The Government’s plan for meeting our Kyoto Protocol commitment and 2020 emissions reduction target was released late last year. Underlying this plan is a shocking truth: New Zealand has been a willing participant in a wholesale climate fraud.
This report explores this issue in greater detail and establishes three key facts:
- One type of Kyoto carbon credit (the Emission Reduction Unit) was overcome by fraud and corruption in Ukraine and Russia. Virtually all of the credits issued by these countries are ‘hot air’ – they do not represent true emissions reductions. (Chapter 2)
- Proportional to our emissions, New Zealand has been by far the largest purchaser of these Ukrainian and Russian credits through our Emissions Trading Scheme. This was due to deliberate decisions by the National-led Government to – unlike any other country – continue allowing unlimited use of these and other foreign credits for as long as the international community let us. (Chapter 3)
- Our Government now plans to knowingly utilise all these fraudulent credits so it can claim we are meeting our international obligations through to at least 2020. Meanwhile our actual emissions continue to grow in excess of our targets. (Chapter 5)
We have been party to a fraud that has potential to damage our international reputation as a clean, green and corruption-free country.
This fraud has had several nasty side-effects:
- It sent the price of carbon units in our Emissions Trading Scheme (ETS) to virtually zero, hammering our nascent carbon forestry industry.
- We have seen wholesale conversions of land to dairy, such as the massive Wairakei Pastoral estate managed by State Owned Enterprise Landcorp.
- We have put around $200 million in the hands of foreign criminals simply to avoid our ethical obligation to reduce emissions. There has been no environmental benefit when that money could have been used to reduce emissions here.
- In addition, some companies were issued free units by our Government while also being able to exploit the cheap, fraudulent foreign credits. In other words, they have been able to profit from their pollution at the expense of the rest us.
Carbon trading is a fine idea, and an economically efficient way to spread the burden of emissions reduction, but it only works if the credits we buy actually represent a true emissions reduction somewhere else. The sad truth is that the foreign credits New Zealand has gorged on up until now have produced little to no climate benefit. We need to put this right, or risk a hit to our international reputation jeopardising our future access to international carbon trading.
Our three point plan for putting it right, for introducing integrity into our behaviour, includes:
- Dump the junk – cancelling the fraudulent foreign credits.
- Burn the bank – remove the 2-for-1 deal and freeze companies’ free allocation of New Zealand Units for a year to clear the backlog of banked credits in the ETS.
- Keep it clean – keep the ETS closed to international trade until we can be certain the system has integrity. In the meantime we could work closely with some of our Pacific neighbours to develop bilateral arrangements.