We’re unlikely to meet our target by buying carbon credits or reducing our emissions. So will we just leave the Paris Agreement?

“Are we going to hit it?” 

It was a yes or no question that climate change minister Simon Watts should have been able to hit out of the park: are we going to “hit” our international climate change targets? But as a wily Jack Tame pressed Watts on Q&A in July, the minister seemed trapped on the crease, trying to play a confident defensive shot, but ending up flailing like Trent Boult. 

Until recently, the answer to this question has been a firm “yes”. It was even the heading of a National Party press release during last year’s election campaign: “National will meet NZ’s climate change targets”.

However, over the last few months, when asked about our Paris climate change target, the Y-word appears to have left Watts’s vocabulary. 

Instead, on Q&A, Watts reached for a range of excuses. “It is a significant challenge… we’ve got 77 months between now and then, we didn’t inherit a viable plan to hit that target”. The government, he said, was working “around what options we have available”.

“That doesn’t sound like you have confidence we’re going to hit it,” Tame responded.

Any residual confidence evaporated further the following month, when Watts reportedly declared spending billions of dollars to buy carbon credits – widely acknowledged as the only way to achieve the target – was “unrealistic”. Instead, Carbon News reported, the government was “absolutely categorically focused” on reducing emissions at home.

There’s a big problem with this option: it’s almost impossible. 

The fricken targets

New Zealand has two very different climate change targets. Few people seem to understand the difference between them, and politicians often play switcheroo to get out of answering questions.

Firstly, we have a domestic target. This is written into law and requires New Zealand to reach net-zero carbon emissions by 2050; accompanied by the somewhat vaguer target of reducing methane emissions from agriculture by between 24% to 47% of 2017 levels. 

This is the target we hear about most. It’s the one the Climate Change Commission primarily advises on. The one the government’s recent Emissions Reduction Plan noted we are at risk of missing. And it’s the one our emissions trading scheme – the country’s main tool for reducing emissions – is entirely geared around.

Then there’s the other target. This is the one we signed up to under the Paris Agreement in 2016. It’s often called our “international target”, or the more bureaucratic “Nationally Determined Contribution” (NDC). 

This one’s even harder to get your head around. It’s what’s called a gross-net target. It uses our gross emissions in 2005 as a baseline, and pledges to cut our net emissions to 50% below that level by 2030. Net emissions are our greenhouse emissions, minus the carbon absorbed by forests – but, confusingly, under this target only the carbon absorbed by post-1990 forests is counted.

It’s this target that’s looking distinctly shaky. 

The National government signed New Zealand up to the Paris Agreement in 2016, albeit with the lower target of reducing emissions by 30% by 2030. When the target was set, the government understood that we were never going to reach it by reducing our own emissions. 

At the time, modelling found only about a fifth of this target would be met domestically. The remaining 208 million tonnes of greenhouse gas – equivalent to about two-and-a-half years of our emissions – would be purchased from other countries, paying them to plant trees or close coal power stations or the like. The rationale being that it’s cheaper to pay poorer countries to reduce their emissions than cut our own, and the climate doesn’t care where the reductions occur.

Over time, this gap reduced significantly, as more climate change policies were introduced. By 2021, it was estimated that we’d need to buy 52 million tonnes of offsets – about half of the emissions reductions required under the target.

That same year, however, the Labour government made the target markedly more ambitious, increasing it to a 50% cut in net emissions by 2030. This was to ensure we were doing our fair share, as a rich country, to meet the Paris Agreement’s goal of limiting the rise in global temperature to “well below 2 degrees Celsius” and to “pursue efforts” to limit it to 1.5C above pre-industrial levels.

About two thirds of the carbon cuts required would have to be purchased offshore to meet the new target. Advice at the time said this would require 91 million tonnes (Mt) of carbon offsets at a cost of $13.7b to $22b.

By last year, this deficit had grown to 99Mt and Treasury estimated we’d have to pay between $3-24 billion, depending on the price of offshore carbon credits.

It’s been a looming bill that no one seems to want to address. Despite nine years elapsing since the target was set in 2015, New Zealand still hasn’t inked any agreements to buy these carbon credits. There have been negotiations, but so far all details have been redacted from official documents. 

Nor has the government set aside money to buy them. Controversially, the government doesn’t have to account for this bill when it sets its budgets. Treasury has said this is because the Paris Agreement isn’t legally enforceable and the government hasn’t “created a valid expectation” that it has no realistic alternative but to pay up. 

So, with just over five years left, we’ve got no agreement to buy the credits, no money set aside to buy them, and both major parties seem to be running down the clock. During last year’s election, neither National or Labour would explicitly commit to spending the billions of dollars required to meet the target.

Which brings us to last month, when Watts appeared to rule out spending billions on overseas credits. Speaking at the Climate Change and Business Conference, Watts said doing this would be politically unrealistic.

“When I stand up and say, ‘Guess what, I’m going to write a cheque for $4 billion in your taxpayer money to some country overseas,’ you know people go: ‘I sort of want my hospital and I want my health care over that. You know, I love it, but I sort of want other stuff.’”

Instead, to meet the target, Watts said the government needed to do everything possible to reduce emissions domestically.

The problem is, this won’t get us even close. The 100 million tonne shortfall is about 15 months worth of our emissions. If we cut emissions by 20 million tonnes each year to meet it, we’d have to reduce our pollution by more than a quarter, right away. If we instantly made all of our vehicles electric (13.7 million tonnes a year), and all of our electricity renewable (2.7 million tonnes a year), we’d still be 18 million tonnes short.

Meeting the target by cutting our emissions would be so costly, the Climate Change Commission has specifically advised against it. In 2021 it said even meeting the National government’s weaker target domestically would “likely lead to severe social and economic impacts on communities, people and businesses – far more than necessary to achieve the same amount of emissions reductions given more time”.

Planting more trees won’t help either because they take more than a decade to absorb significant amounts of carbon. 

To date, the government’s been going backwards. Recent projections show our emissions will be about 33Mt higher by 2030 under the government’s policies, compared to last year.

The change in government rhetoric hasn’t gone unnoticed. Last week, Chris Hipkins asked the prime minister how the government would meet the target without buying carbon credits. 

Christopher Luxon replied that this will be outlined in the government’s Emissions Reduction Plan due later this year – a plan that is entirely about meeting the net-zero 2050 target (the switcheroo), which the government is no longer on track to meet.

‘We made a colossal cock-up in the target we pledged’

Economist Geoff Bertram began advising the government on climate change policy in the late 1980s. He would prefer the country try to meet the target domestically “with a truly massive domestic mobilisation comparable to the COVID response in 2020”. Even before Watts’s recent comments, however, he believed the government would probably baulk at the multi-billion-dollar price tag of meeting the Paris target and walk away.

“My money is on that we’re going to walk away from Paris,” Bertram tells me. “We’re not on course to reduce our own emissions anywhere near enough to meet the target domestically and the government is clearly nervous about spending the amount of money offshore required to meet the target with international credits. But we will have a cover story.”

While Bertram isn’t sure if Watts’s comments indicate the government has decided to abandon or weaken our target yet, he says it’s probably just a matter of time. The government can weaken the target at any stage, he says, and it may do this while claiming they’re still committed to the Paris Agreement. 

“Never underestimate the wiggle room for the spin doctors to claim that we’re not really reneging,” he says. “Over the years I’ve become accustomed to the government hiding behind confusing PR to cover-up for the fact that they’re not doing anything serious. Getting out of the Paris Agreement is going to require massive amounts of spin-doctoring, but I don’t doubt that they will try it. There are all sorts of tricks they can still play.”

This could include accounting changes that would calculate the carbon absorbed by oceans, swamps, native forests, scrub, soil – changes that would reduce net emissions without actually reducing our pollution. The last government also decided to look into accounting for more domestic offsets, but the advice at the time was that this may actually increase net emissions in the short-term. 

Adrian Macey was New Zealand’s climate change ambassador between 2006 and 2010, responsible for negotiating New Zealand’s international climate change agreement. He tells me meeting the target domestically “isn’t plausible at all”. 

However, he believes setting a target that couldn’t be met domestically was a mistake in the first place. No other government set a Paris target that required buying offsets to such an extent, he says. 

“We made a colossal cock-up in the target we pledged,” Macey says. “The question is how we get out of that. I think National’s tactic seems to have been to put it on the backburner and when you get to 2030 you say ‘shock horror, what have these people in Labour left us with. Sorry we don’t have the spare $20-plus billion to spend’.”

Others are adamant we should not only meet the target, but go much further. Lawyers for Climate Action has taken a court case against the government and the Climate Change Commission, claiming our Paris Target is not enough to limit global warming to 1.5C. 

“Our current NDC isn’t ambitious enough and even if we actually meet it we’ll still be doing less than our fair share to the global effort,” executive director Jessica Palairet tells me.

The fact that meeting the target is difficult doesn’t mean we shouldn’t do it, she says, even if that requires helping other countries to reduce their emissions. “The world’s depending on us to meet it. If we support other countries to reduce emissions through offsetting, I don’t have an issue with that given this is a global problem that relies on global solutions. It was always intended from the outset that the target would be met in part with offshore mitigation. That’s just what it requires for New Zealand to play its role as a global citizen.”

However, Palairet says Watts’s recent comments were “raising alarm bells”. 

“New Zealand is potentially signalling that it might walk away from our NDC,” Palairet says. “That we might be one of the first countries to say that we can’t achieve our nationally determined contribution is incredibly concerning for the climate, for the future of the Paris Agreement and for New Zealand’s standing and reputation internationally.”

Lawyers for Climate Action aren’t alone in their view. Greenpeace and Oxfam have also called on the government to set a much more ambitious target. 

There would be serious consequences for weakening or abandoning our 2030 target. Notably our free trade agreements with the UK and the EU require us to meet our Paris Agreement obligations.

Climate change policy expert Christina Hood says the reputational damage to the country would be enormous. “We’ll never be taken seriously at climate negotiations again,” Hood says. “John Key’s government fought tooth and nail to get carbon markets put into the Paris Agreement. And then when we’re getting close to using them are we going to say ‘no, just kidding’?

“The repercussions would be so serious that they don’t have any realistic alternative but to follow through. It’s not just a case of our free trade agreements. The success of international efforts to maintain a habitable climate under the Paris Agreement rely on every country doing its part. If rich countries like New Zealand don’t follow through, the whole thing would unravel.

“But I don’t think they’ve made any decision yet.”

Significantly, NZ First has been opposed to meeting the target buying offshore credits, while ACT has called for the Paris target to be aligned with emissions reductions of our major trading partners.

Watts remains equivocal. When The Spinoff asked him via email if the government was committed to meeting the target, he said it was “committed to making our best efforts”.

“Tough decisions will need to be made, and we are considering all options,” he said.

However, he added the government had no current plans to change the target and the government was still negotiating with other countries and looking at “the potential role international cooperation could play”.

Meanwhile, New Zealand must set a new Paris Agreement target for the 2031-35 period by February next year, meaning consultation should be imminent – if they’re going to consult at all. Each new target is meant to be more ambitious than the last and New Zealand’s most recent climate change ambassador has called on the government to step up its game. 

Its decision will signal to the country, and the world, whether we’re still planning to do our bit to restrict global warming to 1.5C, or whether Paris is burning.