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Offsets, Not Tricky Climate Accounting is the Outrage



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New Zealand came up with some tricky accounting to justify its emissions cuts to the global climate summit. But the problem that masked is what needs our focus, write Rohan MacMahon and Jez Weston.

As the world moves on from COP26, one debate continues to rumble in climate circles: the accounting trick played by New Zealand to claim a 50 percent reduction in GHGs emissions by 2030. This so-called ‘net versus gross emissions’ sleight-of-hand angers many people and rightly so. But hold my beer. There’s a much bigger problem to be hot and bothered by: the sheer scale of offshore offsets required to meet our emissions reduction targets.

In late October, as he headed to COP26, Climate Change Minister James Shaw announced a revised National Determined Contribution (NDC) to halve emissions by 2030. At first blush it sounds brave and indeed it is an improvement on the previous NDC set by John Key in Paris in 2015. That NDC committed us to reducing greenhouse gas emissions by 30 percent compared with 2005 levels. This is not sufficient to keep a rise in global temperatures to below 1.5 degrees.

So a hike to 50 percent sounds necessary and good. But as many critics quickly pointed out the real number is much lower, thanks to a nice accounting trick. The Government’s NDC takes a gross-net, averaged, point-year approach. As Newsroom’s Marc Daalder says, if you convert it to a budget approach, rather than point-year, and leave in the other accounting tricks, you get a 41 percent cut. That’s the figure that’s comparable with the old NDC of 30 percent cut from 2005 levels.

If you strip out the gross-net accounting, you get a cut of about 28-29 percent. If you strip out the averaging of forestry sequestrations, you get a cut of about 22 percent. Climate Action Tracker does a decent job of explaining this.

Is it outrageous? A bit, but it’s not unexpected. There are no international standards for NDCs – they’re up to each country to conceive. The Government is simply following the same methodology used previously. And, let’s face it, Shaw needed a headline number to take to Glasgow following the embarrassment of the Emissions Reduction Plan. Fifty percent sounds pretty schmick.

If there is a cause for outrage, it’s not the accounting. It’s the sheer scale of the offsets required to get us there. Some two-thirds of the forecast reductions come not by actually reducing our emissions but by buying offsets – around 100 million tonnes of emissions savings.

If we’re talking analogies, that’s like saying you’ll lose weight by paying someone else to run around the block twice a week.

It gets worse. We don’t know the cost of these offsets yet. The Climate Change Commission estimates anything between $2 billion and $20 billion. This year’s rise in carbon prices raises those stakes even higher.

What will happen to all that money? We don’t know, but there’s a fair chance that we’ll be paying other nations to plant trees for us. Lots of trees. Potentially we’d be increasing our exotic forests by 50 percent, except that extra half will be overseas.

How are we going to count those trees and measure that carbon? Other rich nations are also wanting to buy those offsets, so how are we going to make sure that there is no double-counting and funny business, like there was under the Kyoto Protocol? Will those forests lock up that carbon in perpetuity in a world with more droughts and wildfires? And most importantly, do the people in those countries get a fair say in what happens to their land? Will they accept it being bought and tied up by rich Westerners? 

The Government’s plan for major purchase of offsets is also at odds with the Climate Change Commission’s advice which opposed a “plant and pollute” model. And it provides more grist for the critics’ views: Greta Thunberg called former Bank of England governor Mark Carney’s climate finance plan, being based on offsets, simply more greenwashing.

We accept offsets have a useful transitional role to play, as they enable those wanting to pay to reduce emissions to do so. But the extent of the offsetting required is unwise, unnecessary and frankly outrageous.

Our focus should be on cutting gross emissions. We can do that right now, with a faster transition to renewable energy, electrified transport, and a smarter agricultural sector. There is huge scope for innovation here with smart Kiwi companies developing real solutions. They are finding huge demand from nations that are committed to reducing gross, not net, emissions. 

To put it really simply, we could address harmful emissions by – wait for it – reducing harmful emissions.

Rohan MacMahon and Dr Jez Weston are directors of the Climate Venture Capital Fund




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