Govt ignored Treasury advice on emissions target: Papers

Treasury papers released today show the Government did not follow a call from its financial advisers for it to set a 2020 greenhouse gas emissions target 15 percent above 1990 levels.

On August 10, the Government announced an emissions reduction target range of 10 percent to 20 percent below 1990 levels by 2020.

But Treasury recommended a target range with an unconditional target of 8 percent reduction on a base year of 2005.

This was equivalent to emissions 15 percent above the 1990 level because New Zealand's total greenhouse gas emissions increased 24.7 percent between 1990 and 2005.

Treasury suggested the Government propose further targets of 15 percent and 26 percent, conditional on more ambitious targets being set by developed and developing countries.

In July, Treasury specifically advised the Government against a target range of 12 percent to 20 percent drop on 1990 emissions.

"A target of 15 percent above 1990 levels would be a fair target," it said. This would have been equivalent to the advisers' proposal of 8 percent below 2005 emissions.

It said this offered a cost saving of over $10 billion on the Government's preferred 12 percent below 1990: "The Crown would have to recognise a liability of as much as $17 billion."

New Zealand's net business-as-usual emission in 2020 are forecast to be 40 percent about 1990 levels, so the Government's proposed 2020 target of a 12 percent reduction would have required a reduction in actual emissions of 37 percent.

Climate Change Minister Nick Smith told NZPA Treasury provided "very cautious" advice.

"The Treasury's advice reflects the fact that NZ has a really tough job to reduce emissions but Cabinet decided not to go with Treasury's recommendations," he said.

Ministers took a range of 12-20 percent to Cabinet and that was brought back based on Cabinet advice and concern about the economic costs to NZ and "I think that was appropriate".

Going with Treasury's advice would have "done reputational damage to NZ in the broader climate change negotiations," he said

Green Party co-leader Russel Norman said the Treasury advice had been "extraordinarily irresponsible".

"We have responsibilities to future generations and we have responsibilities to other people on the planet to reduce our greenhouse emissions - we're one of the highest per capita," he told NZPA.

Some of the information which Treasury official Andrew Blazey offered Finance Minister Bill English was deleted before the papers were released, but they did note the Treasury calculations did not include the carbon emitted or absorbed by forests, because accounting rules for that had not yet been agreed.

Trade Minister Tim Groser is taking the NZ proposals to talks in Bonn later this month in the run-up to December negotiations in Copenhagen on a post-Kyoto climate change agreement.

Climate Change Minister Nick Smith said at the time that higher targets of a 40 percent reduction on 1990 emissions - the figure international scientists say is necessary to keep global warming to around 2degC - would have too great an economic impact.

According to Dr Smith recent satellite data has confirmed the area of post-1989 forests is sufficient to offset New Zealand's increase in emissions and meet Kyoto obligations in the first commitment period from 2008 to 2012 - which only requires a reduction to the 1990 level of emissions.

But Treasury warned in early August that though more ambitious 2020 targets could be set by using forestry credits, those credits would need to be paid back when the forests were harvested.

From 2013-2020, it was estimated that 130 million forestry credits would be generated and used to reduce the costs of meeting the 2020 target, but the cost of repaying those costs when the forests were harvested could be as much as $13 billion, if carbon prices rose to $100/tonne.

In an earlier paper, in July, Treasury said the Government would need to recognise a total contingent liability of 180 million units for the period of 2008 to 2020 - worth $18 billion at $100/unit.

- NZPA