New Zealand and the Kyoto Protocol: ideals, interests and politics: Jian Yang outlines the conflicts of interest and politics in New Zealand's approach to global warming.

• Author: Yang, Jian

The Kyoto Protocol to the UN Framework Convention on Climate Change, signed in the Japanese city of Kyoto in 1997, committed developed countries to cutting emissions of greenhouse gases, mainly carbon dioxide, by an average of 5.2 per cent from 1990 levels by 2012.

While business groups argued that New Zealand's ratification of the Protocol should be conditioned on its major trading partners' ratification, the Labour-led government wanted ratification sooner rather than later. It was undeterred by the reluctance of the United States, the world's largest emitter of greenhouse gases, to sign the Protocol. 'We must lead by example', said Prime Minister Helen Clark. Pete Hodgson, Minister of Energy and Convenor of the Ministerial Group on Climate Change, noted that the Protocol was the only mechanism in sight offering any kind of start at all. He stressed that 'It has taken 10 years for the protocol to become a ratifiable mechanism. Too much time has been wasted already.'

The Labour-led government's commitment to the Protocol may well be based on its environmental ideals and a strong sense of responsibility to protect our wanning globe. It is in line with Labour's more or less idealistic approach to international issues, especially its sensitivity to being seen as a good global citizen. However, environmental policy-makers have to take economic implications into account. Indeed, strategic environmental policies are often based on the notion that economic and environmental needs are fundamentally compatible, hence the phrase 'sustainable economic development'. In addition, environmental policies cannot be politics-free. It is observed that 'In democratically governed countries, long-term planning, on which strategic environmental policy development is based, does not fit well with dominant political rationality, which is based on relatively short election-cycles.' (1)

This article attempts to highlight the conflicts of interests and politics in the making of New Zealand's policy towards the Kyoto Protocol.

Business concerns

The most comprehensive arguments against New Zealand's early ratification of the Kyoto Protocol were presented in a report prepared by the New Zealand Institute of Economic Research (NZIER) in February 2001 for the Climate Change Pan Industry Group, a coalition of business groups opposed to early ratification. The report concluded that the Protocol imposed heavier burdens on New Zealand than on other developed countries due to factors peculiar to the New Zealand economy. These included the fact that sheep and cattle belching methane were the biggest source of greenhouse gas emissions in New Zealand. No economically or technologically viable metals of reducing those emissions existed. In New Zealand, carbon dioxide accounts for around 39 per cent of greenhouse gas emissions, methane for around 44 per cent and nitrous oxide around 16 per cent. When expressed by economic sector, emissions from agriculture account for 55 per cent of gross emissions and fuel combustion and industrial processes for 41 per cent.

The report pointed out that the New Zealand economy was relatively emissions-intensive. Transport represents an unusually high proportion of energy consumption in New Zealand, about 40 per cent as against 25 per cent in Australia, the United States and Britain, or under 20 per cent in Canada and Japan. In terms of electricity generation in New Zealand, about 65 per cent came from hydro-plant ha 1998 while coal accounted for about 5 per cent and gas for 20 per cent. Hydro-generation involves no greenhouse gas emissions. But its proportion is expected to fall in New Zealand. The report noted that coal's share was estimated to grow to 14 per cent in 2020, while the shares of gas and hydro generation would drop to 15 per cent and 52 per cent respectively. This contrasts with Europe, where the switch from coal to gas is making electricity less emissions-intensive. (2)

The NZIER echoed business groups' concerns over New Zealand's international competitiveness. Fonterra, New Zealand's largest company owned by 13,000 New Zealand dairy farmers, argued in its 2001 submission to the government that Kyoto obligations could undermine New Zealand's competitive advantage as the lowest-cost milk producer. Of the next cheapest producers--Australia and Argentina--the former has refused to ratify" Kyoto while the latter has no Kyoto obligations, at least in the first Kyoto commitment period of 2008-12. (3)

Government's calculation

The government had its own research reports. The Ministry of Agriculture and Forestry commissioned the Australian research agency Bureau of Agricultural and Resource Economics (ABARE), which had done work for John Howard's government, to assess Kyoto's implications for the New Zealand economy. According to ABARE's November 2001 report, implementing the Protocol would shave up to 0.26 per cent off New Zealand's gross domestic product (GDP) in 2010. But the six scenarios considered by the ABARE all showed that gross national product (GNP) would be up to 0.52 per cent higher than business as usual (no climate change policies implemented in any country) projections. The key factor here is that the Protocol provides tradable...