24 June 2016

Friday night reading David Dunning and the Brexit

New Zealand's state-funded public radio channel, Radio New Zealand, dedicated half an hour of music to the British referendum on leaving or remaining in the European Union.

The tunes showcased included 'Land of Hope and Glory', 'Wake me up before you go go' by Wham, 'Winner takes it all' by Abba. The final insult, I mean, the final tune for the half-hour 'sonic tonic' was the Sid Vicious version of 'My Way'.

I must admit I found the 'Sonic Tonic' a very amusing antidote to the news of a decision that will have very serious outcomes.

For example, here is Ed King writing on the referendum result on Climate Home. Midway through what’s set to be the warmest year in history, UK voters have elected to leave the world’s most progressive climate change alliance.

However, I did manage to tear myself away from Radio New Zealand and Youtube and I found something on the internet to feed the intellect. I dedicate David Dunning's 2014 article We are all confident idiots to the Leave Campaign. I should I be dedicating the Sid Vicious version of 'My Way' to them?

18 June 2016

Emissions Trading Scheme unit allocations are open data but units surrendered and actual emissions are state secrets

It would be good if we could compare actual company emissions under the NZETS to the generous free allocations of unit some entities receive. But we can't. It's half secret. So how will we ever know if allocations are excessive?

Someone recently asked me if there was enough publicly available information to be able to tell how the free allocation of NZ emission units to some privileged ETS participants under the NZ Emissions Trading Scheme related to the emitters actual emissions of greenhouse gases.

This information would be the number of emission units allocated to some emitters on the one hand, and on the other hand, the actual emissions of the emitters as reported to the Environmental Protection Authority and the actual numbers of corresponding emission units they surrender to the Environmental Protection Authority.

I replied "No, the data is not available". A response which, although it contains a grain of truth, still doesn't reflect the whole story. So this post is an attempt at that story.

In the past few years, I have written several posts about the significance of the free allocation of emission units to New Zealand Aluminium Smelters Ltd, Norske Skog Tasman and New Zealand Steel. In each case I concluded that the free allocation of units (including units for energy costs) were excessive. That these were cases of 'over-allocation'.

In those posts I had to make estimates of the actual emissions and actual units surrendered. Although the New Zealand Ministry for the Environment completely discloses the annual free allocation of units, neither the Ministry or the Environmental Protection Authority report the actual emissions and units surrendered by entity.

As I noted recently I have compiled a Google sheet of all units allocated to emitters from 2010 to 2014.

So good on the Ministry for the Environment. A while ago I made this pie chart of the 2011 allocations from the Ministry. Yes, awful rainbow colours I know! But it still makes it clear that the vast bulk of free units get allocated to the top ten or so emitters - who happen to also be some of New Zealand's largest and most influential companies.

I was running out of emitters like NZ Steel and NZ Aluminium Smelters Ltd who both have unique operations. Both are the only example of their industry in New Zealand. So I could look at 'category' emissions for 'aluminium smelting' and 'steel making from iron sands' in the Ministry for the Environment's greenhouse gas inventory reports and be confident the category emissions were the same as the company emissions.

So, back on 28 March 2013, I made a request under the Official Information Act (OIA) to the Environmental Protection Authority, who administer the reporting of emissions and surrendering of units in the ETS.

I asked for number of units surrendered by the top eleven ETS participants (New Zealand Steel Limited, New Zealand Aluminium Smelters Limited, Methanex New Zealand Limited, Fletcher Concrete and Infrastructure Limited, Ballance Agri-Nutrients Limited, Holcim (New Zealand) Limited, Carter Holt Harvey Pulp & Paper Limited, Pan Pac Forest Products Limited, McDonalds Lime Limited, Winstone Pulp International Limited, Whakatane Mill Limited) for 2010 and 2011.

On 18 April 2013, the Environmental Protection Authority declined my request.

On 19 April 2013 I made a complaint about the EPA decision to the Office of the Ombudsman.

Almost a year later, on 8 April 2014, the Ombudsman concluded his investigation and said that the EPA were correct in refusing to give me the information as the Climate Change Response Act 2002 explicitly applies to the surrender of units in priority to the Official Information Act 1982.

The Deputy Ombudsman Leo Donnelly advised that he agreed with the EPA view that they did not have to provide the information on units surrendered. This is the key passage from his letter dated 8 April 2014.

"I am not persuaded that the Official Information Act is an Act that provides for the disclosure of information in s 99(2)(a) of the Climate Change Response Act.
The Official Information Act confers a right to request official information and requires that such requests be processed in accordance with its provisions, but those provisions do not provide for the disclosure of information under the Climate Change Response Act (or any other Act that imposes restrictions on the availability of official information).
Instead, section 52(3)(b)(i) of the Official Information Act provides that nothing in that Act derogates from any provision which is contained in any other Act which imposes a prohibition or restriction in relation to the availability of official information. Section 99 is such a section.
Accordingly, the Official Information Act does not override the restrictions imposed by section 99 of the Climate Change Response Act and it would be contrary to that section for the requested information to be made available to you. Consequently, section 18(c)(1) of the Official Information Act provides a reason to refuse your request on that basis."

I was bloody disappointed with that response. Here is the Ombudsman's letter. I also didn't know that the Official Information Act only applies if another statute allows it too. I will look at the relevant sections in detail.

Section 52(3)(b)(i) of the Official Information Act states;

(3) Except as provided in sections 50 and 51, nothing in this Act derogates from—
(a) ....
(b) any provision which is contained in any other Act of Parliament or in any regulations within the meaning of the Regulations (Disallowance) Act 1989 (made by Order in Council and in force immediately before 1 July 1983) and which—
(i) imposes a prohibition or restriction in relation to the availability of official information;...

So if another statute (or regulation) prohibits or restricts the availability of official information, then that statute or regulation applies irrespective of the Official Information Act.

Section 99 of the Climate Change Response Act certainly appears to prohibit the availability of information. It states;

This section applies—
(a) to the chief executive, the EPA, an enforcement officer, and any other person who performs functions or exercises powers of the chief executive, the EPA, or an enforcement officer under this Part and Part 5; and
(b) at the time during which, and any time after which, those functions are performed or those powers are exercised.
(2) A person to whom this section applies—
(a) must keep confidential all information that comes into the person’s knowledge when performing any function or exercising any power under this Part and Part 5; and
(b) may not disclose any information specified in paragraph (a), except—
(i) with the consent of the person to whom the information relates or of the person to whom the information is confidential; or
(ii) to the extent that the information is already in the public domain; or
(iii) for the purposes of, or in connection with, the exercise of powers conferred by this Part or for the administration of this Act; or
(iiia) for the purposes of, or in connection with, reporting requirements of the Public Finance Act 1989; or (iv) as provided under this Act or any other Act; or
(v) in connection with any investigation or inquiry (whether or not preliminary to any proceedings) in respect of, or any proceedings for, an offence against this Act or any other Act; or
(vi) for the purpose of complying with any obligation under the Convention or the Protocol.
(3) A person to whom this section applies commits an offence under section 130 if the person knowingly contravenes this section.....

So why does the Ministry for the Environment publish the annual allocations of units on its website? Why is the policy for unit allocation effectively open data (with complete public disclosure) when the policy for emissions and units surrendered in the ETS, the policy is 'Official Secrets Act?

The answer is the perfect bureaucrat's answer, because the Act says so. Section 86B Decisions on applications for allocations of New Zealand units to industry and agriculture of the Climate Change Response Act states:

(5) The EPA must, as soon as practicable, after deciding an eligible person’s final allocation for an eligible activity in respect of a year,—
(a) publish the decision in the Gazette; and
(b) ensure it is accessible via the Internet site of the EPA
.

Where does this leave us? It's the old story of the three-handed forestry consultant. 'On the one hand, on the second hand, but on the third hand..' Its great that the data on free allocation of units to emitters is fully disclosed. I am sure many of them wouldn't want that. However, without data on units surrendered and actual annual emissions under the ETS, no one can make much of an assessment of whether the units allocated are reasonable or over-allocated in terms of exceeding actual emissions. Transparency (and legitimacy) would be very much improved if the actual emissions and unit surrenders were just as open as the unit allocations

17 June 2016

Friday listening White Valiant The Muttonbirds live in 1994

The Muttonbirds are a terrific band led by the indefatigable Don McGlashan in the 1990s.

Although Nature and The Heater are arguably better-known songs, this is the subtly disturbing 'White Valiant' played live in 1994.

Ah, that's great! I can't get enough! So here is the official video of 'Dominion Road', which was a single from their first album 'The Muttonbirds'.

23 May 2016

An open letter to Minister for Climate Change Issues Paula Bennett cancel the dubious surplus units

In which I write to Paula Bennett and ask her to cancel the 124 million surplus emission units.

Paula Bennett's first act as the new Minister for Climate Change Issues was to announce that yes indeed New Zealand would be using creative carbon accounting and shuffling of dubious 'surplus' emissions units to meet the 2020 climate change target without actually reducing any emissions of greenhouse gases.

That approach became unstuck for Paula Bennett with the release of the Morgan Foundation's 'Climate Cheats' report.

Report author Geoff Simmons pretty convincingly put the case that if New Zealand has unethically benefited from buying dubious Ukrainian emission units, then Paula Bennett is ethically bound to cancel the remaining surplus units. I have heard no response, so I thought I would ask her myself. Hence this letter.

Hey why don't you write or email her too? Her email address is p.bennett@parliament.govt.nz

The Hon Paula Bennett
Minister for Climate Change Issues
Parliament Office
Private Bag 18888
Parliament Buildings, Wellington 6160

23 May 2016

Your ethical duty to cancel 124 million surplus assigned amount units

Dear Minister,

I see that last Friday (20 May 2016) the Ministry for the Environment released New Zealand's Greenhouse Gas Inventory 1990–2014 and the summary 'Snapshot'.

I see that in the Snapshot summary on Figure 5, page 5, that New Zealand is still intending to use 123.7 million emission units (Assigned Amount Units or 'AAUs') that were 'surplus' from the Kyoto Protocol first Commitment Period to meet the 2020 emissions reduction target and still have a surplus of 92.6 million units.

You are aware that the Morgan Foundation's report 'Climate Cheats' and the Stockholm Environment Institute report (Kollmuss, Schneider and Zhezherin 2015) set out a persuasive case that the 97 million Emission Reduction Units ('ERUs') that were imported to New Zealand were “questionable or of low environmental integrity”. Those ERUs were surrendered by NZETS participants into Crown holding accounts.

According to the Kyoto Protocol 'True-Up' Report, in December 2015, the Ministry for the Environment cancelled (transferred Crown-owned units to cancellation accounts) 373 million emission units to comply with the Kyoto Protocol. The numbers and types of units cancelled were: the 97 million imported ERUs, 16 million imported Certified Emission Reduction units ('CERs'), 81 million removal units ('RMUs'), and 179 million AAUs . The 'surplus' units remaining in Crown holding accounts were 124 million AAUs.

In a nutshell, the only reason New Zealand (the Crown) has so many 'surplus' AAUs is because of the inflow and use of the dubious ERUs in the NZETS. Each dubious imported ERU has allowed one additional AAU to be carried forward in a Crown holding account as a 'surplus' unit. Because the ERUs have no credibility, the AAUs no longer represent carbon safely stored out of the atmosphere. No emissions were reduced. Therefore to use these surplus AAUs to comply with the national 2020 emission reduction target is simply an exercise in creative carbon accounting. It is simply unethical.

I put it to you that as Minister for Climate Change Issues, you are morally obliged to cancel these surplus units owned by the Crown. Will you cancel the units? It may hopefully to some small extent restore New Zealand’s very tarnished reputation with respect to mitigating climate change policy.

Yours sincerely

21 May 2016

Helter smelter deja vu Tiwai Point smelter uncertainty stalls renewables for more Huntly coal

I look at how New Zealand Aluminium Smelter Limited is behind the Meridian/Genesis deal keeping the Huntly Thermal Power Station burning coal as the threat of closing the Tiwai Point smelter is stalling the construction of consented renewable energy projects. NB This post also features on Hot Topic.

My last post at Hot Topic was about energy companies Meridian and Genesis doing a deal to keep the Huntly Thermal Power Station open (and burning coal) for an extra four years.

My post really just noted how backwards the decision was in terms of reducing emissions of greenhouse gases. And that the expected shut-down of Huntly represented the only predicted drop in energy emissions New Zealand had advised to the UNFCCC. And that reduction has just gone up in smoke.

However, New Zealand Aluminium Smelters Limited and the Tiwai Point smelter have a malignant background role in the Huntly deal.

Meridian Energy said the deal was necessary to provide security of energy supply if the hydro lakes are low. That is only the case if the next 'cab off the rank' of renewable energy capacity is not built to replace Huntly. The generators don't want to build any new renewable capacity if the smelter closes and Meridian then releases cheaper Manapouri hydro electricity onto the grid.

Hence helter smelter deja vu all over again.

The last time I blogged about the smelter was in late 2012, when the Government was rolling out the partial privatisation and float of Meridian Energy. New Zealand Aluminium Smelters Limited chose that moment to threaten to close the 'unprofitable' smelter and to demand cheaper electricity from Meridian.

For a re-cap of the issue, see this summary by Bryce Edwards as of April 2013. The conclusion was in August 2013 with a new (secret) power deal with Meridian with the Government putting in a $30 million subsidy on the promise of no plant closure before the end of 2017.

In terms of climate change policy, Gareth Renowden pointed out that the closure of the smelter would be a good thing.

Electricity prices would fall as Meridian's cheaper Manapouri hydro power would enter the wholesale electricity market. The most expensive generation, from coal and gas thermal plants (such as Huntly) would be forced out of the market by price. Electricity security would be better, as Lake Manapouri's storage would be available as a buffer for droughts instead of being committed to the smelter.

Cheaper power, less emissions, more renewables, more security. That sounds like the right strategy on a planet with a finite carbon budget consistent with no more than two degrees celsius of warming. What's not to like?

Now fast forward to April 2015. Meridian has been partially floated. New Zealand Aluminium Smelters Limited is yet again stating that its electricity transmission costs are too high and linking that to the smelter's future.

Board Chair Brian Cooper said

"No decision had been made about the future of the smelter, and we are doing everything we can to secure a long-term commercially competitive electricity price for the smelter."

So back to square one. New Zealand Aluminium Smelters saying yet again "Nice smelter, you got there. Shame if something happens to it". So who do they expect to give them a handout this time? Transpower, actually. The opportunity being the Electricity Authority's review of transmission costs, in which a draft proposal was expected to give New Zealand Aluminium Smelters a windfall of fifty million dollars.

I suppose I should not be surprised by this sort of business behaviour. However, I am more interested in the electricity demand implications of a smelter closure.

Belinda Storey of Pure Advantage says that the threats to close the smelter have made future predictions of electricity demand uncertain. And therefore

"Electricity companies have delayed investments in wind, solar, and geothermal energy while the Tiwai negotiations hold to ransom the forecasting of future demand."

In November 2015, Meridian CEO Mark Binns confirmed that new electricity investments had been stalled by the possibility of the smelter closing

"because nobody wants to build a new plant if Tiwai Point can go on 12 months notice".

In December 2015, Binns confirmed to Fairfax's Tom Pullar-Strecker that a smelter shut-down would release about 1.15GW of electricity, which would drop wholesale electricity prices and that none of the generators wanted to build the power station that would stop first when electricity demand dropped below supply. Binns even said

"No-one wants to spend a lot of money and have a stranded asset".

So, in 2016, in New Zealand's electricity market, renewable electricity projects will be stranded assets. Pretty much because of New Zealand Aluminium Smelter Limited's preferred mode of corporate behaviour.

The only thing more bizarre are the completely contradictory media releases from Energy Minister Simon Bridges.

In August 2015 Bridges was celebrating the 2018 Huntly closure as creating renewable opportunities. In April 2016, Bridges commended the reversal of the Huntly closure as a 'transition' 'down the path of greater renewable generation'.

Is there no use of fossil fuels that Bridges won't describe as 'transitional'? Is there any other explanation for Bridges contradictory statements than the assumption that he is a complete political weather vane when it comes to policy?

Conclusion

From that last no doubt factual comment of Mark Binns, we enter a "Bizarro World" of contradiction and ridiculousness. In the rest of the world, Nicholas Stern and Mark Carney and Carbon Tracker have laid out the case that coal, oil and gas reserves are stranded assets. But in New Zealand, it is new renewable electricity generation that will be stranded assets.

All because of consistently unethical behaviour by one trans-national company. And the Minister of Energy views the situation as within his very elastic definition of 'transition' and is happy to leave direction of the market to the partially privatised generating industry. Never mind carbon budgets and the Paris Agreement.

01 May 2016

The Huntly power station decision - projected energy emission reductions to 2020 up in coal smoke

The decision to keep the Huntly coal thermal power station open for another four years is not only contrary to all New Zealand's commitments and climate targets, it also sends the Ministry for the Environment's projections of stabilising energy emissions to 2020 up in a cloud of coal smoke. NB this post is also features on Hot Topic.

We seem to have had an extra dose of announcements and activities about climate change in an action-packed month of April.

We have had our Minister, Paula Bennett, signing the UN Paris Agreement. The Morgan Foundation's "Climate Cheats" report made a big splash. That lead to Jack Tame's grilling interview of Paula Bennett. Then the Royal Society of New Zealand released two major reports on climate change; one on impacts and another on policy responses. The business-backed Pure Advantage group released a report on enhancing forestry sequestration.

So what did the New Zealand energy industry do to elbow it's way into the climate change spotlight? How do you beat signing the Paris Agreement or compete with climate fraud?

Well, you just say you are going to burn more coal!

On 28th April 2016, Genesis Energy and Meridian Energy announced they had reached an 'arrangement' that would keep the coal-burning Huntly thermal power station open for an extra four years. This deal postpones the expected shut down from the planned 2018 date to 2022.

Patrick Smellie notes two interesting details of the story. First, the irony that the "100% renewable" generator Meridian Energy has led the process of negotiating with Genesis. And second, that the public announcement of the shut-down by Genesis was just 'code' for negotiating a higher price from other generators.

The Green Party's Gareth Hughes points out that on the basis of Huntly's generation of 1,277 GWh of energy in 2015, the closing of Huntly would have lifted New Zealand's proportion of renewable electricity generation from 79.9 percent to 84.5 percent. So unsurprisingly the Meridian-Genesis deal is just 180 degrees in the wrong direction in terms of the 90 percent renewable target and the need to reduce greenhouse gas emissions.

Greenpeace has given us ten reasons to shut Huntly and have started an on-line petition to keep to the plan and shut Huntly.

But what effect will this have on the Ministry for the Environment's projections of energy emissions out to 2030? These are part of the December 2015 report "NZ’s Second Biennial Report under the UNFCCC". This chart shows projected "with measures" emissions and "without measures" (i.e. business as usual).

In the chart, the projected "with measure" emissions for each sector are the circles and lines. The projected 'business as usual'/'without measures' emissions are the lines between the data points marked by triangles on 2020 and 2030. That's because the without measures projections are for only two years! It is almost as if they are an after-thought.

The other thing to note is that for agriculture, transport and industry, there is no difference between "with measures" and "without" projections. This is of course because the Ministry is reflecting the Government's intention to exempt those three sectors of the economy from any climate change policy.

However, have a close look at the energy sector projections. There is some 'daylight' visible between the 'with' and 'without' projections. The "without" trends ever so slightly upward and the "with" trend is a plateauing. So something is expected to change the slight upward emissions trend to a plateau. The Biennial Report states on page 39;

"Energy emissions are expected to increase between 2013 and 2015, but then fall between 2015 and 2020. The remaining coal-fired power plant in New Zealand is expected to be decommissioned by 2018, reducing emissions from coal. Coal-fired electricity generation is expected to be replaced mainly by a combination of hydroelectricity, geothermal, wind, and gas-fired peaking plants in the modelled scenario".

In other words, the 'something' was the closing of Huntly. The Ministry for the Environment was relying on Genesis Energy to honour its public statement that it was closing Huntly. Which of course would then be attributed to the New Zealand emissions trading scheme. However it looks like the projections are now out-dated.

Conclusion

The 2030 emissions projections show that New Zealand's climate change policies are intentionally not affecting three out of five sectors of the economy. Now with two power generators reaching a private agreement to keep an non competitive asset, Huntly thermal power station, emitting for four extra years, the projected savings in energy emissions out to 2030 have gone up in a puff of coal smoke.

25 April 2016

Minister for Climate Change Paula Bennett denies climate cheating with dodgy Ukrainian carbon credits

In which Jack Tame conducts the toughest interview ever with a New Zealand Minister for Climate Change and Paula Bennett ends up denying that the Government cheated on it's climate change commitments.

Minister for Climate Change Paula Bennett has just been in New York signing the UN Paris Agreement. While in New York, Bennett was interviewed by TV One USA correspondent and general nice guy Jack Tame for Television NZ's Q + A news show. And we can read a full transcript.

I wonder if Paula Bennett thought she would get a soft jokey interview with that nice young man Jack Tame. She certainly didn't. Tame takes the interview 110% seriously. He does not smile. He delivers his questions and his interruptions through a taught stone-face. And his questions are good questions.

We perhaps need to remember about a year ago, Jack Tame stood in for Mike Hoskins on 'Mike's Minute' and gave us a month of refreshingly different short pieces to camera. In that month, Jack Tame talked about climate change. And he concluded with a minute titled climate tipping points. So Tame takes climate change and climate change policy seriously.

Tame gives Bennett a couple of minutes to gush enthusiastically about the signing of the Paris Agreement. Then he cuts straight to the Morgan Foundation's Climate Cheats report which alleges that the New Zealand Government was complicit in allowing dubious international carbon credits (Russian and Ukrainian and emission reduction units or 'ERUs') into the New Zealand Emissions Trading Scheme.

JACK

"I want to pivot quickly to the ETS. As you know, a report by the Morgan Foundation has concluded New Zealand, in their words, effectively 'cheated' its way to commitments made under Kyoto by trading in international carbon credits that were of dubious integrity at best. Do you accept that term? Cheating?"

PAULA

"I accept, actually, that there were dubious carbon credits last year when the Stockholm report came out. So, actually, the Morgan report's nothing new. So half of it is kind of right, you know? Yes, there were dubious credits. We found out. We're not using them now. We don't hold any of them. And we definitely won't again. And then, quite frankly, the other half of his report is factually incorrect."

Bennett's answer is mostly spin and I'll come back to that. But what happened next was that Jack Tame peppered her with about a half dozen really pertinent follow-up questions about the New Zealand Government's failure to stop the inflow of dodgy units.

  • "what part of 'Climate Cheats' report is factually incorrect?"
  • "we did continue trading on those credits for a long period when other countries abandoned them"
  • "but the government allowed that trading"
  • "So you don't accept that was cheating?"
  • "it wasn't in the spirit of the commitments made under Kyoto"
  • "but I think the question is how do we make up for that shortfall?"

Bennett eventually tries to 'flip' the questions onto a diversionary track; the undefined way forward with the Paris Agreement. Tame then flips her diversion back on her by implying she is being a hypocrite in grandstanding over the signing of the Paris Agreement when she knows that New Zealand has 124 million surplus emission units in the bank because of the influx of the dodgy Ukrainian units into the emissions trading scheme.

JACK

"But how do you come to New York and say, 'These are our commitments. Yeah, sure, the last time we had commitments, we reached them by purchasing credits of dubious quality when internationally, these things were slagged off.' Now you come here and say, 'Believe us this time. We're not gonna buy credits of dubious quality.'"

Bennett then hides behind a false statistic - that 80% of the units were okay. I have no idea where she gets that number from. And tries, again unsuccessfully, to move the interview on. Tame goes to the ethics of the matter in his next question and focuses on what would be the right thing to do.

JACK

"Would it not be a stronger thing for the government to come to New York and say, 'Yes, we've made a mistake. We're going to rectify this by either making up that shortfall in credits that were of dubious quality by purchasing extra ones, or making greater commitments in the future.' Wouldn't that be in the spirit of the Paris agreement and in the previous commitments under Kyoto?"

Bennett resorts finally to an old trick often used by Nick Smith and Tim Groser. She invokes the old canard that New Zealand is one of the few countries that has an emissions trading scheme! She then changes to some more waffle about what a big job it is. Which seems to be her preferred form of discourse. See for example her first speech as Minister for Climate Change to the National Blue-Greens.

I could keep going. Tame asks if she accepts that doing nothing will lead to 3 or 4 degrees Celsius of global warming. And if she accepts the New Zealand's targets match avoiding that. But you should really watch and read Jack Tame's interview for your self.

So I say "Bloody well done, Jack Tame! That's the best interview a New Zealand journalist has ever given a New Zealand Minister of Climate Change! Keep it up!"


Factcheck Appendix (wonky) on surplus emission units.

Now I will come back to this statement by Bennett.

"I accept, actually, that there were dubious carbon credits last year when the Stockholm report came out. So, actually, the Morgan report's nothing new. So half of it is kind of right, you know? Yes, there were dubious credits. We found out. We're not using them now. We don't hold any of them. And we definitely won't again. And then, quite frankly, the other half of his report is factually incorrect."

"We are not using them. We don't hold any of them" (the dodgy international units)

How many units are we talking about? According to the Kyoto Protocol 'True-Up' Report, of December 2015, New Zealand cancelled 373 million units to comply with the Kyoto Protocol. The numbers and types of units cancelled were: 97 million imported dodgy ERUs, 16 million imported Certified Emission Reduction units ("CERs") , 81 million removal units ("RMUs") and 179 million Assigned Amount Units ("AAUs"). The surplus units kept by the Government, after the cancelling, were 124 million AAUs.

Back in 2014, the Greenhouse Gas Inventory ignored the dodgy imported units completely and showed that New Zealand would comply with the Kyoto Protocol and have a small surplus of only 8 million units (which would be AAUs).

The 97 million dodgy imported ERUs, 16 million imported CERs, and 10 million RMUs ended up in the Government's accounts as emitters imported them and gave them ('surrendered' them) to the Government to meet their NZ emissions trading scheme obligations.

Every unit imported and surrendered enabled the Government's 'Kyoto position' to grow significantly from the 8 million unit surplus as noted in 2014 above, to the December 2015 surplus of 124 million Assigned Amount Units.

The Government had a little flexibility in which units could be kept as a surplus. There was a limit on ERUs, a prohibition on having surplus RMUs and no limits on surplus AAUs. So the Government preferentially cancelled all the ERUs, all the CERs and all the RMUs and kept (as surplus) as many AAUs as possible.

So every dodgy Ukrainian ERU that entered the NZ emissions trading scheme allowed the New Zealand Government to have an extra 'credible' AAU in the number of surplus units carried forward. To use an analogy, the Kyoto cancellation process allowed the Government to 'launder' the dodgy international units into a 'credible' currency, the Assigned Amount Units.

The Ministry for the Environment's 2020 position report shows that the Government intends to use 123.7 million surplus units from Kyoto's Commitment Period 1 to plug the gap as expected emissions will be above the 2020 emission target.

So back to Bennett's statement on the dodgy units "we are not holding them". That is spin and semantics. The Government is holding an extra large surplus of 'credible' AAUs ONLY because millions of ERUs were cancelled.

And the statement "We are not using them". That is double spin. Firstly, the Government used the dodgy units to comply with the Kyoto Protocol. And secondly, the Government is using the surplus of AAUs, which it has in such large numbers only because of the dodgy units, to claim compliance with the 2020 target even while emissions increase. That is just grossly unethical.