The government has set a new and more ambitious greenhouse emissions target, but exactly what it means is hazier than a cloud of coal smoke. George Driver digs into the details.

It was the best of targets, it was the worst of targets.

New Zealand ramped up its emissions reductions target at Glasgow on Sunday and the announcement has been praised and panned on all sides. Greenpeace said the long-suffering Shaw had “wimped out”, Oxfam called it a “betrayal”, while National said the new targets went too far and would cripple the economy. The Science Media Centre kindly collated comments on the announcement from 12 scientists, but even here the experts often sounded like they were talking about completely different announcements, responses ranging from praise to condemnation.

But the greatest confusion is around just what the targets actually mean. It seems clear they will not, as the headlines have claimed, result in NZ halving its emissions by 2030 – at least not under any reasonable interpretation of the claim.

The reason is because of the way the target is calculated – it uses what’s called gross-net accounting. The baseline for the target is gross emissions in 2005. Gross emissions are the emissions we produce – the gases that come from transport, agriculture, manufacturing etc. However, the target in 2030 is a net figure – that’s our emissions after carbon sinks like planted forests have sucked up some of our greenhouse gases. 

Because NZ has planted a lot of forests over the last 30 years, our net emissions are significantly lower than our gross emissions. So, for example, in 2005 our net emissions were 30% lower than our gross emissions. So even if our emissions were unchanged between 2005 and 2030, using gross-net accounting you could claim we’ve “cut” emissions by 30%. In fact, our target up until Sunday was to reduce our emissions by 30% by 2030 using this kind of calculation (although, confusingly, this target used a different method to calculate the emissions reduction). Some had actually calculated that our emissions would rise under the previous target – that we would actually put more greenhouse gases into the atmosphere while apparently “cutting” our emissions by 30%.

It’s a bit like going to your boss and complaining that you’ve had a 20% pay cut by comparing your before-tax income last year to your after-tax income this year. It shouldn’t convince your boss, and it shouldn’t convince the country.

Comparing like-for-like net emissions, the new target will actually require us to reduce emissions by about 28% on 2005 levels, or by about 25% on current levels. It would see our net emissions reduce to about the level they were in 1990. It’s still significant and much more than the previous target set under National – but it’s not a 50% cut.

It’s worth noting that using 2005 as a baseline also massages our figures – that year our gross emissions were the second highest on record, although emissions have been at a similar level since, making any reduction look more significant.

The Climate Action Tracker claims New Zealand is “one of only a few countries in the world” using gross-net accounting for its 2030 targets. 

However, Massey University emeritus professor Ralph Sims, a lead author for the IPCC, said gross-net accounting was relatively common.

“New Zealand’s not unusual in its accounting methods,” Sims says. “It abides by the UNFCCC rules for its inventory.”

OK, so New Zealand will reduce our current emissions by 25% by 2030? Well, not quite. Even achieving that goal would be extremely difficult to do domestically in just eight years. The Climate Change Commission said trying to meet a much lower target domestically would “likely lead to severe social and economic impacts on communities, people and businesses”.

Instead, two thirds of the emissions reductions will reportedly come from overseas – paying other countries about a billion dollars a year to plant trees or take actions like retiring a coal power plant and replacing it with renewables. 

So, it looks like New Zealand will reduce its domestic emissions by a third of 25% by 2030 – or about 8.25%.

How offsetting offshore will work in practice still has to be hashed out at Cop26 in Glasgow, although Switzerland has already reached multiple bilateral agreements with other countries to offset its emissions.

Offsetting offshore could still be positive in theory – it doesn’t really matter which country has reduced its emissions, as long as the result is the same. However, there is concern that this kind of emissions trading won’t result in real emissions reductions. International emissions trading got a bad name during the Kyoto Protocol, when New Zealand bought millions of dollars of so-called junk credits from Ukraine and Russia.

“We bought ‘hot air’ credits from Ukraine to try to meet our Kyoto target and they were totally false,” Sims says. “They claimed that they had reduced their emissions because their economy collapsed and therefore their industry wasn’t as prolific as before. So they claimed ‘we would have been emitting this many millions of tonnes of CO2 if our economy hadn’t collapsed, so we can sell the reductions to you’. But it was just purely because their economy collapsed, they hadn’t done anything to reduce their emissions.”

Now there is concern that a new system under the Paris Agreement will see countries cook the books again. As Sims explains, it can be very difficult to determine whether the carbon credits are the result of legitimate changes that reduce emissions, or if the emissions reductions would have happened anyway.

“For example, if New Zealand invested in a wind farm in Fiji we might be able to claim credits if it reduces their emissions. But would they have built a coal power plant if we hadn’t invested in the wind farm, or would the wind farm have been built anyway? If so, then it’s not really reducing emissions.”

There’s also a risk of double-counting – where both the country buying the credits and the country selling them counts the emissions reductions towards their target.

“I think double-counting is going to happen regularly. That’s just the way the world works.”

In 2019, countries failed to reach an agreement on how international credits could be traded and details on whether double-counting will be outlawed are still being debated.

Shaw said the government is committed to ensuring the agreements will result in real and transparent reductions. But can we trust politicians to follow through?

Sims says no.

“It’s not just the New Zealand politicians, it’s the politicians in the country you’re buying the credits from as well. It’s got to be independently accredited, and some effort was taken to try and do that in the past, but it didn't work very well.”

He would prefer to see emissions targets be purely domestic targets – even if the targets have to be much lower. 

“The emphasis has to be on domestic emission reductions for every country, and anything else – planting forests and these things – they are just buying us time.”

Former diplomat and NZ climate change ambassador Adrian Macey is also wary of NZ’s heavy reliance on meeting its target with offshore carbon credits. He says we would have been better to spend the billions of dollars on meeting a more modest domestic target.

“New Zealand is unique in having such a massive gap between its target and what we are planning to do domestically. Most countries workout the most ambitious reductions of domestic emissions they can do, and they put that into the Paris Agreement. The EU, the UK, Australia, the US have all done it that way. But New Zealand’s target will require billions and billions of spending offshore to buy these carbon credits. But these units are not permanent – if we don’t reduce our emissions enough we will have to keep buying them. And secondly, every dollar we spend buying units offshore is a dollar we don’t spend transitioning our own economy. Depending on the carbon price we could be spending up to $30b offshore with zero benefit for NZ’s own transition to net-zero by 2050.”

But it’s still not clear how NZ will reduce its domestic emissions. The government has delayed its response to the Climate Change Commission’s recommendations on how NZ should reach net-zero by 2050. In the meantime, it’s released a consultation document on reducing emissions, but it has been criticised for containing large holes – there’s little detail on how agriculture emissions will be reduced and the government has conceded the plan wouldn’t be enough to meet its target. A more detailed response is due in May.

Despite all of the jiggery pokery with the numbers, the ultimate goal of the Paris Agreement is to reduce the impact of climate change by limiting warming to close to 1.5C above pre-industrial levels. Shaw claims the new target is consistent with that goal, although that is also disputed. Our net-zero 2050 goal also puts us in line with that goal (although again, disputed).

It’s also a significantly bolder target than the one set under National, and more action will be taken domestically to meet it. Under National’s plan, reportedly 85% of emissions reductions would have been made offshore.

But as Dave Frame highlighted last week, the real challenge isn’t setting targets, it’s getting public support to take the action required to meet them. 

Considering that earlier this year thousands of tractors blocked roads and towns around the country in the wake of a relatively small fee being added to new and imported utes, it suggests the real challenges are still to come.