Submitter: Professor Euan G. Mason
Profile: Euan Mason is a Professor at
the New Zealand School of Forestry, University of Canterbury, where he teaches
silviculture, statistics, modelling, and research methodology. His research interests include forest growth
and yield modelling, tree physiology, and silviculture. He has published numerous peer-reviewed articles
and a book chapter relating to climate change and forestry, and has been
employed by government ministries and political parties to advise them on
climate change issues from time to time.
He is a New Zealand citizen, born in Invercargill. He was educated at universities in New
Zealand and the United States of America.
greenhouse emissions trading scheme (ETS), and almost all others
internationally, are based on deeply flawed logic and so it is unsurprising
that humans are failing to address the problem of climate change. An
alternative, logical approach is available that would allow us to effectively
plan to meet emissions reduction targets in the most efficient ways that people
can devise. Unfortunately proposed amendments to our ETS in this bill will not
fix its underlying problems. Much more radical changes are required if we wish
to meet our emissions reduction targets. This submission outlines why cap and
trade schemes are failing and proposes an alternative approach that has far
more environmental integrity.
submissions I outlined New Zealand’s emissions and the failure of our ETS to
make any substantial difference to our greenhouse gas (GHG) emissions. Our net
emissions increased by 54 % between 1990 and 2016, with agricultural and the
energy sectors contributing 49% and 40% of emissions respectively (MfE, 2018)
. Our gross GHG emissions are
approximately 80 million tonnes of CO2
-e. Clearly our emissions
trading scheme (ETS) has failed so far, and so we need to change it. The
climate change amendment (zero carbon) bill may result in positive change along
with additional mechanisms for New Zealand’s climate change response.
The ETS was
touted as a “cap and trade” scheme, where a cap on allowed emissions is
supposed to be gradually reduced over time, and emitters are “grandfathered” carbon
credits, called “New Zealand Emission Units” (NZUs) for their allowed pollution
which they either submit each year or, if they reduce their pollution below the
cap, they can sell. The price of NZUs dropped substantially late in 2011 when
New Zealanders began to import cheap “hot air” credits (ERUs) from eastern
Europe (Mason, 2013)
that represented no real
environmental gain (Alessi & Fujiwara, 2011)
The price of these bogus, imported credits
was as low as $0.17, and many New Zealand greenhouse gas (GHG) emitters bought
and surrendered them instead of NZUs in order to meet their obligations.
In 2015 the New Zealand government outlawed
the surrendering of imported credits, and this has led to a modest increase in
the price of NZUs.
However, that was not
the only flaw in ETS policy, and some of those other flaws are outlined in this
The case for New Zealand taking action
Few of us
are equipped to understand global climate models, and so we rely on the
integrity of the world’s climate modellers. I have yet to hear any convincing
argument that their integrity is suspect or that their reasoning is flawed, but
I am no expert on climate change models, and so I write this under the
assumption that we have an urgent problem with anthropogenic emissions of
greenhouse gases, particularly CO2, CH4 and N2O.
Generally, on a 100 year time horizon, CH4 is considered to be about
24 times more potent as a greenhouse gas than CO2 and N2O
is rated as 298 times more potent than CO2. If we use a 20 year time horizon, CH4 is about 84
times more potent than CO2.
argue that because New Zealand has a small population we should not take action
because reducing our emissions will have minimal physical impact. The fallacy
in this argument is of course that any population of 4.5 million people could
make the same claim, yet we all contribute to the problem. Moreover, most
groups of 4.5 million people around the world emit less CO2-e (CO2
equivalents) than New Zealand does. A third reason why this claim is silly is
that our example may speak far more loudly and have a bigger impact on
behaviours of other countries than our proportion of global population.
Agriculture and a fragmented, sector by
our international commitments into domestic action, we have created an
emissions trading scheme (ETS) that is meant to be a cap and trade scheme, but
it does not operate like a cap and trade scheme and its design has so far led
has taken a fragmented approach to emissions trading that has greatly reduced
the ETS’s effectiveness. In particular, agriculture, which contributes almost
half our national GHG emissions has no credit surrender requirement and
therefore no incentive to undertake any mitigation activities. The bill
proposes to bring agriculture into the scheme, which is good, but also to delay
any price on agricultural emissions until 2025 when only a tiny fraction of
agricultural emissions will not attract a free allocation of fraudulent credits
(see below), which is too little, too late, and too ineffective.
At least two
very effective mitigation options are available to the agricultural
sector. Nitrous oxide emissions comprise
a large minority of agricultural GHGs, and these can be significantly reduced
by more efficient use of fertiliser. In
addition, plenty of erosion prone land currently under grass could be planted
in trees without significant reductions in livestock numbers on our farms. With an effective ETS, many farmers would
then earn money from their mitigation activities. They currently have no incentive
to undertake either of these mitigation activities.
agricultural sector could make a large contribution to mitigating its own GHG
emissions, but it has no incentive to do so with current policies, and very
little incentive with the proposed amendments. Hill-country farming would
become more profitable if farmers were encouraged to engage in carbon forestry
on land that is relatively unproductive for agriculture, and competition for
land between carbon forestry and farming is unbalanced while agricultural
greenhouse gas emissions attract virtually no penalty.
about 84 times worse than carbon dioxide as a greenhouse gas, but it has a much
shorter life in the atmosphere. Currently the international community prefers
to handle this by adopting a 100 year time frame and reducing the relative
effects of methane accordingly. Until such time as we can convince the
international community to change its approach to methane pollution we should
retain the current international accounting scheme for it.
Agriculture should be brought into the ETS immediately, and all sectors should
be treated equally in the scheme. All GHGs should be treated the same under 100
year estimates of CO2-e.
agriculture into the scheme would not solve the ETS’s problems on its own.
There are several other issues that need to be sorted out.
From time to
time the government has randomly gifted “thin air” credits, that represent no
environmental gain, to entities or people whom they wish to encourage or
mollify. These credits represent no
cleaning of the atmosphere and are of no greater value than fraudulent Eastern
European “hot air credits”. Such gifts
are very tempting for a government because they enable a “reward” to be
delivered without any immediate impact on government accounts. Gifts include allocations of credits to a
power company for building a wind farm (the reward for a wind farm should be
that wind power requires no credit surrenders, hence these credits were a
double payment), or an allocation of many millions of credits to pre-1990
forest owners to partially account for losses in land value (suffered when they
were forbidden to generate sequestration credits but were required to surrender
credits for emission of carbon stored in trees when land use changed). In this latter case any compensation should
have been in cash, but a more rational approach would have been to treat all
forest equally irrespective of the date of forest establishment. Gifting thin air credits floods the ETS with
credits that represent no environmental gain and so contributes to credit
Random gifting by government should be illegal.
Grandfathering of credits
We can make
rapid progress at mitigating climate change by adopting the simple principle
that those who emit GHGs should either sequester them or pay other people to
sequester them. This principle has been
undermined by ETS policies. Kyoto has the same problem. Almost all countries
are meeting their Kyoto commitments, and yet anthropogenic greenhouse gas
emissions continue unabated.
government has engaged in a practice labelled “grandfathering”, where polluters
are given credits for “allowed emissions” up to a portion of their actual
emissions and then they have to surrender credits for some of their
The extent of grandfathering
has reduced recently, but “trade-exposed” industries still receive credits for
up to 90% of their emissions, and some others receive credits for 60% of their
emissions. Agriculture will receive grandfathered credits for almost all its
emissions under the proposed amendments. Grandfathered credits represent no
cleaning of the atmosphere and flood the credit market with credits that are as
bogus as fraudulent “hot air” credits from Eastern Europe (Mason, 2013)
They also impose awkward administrative
difficulties, requiring people to assess “additionality” of climate change
responses, and such judgements can at time appear rather arbitrary and costly (Valatin, 2012)
Irrationality of grandfathered versus
well-functioning emissions trading scheme, polluters would have to submit credits
in order to be allowed to pollute, and they would purchase credits from those
who cleaned up their pollution. So if the cost of cleaning was higher
than the cost of reducing pollution in the first place then they'd choose to
reduce emissions. Either way the atmosphere would not receive any more GHGs and
purchasers of carbon credits could rightly call themselves "greenhouse gas
However, that's not what's happening. If a polluter reduces their
pollution below the cap then they can sell grandfathered credits. They also
assert that purchasers of their credits can claim to be "greenhouse gas
neutral". They are wrong.
There are many ways to explain why they are wrong. You could use stories,
mathematics, graphs or even children's blocks. Let's use the latter.
Blocks below represent levels of greenhouse gas in the atmosphere and levels
planned to be emitted by two polluters.
Then polluter 2 opts to no longer pollute and has grandfathered carbon credits
for sale. Polluter 1 purchases those credits and is allowed to pollute. The
result is more greenhouse gas in the atmosphere, as shown below. Polluter
1 clearly cannot claim to be "greenhouse gas neutral".
So, what kinds of credits can confer greenhouse gas neutrality on a purchaser?
Let's reach for the blocks again. In this case, we have the atmosphere, a
potential polluter and someone who will take greenhouse gas from the atmosphere
(maybe using new trees, a scrubber, or perhaps by seeding the ocean with iron
to promote plankton); a sequesterer.
The sequesterer receives carbon credits for removing greenhouse gasses from the
atmosphere. They are purchased by the polluter, who then goes ahead and
pollutes, but the amount of pollution is exactly equal to the amount of
sequestration and so the result is shown below:
Clearly, the atmosphere gains no new greenhouse gas and the polluter can now
claim to be greenhouse gas neutral.
It is generally much cheaper to do nothing than to extract greenhouse gasses
from the atmosphere. If we allow people to sell carbon credits for simply
reducing outputs of greenhouse gas, we effectively pay them for nothing, and it
takes much longer for emissions trading schemes to work because few will engage
in activities that extract greenhouse gasses from the atmosphere.
A further problem with forestry in cap
and trade schemes
trade schemes are meant to work by limiting the availability of credits to a
known volume, but each credit earned by forestry potentially adds to the level
of the cap. One could argue that the cap applies to “net” rather than “gross”
GHG emissions, and so forest-based credits could be considered to be “net cap
neutral”, but this begs the question of how to deal with the fundamental
difference between forest-based credits and fraudulent credits manufactured
from thin air by government, as outlined above.
Our current scheme is essentially irrational with respect to
Grandfathering of carbon credits should be abolished, and people should be
liable for credits only to the extent that they fail to meet their emission
reduction targets (see below).
There are a
couple of ways to deal with this irrationality.
forest-based credits from the ETS and find other ways to encourage new forest
establishment, such as greatly expanded forestry encouragement grants. This
option would probably be unpopular with forest owners already engaged in
idea of a cap and trade scheme, and redesign the scheme so that polluters who
purchase NZUs are truly GHG neutral. This
might be achieved if we:
a) Stop grandfathering credits
b) Have no random gifting of NZUs from Government
c) Apply the ETS equally to all sectors
d) Set emission reduction targets each year that
stabilise the NZU price and allow us to be on track to meet our international
e) Require credit surrenders each year only for
“over target” greenhouse gas emissions
f) Allow trading only between sequesterers and
If you overpollute you pay someone else to clean
g) Manage our domestic credits as a currency rather
than as a commodity
h) Plan to gradually reduce our NZU price as the
world solves the climate change problem
In this way
the “target” emission % of existing emissions becomes the cap, and reducing the
% gradually would see us meet our national targets in a planned fashion. Unlike
a normal cap and trade scheme, no fraudulent “thin air” credits are given to
polluters, and so real credits retain their value.
option would be unpopular with carbon credit traders, but they contribute very
little to solving the problem of climate change.
Note that had the Kyoto Protocol adopted a
similar scheme to the one outlined above, then there would have been no
fraudulent credits for New Zealanders to import.
Some other ETS issues
Auctioning of credits
credits made out of thin air that represent no environmental gain (see above),
will undermine forest-based credits that do represent environmental gain. We
are setting ourselves up to have two kinds of credits:
1) Credits earned by sequestering GHGs from the
2) Fraudulent credits that represent no
environmental gain and which can be made from thin air at the whim of
these two kinds of credits as a common currency we shall undermine efforts to
create credits that really have environmental integrity, because it is far
cheaper to manufacture credits out of thin air and governments are extremely prone
to persuasion by lobbyists.
credit schemes vary hugely and have many of the same irrationalities as our old
ETS. So far allowing international credits in our scheme has been catastrophic,
and I have little confidence in our collective ability to distinguish between
bona fide and fraudulent credits. We
should not allow international credits in our domestic scheme.
The case for using forests
as a short-term mitigation option
government has initiated a “one billion tree” programme to jump start the
planting of new forests in New Zealand. New forests are sinks for CO2,
while old forests are reservoirs or even sources of CO2 emission.
The means that establishing new forests can only be a temporary solution to
climate change. The rationale for New Zealand’s ambition to plant new forests
is therefore to create sinks which would fill a gap in our carbon accounts
during the middle part of this century (assuming we wish to keep our commitment
to GHG neutrality by 2050) while we simultaneously adapt our economy to reduce
gross GHG emissions.
The gap in our accounts
2017 Vivid Economics published a report commissioned by a cross-party group of
parliamentarians outlining alternatives for New Zealand’s responses to climate
change (Vivid Economics, 2017)
. Several pathways to GHG
neutrality were outlined in the paper, but the most feasible one, called the
“innovative scenario”, would get us to GHG neutrality by 2080 at the earliest
unless forests were used to fill a large gap in net GHG emissions. Evison &
Mason (in prep) have identified a way to fill this gap using forests as
The gap is shown in
grey in Figure
5 below. GHG
emission/year in millions of tonnes are on the y-axis and years are on the
x-axis. The blue line shows the innovative track of gross emissions, extended
to 2080, and the orange line is our desired pathway.
under the grey line represents 1432 Mt of CO2-e.
estate simulator, a tree planting programme was designed that filled this gap,
using approximately 1.75 million ha (for reference, the area of New Zealand is
approximately 27 million ha). It involved establishing radiata pine, 75% of
which was assumed to be harvested periodically and 25% was permanent carbon
forest. The area was planted over a span of 28 years. The Figure below shows
the estimated impact of programme.
Figure 6 –
Sequestration impact of planting 1.75 M ha of radiata pine forest over 28 years
In Figure 6,
the red line shows the gap in our accounts, while the black line is the
sequestration of CO2 by the new forest.
if the 500,000 ha of new forest under the “billion trees” programme was
established in radiata pine, the sequestration effect is estimated to be as
shown in Figure 7 on the next page. Clearly 500,000 ha of new trees would not
be enough to fill the gap and new initiatives are required. As shown in Figure
8 on the next page, planting 50% of the new area in native forest and 50% in
radiata pine forest would not be as effective.
Figure 7 -
Sequestration impact of 500,000 ha of new radiata pine forest over 10 years
Figure 8 –
Sequestration impact of planting 250,000 of pine and 250,000 ha of native forest
over 10 years
The case for exotic tree species
Many imported species grow and
sequester CO2 much more rapidly than native species within the time
frames required to meet our target. Radiata pine has been chosen as an example
for the following reasons (although other species such as dryland eucalypts
might do the job equally well or even better in some cases):
1) It grows rapidly and sequesters C at
a much higher rate than native species. Between 2008 and 2012, our national
carbon accounts indicate that radiata pine planted after 1990 sequestered at an
average rate of 34 tonnes of CO2-e/ha/year, and rates might be even
higher with silvicultural regimes aimed at maximising value from sequestered
carbon credits. By contrast, estimated rates of sequestration for native
species are often below 10 tonnes of CO2-e/ha/year during the years
following forest establishment (Scott et al., 2000; Trotter
et al., 2005), and the slower development of young
native stands would mean that they would take longer to begin any effective
sequestration. In older indigenous stand higher rates have been reported on
some sites, but not near the rates typical of radiata pine. To be fair, studies
of native forest sequestration are uncommon, but we can also get an idea of
relative sequestration rates by comparing the more numerous reports of growth
rates of stems of various species (Pardy, Bergin, & Kimberley, 1992; Silvester & McGowan, 1999), and native species typically take
3-4 times longer to reach equivalent volumes of radiata pine plantations at
2) We are experts at producing seedlings
for exotic species and they are cheap.
3) Radiata pine will grow on a wide
range of sites and we understand how to establish it on diverse sites, despite
its sensitivity to shade and frost.
4) Radiata pine is not a high country
wilding risk (Ledgard, 2008).
It is very intolerant of both shade and frost, and would only seed
naturally on moist lowland areas where adjacent land was not intensively grazed
(which is a rare condition in New Zealand). Our wilding species are commonly
other, more hardy imports, such a P.
contorta, P. ponderosa, P. nigra and Douglas fir. These wilding risk
species should be avoided in carbon forests.
5) On warm, moist sites (either medium
or high productivity categories), it would act as a nurse crop for native
forest, and the C reservoirs we establish would ultimately change to become
native forest so long as seed sources were available in the local vicinity
(Figure 9). Understoreys of native vegetation are common in plantations on such
sites (Brockerhoff, Ecroyd, Leckie, & Kimberley, 2003; Ogden, Braggins, Stretton, & Anderson, 1997). This issue has been much studied by
a PhD graduate from the School of forestry named Adam Forbes (Forbes, Norton, & Carswell, 2015a, 2015b, 2016). In order for native forest to
regenerate under pines local native seed sources are essential.
S 6) Studies suggest that radiata pine
will continue to sequester carbon for up to 100 years on some sites (Woollons & Manley, 2012), but we have assumed 60 in this
analysis. This means that the forests
would remain as sinks for some considerable time.
Figure 9 - Forest biomass dynamics
after introducing the exotic pine species Pinus
radiata to the native species pool. Dynamics are modeled for a site near
Christchurch, New Zealand. Species aboveground biomass is cumulative. "Kunzea and Leptospermum" include the early colonizing species K. ericoides and L. scoparium. "Others" include the species Griselinia lit- toralis, Pittosporum
eugenioides, Aristotelia serrata, Elaeocarpus hookerianus, Fuchsia ex-
corticata, Nothofagus fusca, and N.
solandri var. solandri Figure from Hall (2001).
New Zealand policy should encourage the establishment of radiata pine and other
selected exotic species as permanent carbon forests, with the proviso that for
every 10 ha of exotic species, 1 ha of local native stands are either
identified or established to act as seed sources for the gradual succession to
native forest as carbon reservoirs.
analysis a 50,000 ha/annum
new forest planting programme (anticipated in the “one billion tree” programme)
would require an NZU price of approximately $50. Moreover, radiata pine planted
and left on erosion-prone land would stabilise the land (Marden & Rowan, 1993)
, and would eventually revert
to native forest, so long as local seed sources were available (Forbes et al., 2015a, 2015b, 2016)
but this requires a credit price of at least $35 according to Manley. Setting a
price ceiling on “thin air” credits manufactured by government and that have no
environmental credibility, would reduce the likelihood that afforestation would
contribute to climate change mitigation.
As we have
adopted the “averaging” proposal for forestry, then to be consistent those who
own pre-1990 forests should be liable for only the “average” C content of their
production forests when they change land use.
This would eventually remove the requirement for two categories of
forest land under the ETS.
Look-up tables for forest sequestration of
lookup tables are pessimistic for many exotic species while being optimistic
for the years immediately following planting of native species. This is
misleading people about the viability of meeting our international commitments
by planting slow-growing native species. The tables should be consistent across
Harvested wood products
of storing carbon in wood products should be equitably shared between growers
of forests and users of wood products, so that people are encouraged to use
wood instead of GHG-intensive alternatives.
Euan G Mason
Ogden, J., Braggins, J., Stretton, K., &
Anderson, S. (1997). Plant species richness under Pinus radiata stands on the
Central North Island volcanic plateau, New Zealand. New Zealand Journal of Ecology, 21(1), 17-29.
Scott, N. A., White, J. D., Townsend, J. A.,
Whitehead, D., Leathwick, J. R., Hall, G. M. J., . . . Whaley, P. T. (2000).
Carbon and nitrogen distribution and accumulation in a New Zealand Scrubland
Ecosystem. Canadian Journal of Forest
Research, 30, 1246-1522.
Trotter, C., Tate, K., Scott, N., Townsend,
J., Wilde, H., Lambie, S., . . . Pinkney, T. (2005).
Afforestation/reforestation of New Zealand marginal pasture lands by indigenous
shrublands: the potential for kyoto forest sinks. Annals of Forest Science, 62, 865-871.