall says its need to find a united position between divided members makes it difficult for it to behave “flexibly and nimbly” in negotiations.