Simon Terry writes on the costs of missing our emissions targets
An opening of the nation's carbon books has finally been forced upon the Treasury and the results are truly shocking.
There are two shocks to absorb:
* How little has been disclosed when the stakes are so high, ecologically and financially.
* How far off the Government's own emissions targets New Zealand is: tens of billions of dollars in payments overseas will be required to bridge the gap unless the Government gets serious about cutting emissions.
First the secrecy. Governments are legally required to provide an update of the nation's financial position just before elections but those accounts do not recognise carbon obligations until they are in an international agreement, hence there is nothing concrete on the books until after 2012.
However, a review of the Emissions Trading Scheme was required this year and that meant someone had to think about the huge financial flows expected in the decades ahead in order to cope with internationally imposed carbon limits.
The result is the projections developed for David Caygill's ETS review report that was released in September. The Sustainability Council requested a copy of those projections 11 weeks ago. After various delays, Treasury delivered its projections the day before the election - late in the afternoon and with much of the key material blanked out.
What arrived is the carbon equivalent of a finance minister presenting a Budget and saying: "Here is the estimated tax take for the next 40 years and here is the total spending. But we are not going to tell you how much tax is coming from any sector and we are certainly not going to tell you how tens of billions of dollars of carbon subsidies and other payments are expected to be distributed.
"And no, we are not giving you the figures for the past four years of the ETS either."
Future agricultural emissions are a state secret; future deforestation rates are a state secret; even projected fossil fuel emissions are a state secret - all blanked out.
In other documents it is possible to find partial disclosures and various scenarios for some of the detail that makes up the totals on offer, but the moment you ask to see one whole picture, the drawbridge is whisked up.
The non-disclosure is partly driven by concern over telegraphing what forestry rules the Government thinks it can achieve in a new climate treaty under negotiation.
But that concern could easily be addressed by showing a range of outcomes for forestry as any decent analysis should, especially for a public review. The rest of the secrecy is plain outrageous.
So what does this largely obscured picture nonetheless tell us?
Treasury's work compares projected emissions against the Government's three policy commitments for cutting emissions by 2012, 2020 and 2050.
* 2012: Despite being 18 per cent over its Kyoto target, New Zealand is officially ahead of its UN obligations up to 2012 - but only because of the way it accounts for forest credits that are being "borrowed". The financial books show a $997 million contingent liability as a result of this borrowing.
* 2020: After 2012, the nation's carbon position is relentlessly negative for each of the next 38 years. Net emissions are above the current level in each year: rising not falling long term.
Attention is currently focused on New Zealand's pledge to the UN for 2020 which Treasury takes as a 15 per cent reduction on 1990 levels. That is what the Government is negotiating terms for this week in Durban.
Curiously, the projections show New Zealand only 19 per cent over that target. The excess was 46 per cent in a report card the Government recently filed with the UN.
So why the big change? The difference is probably Treasury assuming much higher rates of afforestation. That would put the Government's financial books closer to being in balance and would mean less fiscal stress if the ETS was further weakened - which is what the Caygill review recommended and the Government is adopting.
How credible those radically revised assumptions are is unclear as that is part of the suppressed detail.
* 2050: For 2050, the Government's target is a 50 per cent drop in emissions but the projections are for a result 141 per cent over that. To keep to this comparatively weak policy commitment, New Zealanders would need to pay others to cut 1.119 billion tonnes of carbon. That is worth $28 billion at the low carbon price of $25/tonne assumed here - or $56 billion at the $50/tonne price used elsewhere by officials.
New Zealand has a wealth of low-cost options for cutting emissions but the ETS is tuned so that the incentive to cut back is very weak. As a result, most of today's carbon bill will fall on future taxpayers.
One of the worst things about the lack of a decent set of carbon books is this ability to transfer vast amounts of ecological debt to our children without it even being registered.
It is shameful that the ETS review report did not contain a proper set of carbon accounts when endorsing such transfers.
The onus is now on ministers to instruct officials to quickly prepare a version of the Treasury model that can be released without the deletions.
As John Key insists for the nation's finances: "show me the money".
Simon Terry is executive director of the Sustainability Council and co-author with Geoff Bertram of The Carbon Challenge: New Zealand's Emissions Trading Scheme.