Fears of a billion dollar bill under New Zealand's climate change obligations have been wiped out by a discovery that there are more trees than people thought.
Climate Change Minister Nick Smith said new data showed that New Zealand had sufficient forests to offset increases in emissions since 1990 to meet Kyoto Protocol obligations.
Estimates of New Zealand's Kyoto liability have bounced around wildly from profits to multi-billion dollar payments due to different calculations.
Under the Kyoto agreement forests planted since 1990 offset increases in emissions since then.
There had been concerns that fewer trees and higher emissions would leave New Zealand with a billion dollar Kyoto liability.
The new satellite images and land analysis report showed that New Zealand has enough trees to meets its current obligations.
Smith said the report was good news.
"The Government has been cautious over New Zealand's Kyoto balance and future targets because of the billion dollar plus variations each year in the estimate of forest areas.
"The satellite data is good news in that it accurately confirms the area of post-1989 forests is sufficient to offset New Zealand's increase in emissions and meet our Kyoto obligations in the first commitment period from 2008 to 2012."
The news came as Smith warned that attempting to cut greenhouse gas emissions by 40 per cent by 2020 would cause too much economic hardship.
Appearing on TVNZ's Q&A programme yesterday Smith was concentrating on what will happen when the Kyoto agreement expires and a new deal comes into place after 2012.
Smith said while decisions were yet to be made, targets of around 40 per cent by 2020 in comparison to 1990 were neither achievable nor affordable.
Asked if a 40 per cent reduction would have too great an economic impact, Smith said it would.
Today Smith released an economic analysis that predicted economic costs of $600, $1000, $1400 and $3000 per capita per year for 2020 emissions targets relative to 1990 levels of plus 15 per cent, 0 per cent, minus 15 per cent and minus 40 per cent.
A minus 40 per cent target is being promoted by Greenpeace, but Dr Smith said this would cost $15 billion a year by 2020 and even the current emissions trading scheme (ETS) in legislation would push up power prices by 10 per cent and petrol by six cents a litre.
The Government says it will set a target before an international meeting of climate change negotiations on August 10.
National campaigned on a 50 per cent cut by 2050, which would equate to about 15 per cent by 2020.
Smith said he hoped new legislation amending the ETS would be "sealed" before countries met in Copenhagen to discuss climate change policy.
Labour's climate change spokesman Charles Chauvel said it was better to be bold than to be timid when setting the carbon pollution reduction target.
"Any economist will tell you that it's hard to predict what costs will be in 11 years' time, so I take the institute's (NZ Institute of Economic Research) numbers with several grains of salt," Chauvel said.
"What is certain is that, with our carbon pollution emissions rising rapidly, and with other countries committing to action, New Zealand can't afford to look complacent by failing to set a serious reduction target."
Smith said New Zealand did have to do its part in dealing with the "biggest environmental challenge of our generation", but targets and policy had to be realistic and achievable.