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emissions trading scheme

Radiata pine forest slashed

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Top image: PureAdvantage

Reposted from Pure Advantage:

There is a new risk to you – the taxpayer – from the government’s recent decision to back off from excluding exotic species like pine from the permanent forest category of the emissions trading scheme.

From 1 January 2023 forest owners can lock up pine plantations, as ‘permanent forests’. In return, while the trees are growing, owners will be able to earn credits which they can sell to polluting industries to offset emissions. When the trees stop growing those revenue streams finish. This means pine plantations will increasingly be planted with no intent to harvest. A new exotic carbon farming industry will rapidly spread across the land–an industry we can think of as carbon mining.

Just like its traditional format, carbon mining is an extractive industry. Once there is no resource left–in this case, when the pine trees stop growing–the mine is of no value and becomes a liability.

In addition to the long-term costs of managing a plantation in its ‘permanent’ state, any deforestation requires the owners to buy emission units. There is a very real risk of a ticking time bomb with the price of emissions units increasing significantly over time.

Pinus radiata is an introduced species, unlike native forests with diversity and climate resilience. With increasing impacts from climate change, pine plantations present heightened risks.

They burn well, creating risks for neighbours and releasing CO2 back into the atmosphere. The recent wildfires in the Landes forest, the largest planted forest in western Europe, saw thousands of hectares burnt and thousands of people evacuated.

These are monocultures, at a time when a biodiversity crisis and collapsing ecosystems are posing risks to human survival. In NZ, they are also monoclones, with a lack of genetic diversity that makes them very vulnerable to climate change. In many parts of the world, pests and diseases are wiping out huge areas of pine plantations.

Pinus radiata is also a relatively short-lived species, especially in New Zealand due to intensive genetic modification. Compared with native forests, pine plantations sequester carbon for a relatively brief period. As the trees age and die, the risks of fire and disease increase, along with the risks that the plantations will be abandoned.

Promises may be made that instead, pine plantations will be converted to native forests. This is a very difficult and high risk process, however. Take for example Maungataniwha pine plantation.

It can take at least a decade to clear logged land of wilding pines and to get it to the point where it can be described as fully regenerated – supposing you are lucky enough to have native seeds in the soil already. It’s costing the Forest Lifeforce Restoration Trust around $70,000 per year, plus a lot of volunteer hours.

If land owners are not inclined or able to meet their obligations, these sorts of projects will be extremely challenging. Government and communities will pick up the costs of remediation.

Millions more would be needed to pay for the purchase of emission units to offset the felled pine, and it is hard to see where this money would come from.

As designed, the ETS is encouraging the misallocation of capital towards carbon mining, with the potential for damaging long-term socio-economic and biodiversity outcomes.

Ultimately, taxpayers and society will be left with the bill. The environment will suffer, biodiversity will be negatively impacted, resilience to climate change will be reduced and you, me, our children will be picking up the bill.

See also this website:

COP26 logo

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The carbon budget: a moving target that politicians just moved beyond reach.

Fig. 1. This live feed from the Mercator Institute is, by default, set to show how much time we have left before the CO2 budget to stay under 2°C is no longer possible. The CO2 budget is in tonnes. Currently (18 March 2022), it’s 1,060Gt (Gt = 1 billion tonnes). At the present rate of emissions, this will run out around April 2047.
 
However, if we want the planet to remain habitable for most (but not all) people, and accept losing entire ecosystems like the Great Barrier Reef, we need to keep the average temperature rise under 1.5°C.

Click the box on the top right ‘1.5°C scenario‘ to see that a 66% chance of succeeding means that (as of 18 March 2022), we can emit no more that 309Gt. At the current rate of emissions, that’s July 2029.

Bankrupting the Carbon Budget:

What tipping points mean for the carbon budget

In Bankrupting the Carbon Budget: Part I, tipping points were explained in Videos 1 and 2.

Others tipping points include wildfires in the Arctic and Australia. Together these released around 1Gt of CO2 in 2020. The devastation was so great in places that the conditions that led to the evolution of these ancient ecosystems no longer exist. ‘Zombie’ wildfires in boreal forests in Siberia and Canada and Alaska continue to burn peat underground over winter, re-igniting record-breaking forest fires in the summer of 2021.

These forests, which make up large parts of the biosphere that once absorbed carbon and locked it away, are now releasing carbon to the atmosphere together with human-caused emissions. They have passed a tipping point; a point of no return. The countdown clock in Fig. 1 doesn’t include these emissions because the compound effects are so complex, they have yet to be included in Earth systems models used by the Intergovernmental Panel on Climate Change (IPCC).

But the atmosphere doesn’t care where these emissions originate. Nor how much nations—most notably New Zealand—or businesses cheat on their carbon accounting. The reality is that the carbon budget is a globally shared account. Governments think they know how much we have left to ‘spend’, but the burning forests and melting permafrost and methane clathrates are making CO2 withdrawals over which we have no control. All we know is that somewhere between warming of 1-2°C, some tipping points will be irreversible and warming will accelerate, causing even more tipping points to fall like dominoes.

A race against time

Currently, atmospheric CO2 is around 418ppm and climbing 2-3ppm every year. Global average temperatures are 1.2°C and rising. The last time CO2 in the atmosphere exceeded 400ppm was during the Pliocene Epoch (2.6-5.3 million years ago). Global average temperatures were 2-3°C warmer, Antarctica was 14°C warmer, and melting ice caps added 10-20 metres to sea levels.
 
So why aren’t we already that hot?


The relationship between the amount of CO2 in the atmosphere and warming is well-understood physics and chemistry. But there is a delay—a lag time of 10-20 years—between adding CO2 to the atmosphere and warming. So even if we switch off all emissions today, things will get hotter over the next two decades. It takes even longer for melting icecaps to raise sea levels, unless there’s an abrupt Meltwater Event (historically, these have raised sea levels as much as 4m/century).

The IPCC is banking our future existence on the lag time to literally buy us time to drawdown enough CO2 from the atmosphere and permanently store it back where it came from, with fingers crossed that will return the planet to a safe operating space of 350ppm. 

The Plan: built-in assumptions

The crucial thing about The Plan is that it depends entirely on assumptions. The most important assumption is that carbon capture technologies will draw down and safely store CO2 underground before warming triggers irreversible tipping points. This assumption (otherwise known as magical thinking) is because there isn’t enough land on Earth to plant enough trees to offset emissions while still being able to grow food to feed an exploding global population:

“If we absolutely maximised the amount of vegetation all land on Earth could hold, we’d sequester enough carbon to offset about ten years of greenhouse gas emissions at current rates. After that, there could be no further increase in carbon capture.
 
“Together, land plants and soils hold about 2,500Gt of carbon – about three times more than is held in the atmosphere.
 
“In recognition of these fundamental constraints, scientists estimate that the Earth’s land ecosystems can hold enough additional vegetation to absorb between 40 and 100Gt of carbon from the atmosphere. Once this additional growth is achieved (a process which will take a number of decades), there is no capacity for additional carbon storage on land.”

– Bonnie Waring, Senior Lecturer, Grantham Institute, Climate Change and Environment, Imperial College London

In spite of this limitation, deploying natural climate solutions (NCS) to draw down carbon into restored natural ecosystems would help restore critical, life-supporting ecosystem services.
 
Because we literally cannot live without these services, including their role in climate adaptation and mitigation, every government and council should be treating natural ecosytems as critical natural infrastructure. This is a higher-order priority than critical built infrastructure. Built infrastructure cannot exist without natural infrastructure, whereas natural infrastructure does not need built infrastructure.
 
So, what does The Plan look like?

The Plan by the numbers: 2019 – 2050

  • Atmospheric concentration at the start of 2019: 408ppm
  • Emit: no more than 400Gt of CO2 over the next 21 years; this would add around 23ppm to the atmosphere.
  • Offset emissions: as some emissions are unavoidable, they must be 100% offset by drawing down the same amount of CO2 as emitted and storing it permanently underground or in natural ecosystems. Plantation forestry is by definition not permanent, so it shouldn’t be regarded as a permanent offset because the carbon in it is recycled back into the atmosphere.
  • Draw down: an average 3.9Gt of CO2 every year (total 81.9Gt between 2019-2050) and store it underground and in natural ecosystems. In total, this would remove around 10.5ppm. Again, plantation forestry shouldn’t be regarded as a permanent drawdown.
  • Together, The Plan means that atmospheric concentration as of January 2050  will be: 408ppm + 23ppm – 10.5pm = 420.5ppm.
  • Limitations to offsetting and drawdown:
    • The world’s terrestrial ecosystems can only hold between 40 and 100Gt, so by 2050, CO2 will need to be permanently stored elsewhere.
    • Burning forests and melting permafrost and methane clathrates are emitting CO2 and methane. We don’t know how much, we have no control over it, but we do know this is eating into the existing carbon budget.

The Plan by the numbers: 2050 – 2100

  • The planned atmospheric concentration at the start of 2050: 420.5ppm
  • Emit: zero CO2
  • Offset: As some emissions are unavoidable, they must be 100% offset by drawing down the same amount of CO2 as emitted and storing it permanently underground. By now, terrestrial ecosystems will be unable to store any more carbon.
  • Draw down average 24Gt/year until 2100 (24Gt x 50 years = 1,250Gt or 72ppm) and store it…somewhere.
  • Planned atmospheric concentration at the start of 2100: 420.5ppm – 72ppm  = 348.5ppm.
  • Limitations to offsetting and draw down:

The Plan: how are we doing so far? 2019 – 2021

  • Atmospheric concentration at the start of 2019: 408ppm
  • Atmospheric concentration at start of 2022: 418ppm, ie, we’re going to hit  420.5pm before 2024, not 2050.
  • Emitted: 107Gt of CO2 (26.7% of the 21-year budget ‘spent’ in 3 years)
  • Offset: A handful of the world’s largest carbon polluters are buying up most of the land available for afforestation/reforestation to offset their emissions, leaving no available land for others to offset theirs. This includes land needed to feed people. Many are investing in low value or ‘ghost’ forests such as palm oil plantations, because plants that grow faster earn far more money from carbon credits. Many corporations have no plans to ever become carbon neutral because they will pass the cost of cheap and often useless offsets onto customers. The New Zealand Government, which is using taxpayer dollars to subside the eye-watering carbon cost of agriculture (giving them a 95% discount on emissions), and Fonterra, our largest carbon polluter, also plan to buy carbon credits offshore because they’re cheaper.
“New Zealand’s proposals to COP-26 were dismaying, seeking to shift the task of seriously tackling climate change to others. Spending five billion dollars on international credits to ‘restore’ forests overseas when our own forests are dying is like investing in someone else’s business when your own is going bankrupt. It’s irresponsible.”
 
– Dame Anne Salmond, Distinguished Professor in anthropology at the University of Auckland, and 2013 New Zealander of the Year.

  • Draw down: In spite of all the reforestation and rewilding projects around the globe, terrestrial ecosystem destruction (land use change) exceeded reforestation and offsetting by approximately 10Gt (Fig. 2). A large chunk of these losses are from the Amazon, parts of which have become so dry that they can no longer support re-forestation, so they’re turning in savannahs or being used to grow palm oil, soya, and methane-emitting cows.
  • Limitations to offsetting and drawdown:
    • Oddities with emissions trading schemes not accounting for the value of carbon locked in established forests and their soils, has created perverse incentives: old-growth and naturally regenerating forests are being cut down and/or burned so they can be replaced by fast growing monoculture crops like pine forests that earn more from carbon credits (if they survive wildfires and rapidly rising temperatures). And COP26 did nothing to prevent this from happening into the future (scroll down).
    • The only company extracting CO2 and permanently storing it underground (versus selling it as fuel) is in Iceland. In September 2021, Climeworks’ operations scaled up. It now draws down and stores 4,000 tonnes CO2/year. To scale up to 3.9Gt/year (‘The Plan’) would require building and deploying 9.5 million additional fully operating plants of the same size. To scale up to 24Gt/year from 2050 onward would require 58.5 million additional fully operational plants of the same size. And then there’s this:

“No artificial machines that are even in the design stage will also clean our air, clean our water, provide habitat for wildlife and all the other useful features of trees.” – Sophie Bertazzo, Senior editor, Conservation International

Fig. 2. Sources of carbon emissions 2021 (Image: www.co2.earth/global-co2-emissions)
Fig. 2. Sources of carbon emissions 2021 (Image: www.co2.earth/global-co2-emissions)

COP26: bankrupting the carbon budget

“We are on the verge of the abyss, and when you are on the verge of the abyss, you need to be very careful about what the next step is.  And the next step is COP26 in Glasgow.”

– Antonio Guterres Secretary General for the United Nations
 
Video 1: “I apologise for the way this process has unfolded. I am deeply sorry. I also understand the deep disappointment but I also think, as you have noted, that it is vital that we protect this package.”

– Alok Sharma, President COP26 following last minute changes from India and China.
 
Sharma apologised because India and China hijacked the meeting in the last minutes, demanding that the wording of the final agreement be that coal would be ‘phased down’ not ‘phased out’. China, the world’s largest emitter, won’t commit to net zero until 2060. India, whose emission are increasing fast every year, won’t commit to net zero until 2070. 
 
As Sharma pointed out, the final package, as weak as it was, brings agreement to the rules in Paris Agreement. And, while it’s taken 165 years, fossil fuels have now been formally recognised as the primary driver of climate change.
 
The ‘Reducing Deforestation’ COP26 Article
 
This looks like a win…except that the same declaration was also made 17 years ago, after which deforestation subsequently increased:
“The Glasgow declaration on forests and land use is a pledge to end or significantly reduce deforestation by 2030… In 2014 the New York declaration on forests promised to cut deforestation by 50% by 2020 and end it completely by 2030. Since then there’s been an increase in global deforestation contributing an estimated 23% to total global CO2 emissions.

“Under the UN rules, man-made plantations count as forests even though they contain none of the rich ecosystems and biodiversity of indigenous forests. Environmental groups worry that a big chunk of the $19.2 billion dollars allocated to the Glasgow declaration will be used to tear down existing forestry land to create more of these plantations for things like palm oil, paper and wood pellets, instead of preserving and protecting the trees and plants and wildlife that are now so critically endangered. 

“And how about this doozy: the declaration’s terminology of deforestation refers to ‘permanent loss of forests when land is fully converted to some other use like agriculture or development’. It’s almost completely silent on the role of traditional logging in driving forest degradation from within. Under this agreement loggers can still disappear deep inside a rainforest like the Amazon and destroy forest biodiversity and carbon stocks resulting in almost exactly the same devastating impacts as true deforestation.”

– David Borlace, Video 2 (below)
 
Between 2012 and 2018, New Zealand indigenous land cover area decreased by 12,869ha. In 2020 alone we lost 8,530ha of native forest. There is no reason to expect that trend or enforcement of current or future policies to reverse that trend.
 
So where does that leave us?
 
Carbon Brief has done a full analysis of the outcomes. If every country actually delivers on their promises and statements made at COP26, warming will be around 2.4°C. But that was before India and China insisted in last minute changes. China, India, Australia, and Russia announced plans to open more coal mines. And oil production from OPEC increased.
Climate Action Tracker breaks down the numbers (Fig. 3).
 
The most commonly repeated mantra that you’ll hear on the news, is that to stay within 1.5°C target, global emissions need to fall 45% by 2030. But that’s based on The Plan. The countdown clock at the top of the page, which reflects what’s actually happening in the atmosphere, is clear: to have a 66% chance of staying under 1.5°C emissions need to fall to zero by 2027. As we have no control over the growing emissions from wildfires, melting permafrost and methane clathrates, we had also better start drawing down and permanently storing CO2 as fast as possible.

Fig. 3. The most optimistic scenario of 1.8C (pale blue box) requires every single country to meet every single promise and every single target by 2030. This does not include tipping points (Image and linked PDF report: Climate Action Tracker. )
Fig. 3. The most optimistic scenario of 1.8C (pale blue box) requires every single country to meet every single promise and every single target by 2030. This does not include tipping points (Image and linked PDF report: Climate Action Tracker. )

COP26: The oceans

As Bonnie Waring said in the quote above:

“If we absolutely maximised the amount of vegetation all land on Earth could hold…”

The oddity in The Plan is that it largely ignores 70% of the surface of the planet that’s not land: the oceans, or more specifically the blue carbon in them. For the first time, the capability of the oceans to rapidly draw down and permanently store vast quantities of CO2 was finally addressed at COP26.

New Zealand has an exclusive oceanic economic zone 14 times larger than our land area. Why isn’t the government (and heavy carbon polluters) using that incredible capacity to invest far more in locally produced blue carbon? Fed by the sun, with no need for irrigation or agricultural chemicals, some species can grow up to 1m/day, drawing down as much as five times more carbon dioxide from the atmosphere than rainforests, and permanently sequestering if not harvested and instead, cut and dropped into deep ocean.

Watch this (deep blue) space.

Video 2 : Comprensive 18-minute analysis of COP26
 

More information

  • COP26: The final draft
  • Glasgow’s 2030 credibility gap: net zero’s lip service to climate action: Climate Action Tracker
  • Detailed analyses of each component of COP26: Carbon Brief (scroll down the page a bit to see the links to each section)
Carbon budget gross emission by sector New Zealand

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In 2019, Aotearoa’s net greenhouse gas emissions were 54.9 mt (megatonnes) of CO2-e (that means all greenhouse gases added together).

The single biggest emitter was agriculture: 48% or 39.6 mt (Figure ES 4.2).

The term LULUCF is used in the national greenhouse gas inventory that covers the combined emissions from land use, land-use change, and forestry due to human activities. Currently, the NZ guide (click on the image to download) has assessed this sector as a 'net sink', i.e, primarily because of forestry drawing down more carbon that the total LULUCF sector emits, the emissions are regarded as negative emissions (-33%) (see the full breakdown of the LULUCF at the bottom of this post). The calculations do not include the other impacts on land use change where it involves agriculture. The term IPPU refers to industrial processes and product use.
The term LULUCF is used in the national greenhouse gas inventory that covers the combined emissions from land use, land-use change, and forestry due to human activities. Currently, the NZ guide (click on the image to download) has assessed this sector as a ‘net sink’, i.e, primarily because of forestry drawing down more carbon that the total LULUCF sector emits, the emissions are regarded as negative emissions (-33%) (see the full breakdown of the LULUCF at the bottom of this post). The calculations do not include the other impacts on land use change where it involves agriculture. The term IPPU refers to industrial processes and product use.

From a climate warming perspective, all of that 54.9 mt of carbon was added to the excessive carbon debt—the highest in several million years—already in the atmosphere. But economists and policymakers are writing off this carbon debt because the goal is not to stop feeding the climate beast with more greenhouse gases. Nope. The goal is to keep adding more so that we can meet our obligations under the 2015 Paris Agreement to keep global temperatures under 1.5°C.

Yes, I know it’s irrational to be fixated on a 9-year old agreement that only one tiny country, Gambia, is anywhere close to meeting, using a budget to 2035 that’s going to be broken before then, given that the World Meteorological Organisation estimates we could reach 1.5°C sometime in 2026 [update 2024: we reached that in 2023]. But since irrational economics is driving our plan, let’s use their figures, and with a bit of simple arithmetic, calculate what our agricultural emissions will cost as we head into 2026, the first year that the agricultural sector in Aotearoa has to start paying for any of its emissions.

You may need a primer in the ETS (Emissions Trading Scheme) for this next bit to make sense, but simply put, it’s a polluter-pays scheme that places a $ value on CO2-e. Each 1-tonne of CO2-e is called a New Zealand Unit or NZU. They’re tradable commodities, so the rules of supply and demand mean prices fluctuate. In March 2021, one NZU cost $36. By September, it was $65, because by then, a lot of people had already done the calculations set out below, and realised how valuable these NZUs are going to become.

But let’s be really conservative and say an NZU is going to stay at $65.00 for the next three years. All we need to do is multiply $65 by the net amount of e-carbon emitted during that period. We’ll base the emissions on the Climate Commission proposed emissions budgets (Fig. 5.2 below). Again, these budgets are likely optimistic, but let’s be optimistic.

Years 2022-2025 net emissions = 208.5 mt total. As a megaton (mt) = 1,000,000 tonnes, that’s  2,085,000,000 tonnes x $65 = total $135,525,000,000 over three years.

Remember, the agricultural sector is exempt until 2026, so they don’t have to pay a cent of this.

Year 2026: By now, because they’ve had no incentives to change, the agricultural sector is assumed to be contributing 58% of all greenhouse gases to the atmosphere. The price of an NZU is expected to increase to $73.60. It’s probably going to be waaay higher, but let’s stick with that very conservative price estimate, to work out how much the agricultural sector should pay, using the emissions budget in Fig. 5.2 below, of 59.7 gt net emissions. That’s x 58% x 59,700,000 x $73.60 = $2,548,473,600.

If the number of zeros is confounding, that’s $2.55 billion worth of emissions. In one year. Just from agriculture.

But under New Zealand’s ETS, in 2026, agriculture is given a 95% discount. So they’re up for just $127,423,680 ($127.5 million). In fact, the agricultural sector is barely expected to reduce emissions by 11% by 2050 (see the graph at the top of this page).

Yes, I also know that the $ value under the ETS is not designed to put an actual value on emissions. It’s just an economic mechanism to incentivise industries to reduce emissions so that we can meet an outdated target to keep us under 1.5°C. But it’s the only mechanism we have. In the real world, all those greenhouse gases will be going into the atmosphere, feeding the climate beast, generating record-breaking floods and droughts that will bring serious costs to agriculture, because plans and policies based on economics can’t trump the laws of physics and chemistry and nature doesn’t do bailouts.

Maybe now is a good time to invest in food that’s grown like beer.

Emission budget 2019-2035 New Zealand
Table showing Greenhouse gas sequestration for native versus plantation forests