NZ uses dodgy Ukrainian carbon credits, minister in denial

Paula Bennett
Paula Bennett

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 its 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. You 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 Hosking 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.


“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?”


“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.


“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.


“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!”


Fact-check: 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 obligation.

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.

13 thoughts on “NZ uses dodgy Ukrainian carbon credits, minister in denial”

  1. Totally agree.
    If this Govt were a private individual, the Serious Fraud Office would be prosecuting them in the High Court.
    It’s not just the deception and the fraud that is so worrying, it is also the total denial that they have done anything wrong!
    They have no plan to do anything about reducing NZ’s steadily rising emissions, their so called “target” is woefully weak, and they will fail to meet that because they are still in complete denial about the reality of the problem. The market based economy got the world into this mess, it sure as hell isn’t going to get us out.

  2. It’s even worse than you suggest because many NZ companies are now sitting on large stockpiles of NZUs because they surrendered ERUs instead. The NZ media has been seriously deficient in not highlighting this issue a couple of years ago when it was actually happening.
    Rumour has it that the government will double the free allocation of units when the 2 for 1 deal is negated. This plus agriculture’s free ride means that there is no way that the ETS can reduce emissions to the Paris target. As Jack pointed out, even this modest target will not reduce global warming to below 2°C. The government knows full well that it will have to purchase credits to make our Paris target which is why it was so insistent upon functioning international carbon markets before signing. This is a subsidisation by the taxpayer to emitters with money leaving the country rather than being spent in this country to bolster GDP. I also suspect that the Government may auction additional credits (created out of thin air) to pay for its liabilities. This will further reduce the effectiveness of the ETS and create some extremely perverse incentives.

  3. I guess Nationals response to the AGW crisis is still born out of internally held deep denial within the political right that (a) we have an actual problem with global warming, and (b), that the only way to deal with it will be significant actual physical cuts of emissions. So they try to be seen to do good, give lip service on the international stage while internally fudging the emission books with corrupt measures and shonky deals.

    As long as this and other governments are led by a bunch of slick spin doctors the world will trundle towards a climate catastrophe. As with all catastrophes, eventually, the day of reckoning will come.
    The National party of NZ will go down badly then. Not a legacy to be proud of!

    1. Perhaps you could advise the “deniers” how we might achieve 30% reduction in emissions in a country largely powered by renewables.

      [Tedious trolling snipped. GR]

  4. It’s not just a rumour. When the the 2 tonnes GHG for 1 unit deal ends, the free allocation of units will also double. See page 13 of the NZETS review discussion document, where it states;

    “It should be noted that if the one-for-two surrender obligation is removed, the amount of free allocation provided to emissions-intensive and trade-exposed activities will automatically be increased to correspond with the increased surrender obligation.”

  5. Re the National or the “reasonable moderate small ‘c’ conservative National party, practical, business-type, producer-farmer” mind-set on climate change. I think they have perhaps four under-lying ideological narratives going.
    1. They see the costs of mitigation falling on ‘people like us’.
    2. They see the adverse impacts falling (mostly in the future) on ‘people not like us’ in distant countries – who they simply don’t care about.
    3. They think the UNFCCC process will never succeed in solving the collective action problem.
    4 QED. Therefore, domestic mitigation policy will never succeed because eventually everyone will realise the ‘small c’ pragmatists were right all along.
    5. So in the meantime policy just has to be a greenwashed fig-leaf or a Potemkin Village-like facade.

    1. “reasonable moderate small ‘c’ conservative National party, practical, business-type, producer-farmer”

      I know a few of those… and I think your summation of their mindset and their response pretty well sums it up unfortunately.

      Can we expect our current government to put in place steps to implement the plan suggested by the RSNZ? The short answer is “No”. They have had heaps of advice over the past 7 years they have ignored, and they will continue to do so. Heeding advice might actually involve doing something.

      1. Agreed Macro, it is quite clear this government has no intention to actually change business as usual at all. Quite the opposite, they want to increase intensive dairying, grow the tourism industry, put larger trucks on the road…….. You know the story very well I’m sure and will be able to add many more examples.
        As quoted in the Listener last week, Bennett says her focus is “working on a plan to have a plan. And that plan for me goes out decades” FFS, what planet is she on?

  6. Nice work by Jack Tame, shameful behaviour from Paula Bennett.

    JACK What would a 3-4 degree temperature rise globally do to our agricultural industry?
    PAULA So you’re telling me that if I reduce agriculture by however many percent as being part of our emissions profile, then I would reduce the temperature of the sea by another one or 2%? That’s just simply not true.

    No- he didn’t tell her that and she should have been called out for saying such nonsense.

    And why, oh why is suggesting a reduction in dairy cow numbers considered beyond the pale by the National party?
    Bennett uses the emotive phrase  “killing cows and actually effectively killing jobs”

    We have dirty rivers, methane emissions, CO2 emissions from the milk tankers and the Fonterra factories burning coal- all for what? Given that the milk payout is so low, would there be any dairy farmers actually paying income tax these days?

    Surely ‘agriculture’ is more than just dairy and meat production?

    1. With respect to the “killing cows” comment – Just as an aside

      The average productive lifetime of the dairy cow in intensive milk production is decreasing around the world, with averages like 2.4 lactations in the US and Denmark. This shorter lifespan is mainly a result of what has generally been considered as sound economic decisions on profitability. However, much of the decrease in dairy cow longevity is mainly the result of involuntary culling due to poor health or fertility problems. This can lead not only to lower profitability, but also to concerns from consumers, who are becoming increasingly aware of animal welfare issues.

      my bold
      The life of a dairy cow in NZ is now just as desperate.
      A Government which places all its milk in one company and exports it for baby formula in China, can be said to be well involved in the process of killing cows if not an accessory to the crime.

  7. New Zealand has reached the end of the road with bullshit over greenhouse gas emissions. Helen Clark signed the Kyoto agreement and put our emissions up 25% and Key has continued the ‘do nothing’ policy. We are counting on Paula Bennett to come up with a plan that actually reduces emissions rather than optimistic but empty political statements. There is not a lot of time left.–news/sea-level-rise-urgency

    1. Bob it’s not a “do nothing” policy. It’s a “make it difficult if not impossible to do anything” policy. Still we are ganging-up on this government by self-deception process. Unfortunately the time of transition measures has passed.

  8. Viv K,
    Yes, with that “killing cows” comment Bennett really dropped her facade and revealed her inner, ah, acerbic ‘Tim Groser’. I think its also a moment that she goes tribal – in the sense of attacking Jack Tame. Her clear implication is that Tame in his questioning has proven himself to be ‘other’ or from the wrong tribe.
    Yes its an unacceptable comment. I’d love to see someone respond by saying only two words; bobby calves and hypocrisy.

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