New Zealand could face a $1 billion bill after signing up to much more ambitious emissions targets than it will achieve, its environmental watchdog says.

Parliamentary Commissioner for the Environment Jan Wright says the country is seriously off-course in meeting the emissions reduction targets signed up to under the Copenhagen accord.

But Environment Minister Nick Smith has dismissed the price tag as "speculation".

The Government committed after Copenhagen to reducing harmful greenhouse gas emissions in 2020 by 10 to 20 per cent below 1990 levels. However, projections published by the Environment Ministry predict emissions will in fact rise – possibly by 26 per cent by 2020.

Dr Wright says that, to meet its obligations, New Zealand would have to buy carbon credits to cover the huge discrepancy. But Dr Smith said the Copenhagen accord was not legally binding. At present, the only binding emissions targets were those included in the Kyoto protocol – which would see New Zealand have a surplus of about nine million credits.

HOW WE'RE DOING

- The Environment Ministry's breakdown of New Zealand's greenhouse gas emissions, according to 2007 data:

- Agriculture is the largest source, contributing 48 per cent of the total. Emissions are projected to rise to 25 per cent above their 1990 levels by 2020. The rate of growth in emissions from the sector should decline from this year.

- The forestry sector currently acts as a carbon sink, and will help New Zealand meet its Kyoto obligations. But, by 2020, forestry is expected to become a source of emissions as large areas planted in the 1990s start to be harvested.

- The energy sector contributes 43 per cent. In 2020, its emissions are expected to be 6 per cent higher than 1990 levels.

- Industry accounts for 6 per cent of emissions, derived from the production of steel, aluminium, urea, cement and lime. These are expected to remain steady.

- Emissions from the transport sector are projected to rise to 78 per cent above 1990 levels by 2020. Road transport accounts for 91 per cent of them.

- The waste sector accounts for 2 per cent. Emissions are expected to decrease by 29 per cent in 2020 from 1990 levels. This is mainly because of the increasing capture and destruction of landfill gas.