What are New Zealand's international climate targets and do we really have to meet them?

Analysis - Most New Zealanders support the country meeting its international climate targets, according to a poll commissioned for the environment ministry.

Meeting the target of cutting emissions by 50 percent by 2030 had more than two thirds support among both rural and urban people.

The online survey of 1010 people found most knew of the Paris Agreement although many did not know much about the details.

A majority (74 percent) agreed it was important to meet the country's 2030 target, including three quarters of urban residents (76 percent) and over two thirds of regional and rural residents (67 percent).

Crucially, given that meeting New Zealand's target requires buying help from overseas, a majority (82 percent) were open to using some level of international cooperation, though only around a fifth thought overseas efforts should be the main focus, above cutting our own greenhouse gases.

The online poll was carried out in December, and was released by the ministry this week amid increasingly awkward contortions by the government on whether it will actually meet its target.

The government says it is committed to the Paris target.

Both Climate Change Minister Simon Watts and Prime Minister Christopher Luxon say this often - and National promised before the election that climate targets were not up for debate.

Donald Trump winning the US election has not changed that.

Watts told an insurance conference just this month that just because the US had pulled out of the Paris climate accord that did not change the physical reality of climate change.

Globally only the US, Iran, Libya and Yemen are outside the 2015 agreement and major exporters are saying the government needs to stay in to support international trade.

But saying you are committed and doing what is needed are two different things.

And in New Zealand's case, doing what is needed almost certainly means spending money in someone else's economy.

In an environment of cost-cutting at home, Ministers seem to have decided they do not want to try to sell that.

And that is leading to some seemingly impossible contradictions.

How did we get here?

Right now you might be wondering what the point of Paris is, again, and why the government is letting it create such a headache.

Basically, because climate change is deadly and expensive, every country benefits if all countries cut their greenhouse gas emissions.

But doing so requires trust that everyone else is acting, too - which is the point of global treaties like the 2015 Paris Agreement.

While the agreement has not on its own done enough to achieve its goal, of keeping global heating inside 1.5-2 degrees Celsius above the pre-fossil-fuel-burning era, it has already staved off some of the most hellish scenarios associated with unchecked carbon dioxide emissions and temperature hikes of 4C-5C.

Study after study shows that acting to slash emissions today is cheaper than waiting and either bearing the costs of more severe climate change, or playing rapid catch up later on cutting emissions.

Just this week, Forbes reported on a study by Boston Consulting Group (BCG) and the University of Cambridge which found that global economic output would fall by up to 34 percent if the Earth was allowed to warm by 3 degrees Celsius this century, but investing less than 2 percent of GDP now could eliminate most of those losses.

Closer to home, Treasury puts the chances of another Cyclone Gabrielle-scale weather disaster happening in the next 50 years at 80 percent, at a cost of up to $14.5 billion higher than an Alpine Fault earthquake (75 percent) and much higher than the likelihood of a Wellington fault earthquake (5 percent).

But the exact chances of a Gabrielle-scale disaster - like exact costs of droughts, heatwaves and lost productivity, depend partly on global emissions.

It can be for hard for any government to drum up support for spending money now, to save future taxpayers money...and, in New Zealand, we're acutely aware that we need everyone else doing their bit, too.

However, BCG also says climate action often stacks up on a selfish level - something it says is not well understood.

It says many companies that reduce their carbon emissions benefit from lower spending on fossil energy, a lower risk profile of long-life assets, and stronger market positioning.

New Zealand modelling by the Climate Change Commission found meeting climate goals would slow GDP growth a little - but being proactive about pivoting to clean energy could also create new jobs and save businesses and households about $2 billion a year by 2040.

That was just the estimated savings from replacing fossil fuels with renewable electricity in areas like transport and heating - not savings on cleaning up after future natural disasters.

The whens and hows and who-does-whats have been hashed out during a years-long global process - one close observers say is flawed, but the best available.

A deal built on putting your best foot forward

The Paris deal captured still-developing-but-high-emitting countries like China, India and Brazil.

Those countries were never going to sign if they had to make the same level of emissions cuts as richer nations, which had already built their wealth on the back of burning fossil fuels (or farming exports, in the case of New Zealand).

The accepted rules are that OECD countries - including New Zealand - have to make deeper cuts than the average, allowing developing countries more time to turn their economies cleaner.

Every country sets its own targets, but each target is meant to represent maximum ambition, and successive targets need to get more ambitious every time.

Collectively, efforts need to be compatible with keeping the planet inside 1.5C-2C.

Every country gets to plead national circumstances as to why it can't act faster, but of course, if everyone does that, the deal doesn't work.

New Zealand's special national circumstances - according to our statements to the world - include a legacy of already highly-renewable electricity from the Think Big era (leaving us less room to improve), and an unusual emissions profile that comes almost 50 percent from methane produced by farming dairy and meat to export.

Most developed countries worry more about coal fired power stations than cattle.

Not always mentioned - but clear from reading independent reports - is that we were also a slow starter when it came to trying to lower greenhouse gas emissions, and that despite those clean, green hydro dams, our per-capita carbon dioxide emissions (excluding methane) are around the average for a developed country.

The only reason our emissions profile isn't worse, is swaths of production pine forestry.

All of which helps explain why, in 2016, when John Key's National government was setting our first Paris target, it looked around and decided it would be much cheaper to buy some emissions savings from overseas, rather than trying to achieve a respectable target purely by acting at home.

Despite accusations from environment groups of "cheating", New Zealand made its first pledge under the agreement conditional on being allowed to buy help from abroad.

Later, the Climate Change Commission would back this approach, saying the climate did not care where emissions savings came from, and that making a decent contribution to the global effort entirely via changes at home would deliver a shock to the economy.

The first, Key-era iteration of New Zealand's target was the equivalent of cutting emissions 39 percent off 2005 levels by 2030. (The headline figure was 30 percent, but that equals 39 percent when calculated the same way as today's target of 50 percent).

Key's government was warned that it might have to buy about two hundred million tonnes of emissions savings from overseas to meet that - more than twice the quantity the current government faces buying, and, possibly, at more expensive prices.

In 2021 Jacinda Ardern's government had to review the target, along with other countries, after global tallies of all the pledges showed the world was still on track for highly dangerous heating.

By then, emissions-savings were going better at home, but still not well enough to meet the John Key-era target without help from overseas.

Then, like most other nations, New Zealand agreed to boost its target.

The new target for 2030 was for 50 percent cuts - two thirds of it to be met overseas.

Incidentally, former top climate diplomat Kay Harrison has said there was not much wiggle-room on what New Zealand could put forward, taking into account the various restrictions in the Paris deal.

National thought the new target was too high and likely too costly - while environment groups slammed it being too low. But National still promised not to go back on it.

Yet while government officials drew up purchasing rules and got ready to negotiate trading deals, no deals were signed to buy any help offshore before the Labour-led government was voted out.

Watts now often says the current government "didn't inherit a plan" to meet the target.

It would be truer to say that it inherited a plan it did not like.

'Didn't inherit a plan'

Both the Key-era and Ardern-era versions of the target had two parts: cutting emissions here at home, and buying help from overseas.

Politicians tend to confuse the two as often as the rest of us.

Generally, if you hear about how the country is faring at meeting its "emissions budgets" from, say, 2021-2025 or any other five year period, that is probably a reference to action that's happening inside New Zealand to achieve the domestic part of the target. That means things like retiring coal boilers, encouraging people to buy clean cars, getting better public transport, planting truckloads of pine trees etc, or failing to do those things.

However that activity close to home is only about one third of the picture when it comes to meeting the Paris target - sometimes called our international climate target.

Fully two thirds of that work was always expected to be done overseas... that is, until after the last election.

It is no secret that National resented the size of the target, and the heavy reliance on buying in help, despite the fact that previous National governments planned to buy help too.

These days, when Simon Watts is pressed on how he plans to meet the target, he says the government is in an awkward state because it did not inherit a plan.

Here is a sample of what he said to other Ministers in a recent Cabinet paper:

"The government inherited this.. commitment from the previous government. However, we inherited no viable plan to deliver [it]."

"Officials advised the previous government that its extended commitment could not be achieved domestically and would require extensive purchases of offshore mitigation e.g. carbon credits. Despite this, the previous government allocated no funding for the estimated at $3 - $24 billion of offshore purchases needed to deliver ... I consider these actions by the previous government as irresponsible."

It is worth noting that Key's government also did not set aside any money for purchases, despite being warned of costs up to $37 billion - although at that point, the date of reckoning probably looked much further away.

But successive governments - National and Labour - went out and argued for their right to make these kinds of deals.

One reason the Paris Agreement specifically allows international trading is because New Zealand constantly pushed for it.

While fully seamless carbon trading between countries is not available - yet - any country (usually richer) is allowed to make a one-on-one deal to pay another country (usually poorer) to, say, retire and replace a coal-fire boiler with an electric one sooner than it had planned, or replace a diesel bus fleet with electric buses (something Bangkok has done using Swiss money).

It is usually seen as a cheaper way for the wealthier party to reach a "respectable" target in the world's eyes, at a lower cost than doing all the work at home. For some, like Singapore, it is a way to get around the fact a country has more money than land. Such trades are expected to be more common as richer nations complete the comparatively "easy" stuff at home and find they are faced with harder and more expensive action to meet their targets.

Watts pointed out New Zealand has an unusually high reliance on international trading - possibly the highest in the world.

Yet that reliance has been built-in to our targets since 2016, meaning it is now too late to turn around to the domestic economy and tell it to deeply decarbonise in four years. Even planting trees at home would be much to slow to make any real dent in the problem.

While Singapore, Switzerland and others have signed international deals, New Zealand hasn't started.

That is despite officials warning Watts the cost per tonne could quadruple if he waits until closer to 2030.

With coalition partner NZ First openly opposed to such spending and some in National barely less so the current government seems unwilling or unable to move forward.

Yet with its UK and EU Free Trade deals explicitly mentioning abiding by its Paris targets, it does not want to say it is willing to renege, either.

That leaves Ministers repeating three seemingly incompatible things.

Yes, the government is committing to meeting its Paris agreement target for 2030, but, no, it is "unrealistic" spending large sums on overseas help ... but, yes, it admits New Zealand cannot meet the target without overseas help.

It is beginning to look like the coalition has nowhere to go, unless it has a secret plan that is unknown to voters.

Although Watts at one point hinted the government might procure carbon savings overseas at no cost, he supplied no details in response to further questions from RNZ about what exactly that might look like.

A transparency report that is anything but

Even the government's statements to the international community - which are meant to provide transparency on its detailed plans - do not provide any clarity.

If it truly plans to meet the target, the government has a hole of over 80 million tonnes of greenhouse gas to fill - over one year's worth of New Zealand's total emissions.

That is like keeping every car and truck in the country in the garage for more than five years.

In its first official progress statement to other Paris signatories last year, the government acknowledged the gap and admitted it was not realistic to meet it using domestic action, but failed to give any explanation of what it planned to do.

The closest reference was a line saying New Zealand was "exploring options for international cooperation" - something that has been true for many years without any purchasing deals being closed.

Expert opinion appears to be split on whether the government will be forced to shell out eventually, or whether it plans to curl into a ball and run down the clock until 2030, when it will claim it cannot meet its target despite best efforts.

Or things could change after the next election, by which time there will be a matter of months to execute a plan.

'No one sends you an invoice'

Speculation about whether the government sees the target as truly binding only increased when Watts told an audience of farmers that claims this country will owe billions of dollars if it fails to meet its targets were 'misinformation'.

He was making a reference to Treasury's estimate that buying sufficient help from overseas could cost anywhere from $3bn to $23bn, depending on the cost per tonne. (Other experts have put the likely price at the low end of that range, but only if the government gets moving with deals in Asia or the Pacific, as opposed to getting stuck with high-priced European options).

"Some will meet them [targets], and some won't just because [of] national circumstance," Watts reportedly told the audience.

"You have to have the intent to meet it and if you don't meet it, no one sends you an invoice - and that's why it's not a liability on the government's books," Farmers Weekly reported him saying.

Pressed by ThreeNews' journalist Laura Tupou, who asked him if he really believed New Zealand did not have to meet its target, Watts told her:

"I do believe we need to meet our climate change targets and the Government is committed."

"... The Paris Agreement's compliance process is facilitative not punitive...So if a country falls short of achieving its target, there are not punitive measures, and a country will not be forced to purchase offshore credits to make up any gap."

Watts is a former accountant.

He is correct that no one will force New Zealand to pay - and that there is no liability showing on the government's financial books.

What Watts did not say is that Treasury has been waiting for a sufficiently specific statement from the government in order to warrant adding the cost of international purchases to the nation's account books.

So far, he and Luxon have been careful not to give that.

Although Treasury has noted the cost of meeting the target as a footnote to the accounts, its view is that accounting rules do not permit it being added as a liability unless or until the government makes a more specific statement that it intends to buy help from someone.

One example given by Treasury for why it cannot clock a liability now is that the government could, in theory, put the whole cost of meeting the target on the private sector. Watts says that is not government policy.

Treasury also says the price is not sufficiently certain.

Other accountants say Treasury has this wrong, but officials are unmoved.

However they have said they will keep reassessing.

Meanwhile, some lawyers disagree with Watts that what matters is "intention" to meet Paris.

One of them is Lawyers for Climate Action executive director Jessica Palairet, who says: "The answer is no."

"Simon Watts said there's no legal obligation and the mere intention is enough to comply with Paris, but what the government is ignoring our due diligence obligations under the Paris Agreement."

"These are international legal obligations, and it's not enough to repeatedly say you're committed to the targets," she said.

"Your words have to be backed up by action, in particular the Paris Agreement requires parties to design measures that are meaningful and sufficient for meeting the [target] and that reasonable chance of success."

"The obvious problem for New Zealand is we are currently 84 million tonnes short of meeting our [target' and that's the government's own calculation."

"How are we possibly meeting our due diligence obligations when the government's modelling suggests we are falling well short of our 2030 target and there is no plan in place to meet that?".

What's next?

In the context of climate change, the government's offshore payments tangle is a short term problem.

New Zealand's next target - for 2035 - under the Paris Agreement does not require any overseas purchases.

That is partly because the target is such a small progression on that last one, that it requires just a one percentage point decrease in emissions between 2030 and 2035. The perceived backsliding in effort prompted international news outlet Bloomberg to headline a story saying New Zealand's reversal of policies on climate change was a sign of Trump's era of "climate retreat."

But even if the government had set a higher target - up to 66 percent, according to the Climate Change Commission - it could have been met without offshore help.

That is because, after 2030, the country will have made some progress on cutting emissions, and it will be able make more if wants to by investing in increasingly affordable clean transport, energy and options such as methane medications for cows.

With a target of just 51-55 percent for 2025, it looks very likely that this will be the last four years in a long time when MPs agonise over past commitments to spending billions on overseas climate action.

But for those forced to front questions about their true commitment to Paris, it may feel much, much longer.

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