Have we already met our 2020 target?

Last week the Federal Environment Minister Greg Hunt announced at the National Press Club that we “go to Paris officially subzero and on track to beat our 2020 target”. Can we really be subzero to a 2020 target in 2015? What is going on?

Welcome to the world of Kyoto accounting!

There are a few points to lay out to set the scene for this story.

First, all Kyoto accounting is based on 1990—the year everyone agreed to make the baseline in 1997 at Kyoto. For Australia, this number is 564 million tonnes (Mt from now on).

Towards Australia's 2020 target from early 2015 (previous emissions projections). Source: Australian Government

Second is our first Kyoto target (Kyoto1). This is what Australia’s emissions need to average in the period 2008-2012. Australia’s Kyoto1 target was 108% of our 1990 baseline or 616Mt.

Third is our second Kyoto target (Kyoto2). This is what our emissions need to average for the period 2013-2020. This is set at 99.5% of our 1990 baseline or 561Mt.

So you can see under Kyoto, Australia does not have to change its overall emissions much at all by 2020 compared to the starting year of 1990—a 0.5% reduction over 30 years!

That’s the basics out of the way.

So why did the Minister say we are subzero and on track to meet our 2020 target?

The Department of the Environment released the latest emissions projections last week. This happens every year or so as new information comes to hand. The new projections estimate that Australia is minus 28Mt compared to our 2020 target. What this means is that, on current assumptions and in accounting terms, Australia’s emissions will average 557.5Mt for the period 2013-2020, or 3.5Mt below our Kyoto2 target of 561Mt.

So job done?

It’s not quite that simple!

There are two things I would like to point out.

The first is that we are allowed to ‘carry over’ excess credits from the Kyoto1 period of 2008-2012. Our emissions averaged 575Mt for this period, about 41Mt below the target of 616Mt each year. Under the Kyoto rules, we are allowed to carry over some of the difference between the target and what our emissions actually were. Now all the accounting has been done and checked by the UN, we can carry over 129Mt to count against our Kyoto2 target.

What this means is that instead of our Kyoto2 target being 561Mt it is effectively 577Mt—102% of our 1990 baseline rather than 99.5%. This makes things a bit easier!

Australia's 2020 target close up from early 2015: the areas above and below the sloping brown line must match for Australia to meet its 2020 target. Source: Australian Government

When you look at the graph you can see how this works. To meet our target for Kyoto2, we must be on average below the brown sloping line—our target trajectory finishing at minus 5% in 2020. To make this, the blue and grey areas above and below the line must match. But with the carry over we can add the orange to the blue—voila! You can see the blue and orange was already close to matching the grey when this graph was made in early 2015 (no update graph has been released).

Which brings us to the second point. What has basically happened in the late 2015 update is that the grey area has gone down. This represents less emissions growth expectation. This is because things have slowed down—the economy is cooler, electricity demand is lower and less forest loss is taking place.

But, importantly, the expectation is still that emissions are rising towards 2020. So even if the areas match up and we meet Kyoto2, our emissions will not be 5% below 1990 or 2000 in 2020, but will likely be above 600Mt or at least a 6% rise on 1990.

Said differently, we can still meet the Kyoto2 target even if we badly miss in 2020. No wonder the PM agreed to formally sign up today!

You can see the problem. The expected gap in the 2020 result is not a good starting point for 2030 or subsequent targets. There is no downward trend or expected momentum towards falling emissions.

What makes all this all the more disappointing is the easy ride Australia has had in Kyoto.

Our 1990 baseline included a whopping 136Mt from land clearing—a generous giveaway that became known as the ‘Australia clause’. To put this in perspective, our land clearing emissions have fallen sharply since and were 14Mt in 2014. We just got lucky in 1990.

In addition, our Kyoto1 target was at the high end of targets at 108%—Australia got an easy ride as an energy intensive nation.

When you consider the carry over towards our Kyoto2 target, Kyoto just keeps on giving to Australia, 25 years after the initial baseline year.

Australia's electricity emissions since 1990. Source: Australian Government

By comparison, our electricity emissions were 130Mt in 1990. They peaked in 2009 at 212Mt and are currently at 180Mt—still a rise of 38% on 1990.

So in 2015, we can claim that we will meet a 2020 target of 99.5% even though our electricity emissions, which make up a third of our emissions, are 38% higher. This must be the lucky country!

Need to pause to take all that in.

Now, with a clear head, here’s some thoughts to keep in mind as we head towards 2020:

  • how much abatement is actually being delivered through the Emissions Reduction Fund?
  • will Australia raise its ambition for 2020 given we are on track for our current target?
  • will Australia push for Kyoto2 ‘carry over’ to meet our 2030 target?

Stay tuned. There's bound to be more twists and turns towards 2020.