Greenhouse gas emissions reduction target scenarios

Introduction

Below is a simplified version of the analysis previously found at this address. To look at the detailed analysis behind these figures and to provide greater scope for examining the implications of various other scenarios, click on the links below.

Analyzer

Alternative analysis summary

Analysis of the costs associated with various Greenhouse Gas reduction scenarios.

The whole GHG debate has been skewed by the fact that there has been inadequate information about the real implication of various policy scenarios. Part of the problem is the focus on sectors rather than on the sources of emissions, ie fossil fuels, industrial processes, decomposing waste and farmed animals. NZ is unique in the world regarding the significance of the contribution to CO2e emissions attributed to methane from farmed animals [deemed to be 21 times more harmful than carbon dioxide in Global Warming Potential ("GWP") terms]. However there is no known cost effective technology to reduce these emissions. For farming pay to mitigate this in full, most farms would be uneconomic. Emissions that are controllable by better management should be the responsibility of those responsible for the resulting emissions.

This analysis looks at the cost of achieving the required emissions reductions by way mitigation in the form new forest planting.

In undertaking the analysis along the lines indicated above, we found that the Ministry for Economic Development had figures on its website for fuel, electricity and gas deliveries to March 2009. We therefore created a model with these as a starting point. The objective was to see what energy price increases would actually be necessary to meet various emissions targets. The results were surprising.

Our analysis shows that figures such as $1.20 per litre price increase for petrol (suggested by a respected economist) as a result of signing up to significant emissions reduction targets is simply rubbish. It shows that at minus 100% target with emissions credits at $200, the mitigation costs for petrol would be just over 42c per litre and electricity 3.3c per Kwhr.

Obviously it depends on your assumptions but

Definable variables:

Emissions unit price

Animal emissions covered by energy charges

""

See what happens if other emissions are also?

Reductions target

Minus

10%

20%*

30%

40%

Unspecified savings (eg technology, management, etc)

(The units in these 2 sections are millions of tonnes of CO2e)

Target components

GHG reductions required (by way of reduced emissions or mitigation):

Animal emissions

Energy

Waste, industrial, etc

Total

Model cost re farmed animal emissions of mitigation

Model cost to energy of mitigation

Model cost to other emissions of mitigation

Total model cost of required mitigations

Price increases required to mitigate emissions

Power per Unit (Kwhr)

Gas per Mwhr (x 278 for $/Gj)

Petrol per litre

Diesel per litre

Impact on CPI

Total mitigation forests required (000 ha)

Required if overseas emissions purchases cover

Transport cost increases $/tonne/100 km

Based on a truck carrying 18 tonnes using 25 litre of diesel per 100km, excl GST.

* 20% is the upper figure of the Government's announced minus 10% to 20% target range.

Contact: model@valueaddpartners.com