Point of Order: Pricing farm emissions

It’s great to enable NZ to boast a world first – but how much culling must be done to achieve it?

The Ardern government is claiming a world first in its policy to cut agricultural emissions.

Prime Minister Jacinda Ardern asserts that its proposal “delivers a competitive advantage, enhancing our export brand”, and…

“No other country in the world has yet developed a system for pricing and reducing agricultural emissions, so our farmers are set to benefit from being first movers.”

Farmers themselves may be bemused, if not bewildered, by the Government’s spin because critics claim the scheme aims to reduce sheep and beef farming in New Zealand by 20% and dairy farming by 5%, to achieve what Federated Farmers labels “the unscientific pulled-out-of-a-hat national GHG targets”.

Agriculture Minister Damien O’Connor seeks to put the best face he can on the government’s policy, saying that

“… by rewarding farmers who take action to cut their emissions we can support more farmers to improve their productivity and profitability while achieving climate goals.

“The government is already supporting farmers by investing in the development of high-impact technologies and practices, including the establishment of the new Centre for Climate Action on Agricultural Emissions to shift the dial on climate friendly farm practices, he says.

“Farmers are already experiencing the impact of climate change with more regular drought and flooding.”

O’Connor insists that taking the lead on agricultural emissions is both good for the environment and our economy.

Neither Ardern nor O’Connor, however, have a convincing argument to explain why NZ farmers should be world leaders in cutting methane emissions, giving a competitive advantage in world markets to (for example) Australian farmers.

Ardern may even provoke a hollow laugh when she says:

“The proposal aims to give New Zealand farmers control over their farming system, providing the ability to reduce costs through revenue raised from the system being recycled back to farmers, which will fund further research, tools and technology and incentives to reduce emissions. It would see New Zealand farmers lead the world in reducing emissions, delivering a competitive advantage and enhancing our export brand”.

Federated Farmers national president Andrew Hoggard says he is “deeply concerned” for his members’ futures.

“We didn’t sign up for this. It’s gut-wrenching to think we now have this proposal from government which rips the heart out of the work we did. Out of the families who farm this land.

“Our plan was to keep farmers farming. Now they’ll be selling up so fast you won’t even hear the dogs barking on the back of the ute as they drive off.

“Some overseas buyer can plant trees and take the carbon cash.”

The scariest impact from the government’s rehash of the He Waka Eke Noa proposal was that it’s own modelling showed the impact on sheep and beef farming would be as high as 20%, Hoggard says.

It also shows that world agricultural emissions would increase, not decrease, under this plan.

“The government’s plan means the small towns, like Wairoa, Pahiatua, Taumaranui – pretty much the whole of the East Coast and central North Island and a good chunk of the top of the South – will be surrounded by pine trees quicker than you can say ‘ETS application’.”

The ACT party senses an opportunity to seize the high ground in rural regions. It says:

“These proposals are a hammer blow to rural communities for no benefit to the environment. ACT supports practical emissions reduction policy instead.”

ACT’s agriculture spokesman Mark Cameron says:

“Only Labour and the Greens could devise a climate change policy that inflicts massive economic damage to the economy.

“Farmers are the victims of the government’s obsession with overseas plaudits, the Prime Minister wants to go on the world stage and say that New Zealand is the first country to price agricultural emissions. She won’t admit that her government’s proposal only leads to more emissions.

“The point of He Waka Eke Noa was to help farmers to enter into an emissions pricing scheme with confidence in both better technological and productivity outcomes and reductions in overall emissions. Instead, Labour and the Greens have devised a scheme that will drive up global emissions and inflict massive economic damage to New Zealand.”

Under the proposals most sheep and beef farmers would be better off cashing up by selling their land for permanent carbon storage, Cameron says.

Many meat processors would shut down, collapsing many small regional towns, he predicted.

“Kiwi farmers are the most emissions-efficient in the world and they’re not praised enough for this, but there’s more work to be done and ACT recognises that emissions reductions are key to the sector’s future.”

ACT says the focus should be on working with the primary sector on more accurate measurement and management frameworks for methane emissions and ensuring there are no barriers to the uptake of new emissions reduction technologies.

“This means taking into account that short-lived gases like methane and long-lived gases like CO2 have different warming impacts, as currently climate change experts from the New Zealand Climate Change Research Institute at Victoria University estimate the Government is overstating the impact of methane by up to four times.”

ACT would:

* Make offshore methane-mitigation technologies available in New Zealand

* Reform Hazardous Substances laws to reduce barriers to genetic technologies that reduce emissions

* Recognise all carbon sequestration in emissions calculations

* Adopt an emissions target recognising methane’s true contribution to warming

The government’s proposals were described as a hammer blow to rural communities for no benefit to the environment.

“ACT supports practical emissions reduction policy instead.”

The National Party’s Barbara Kuriger says the government’s policy threatens the sector consensus by failing to recognise New Zealand farmers are already the most carbon efficient in the world.

“We are concerned that today’s announcement puts consensus at risk.”

She referenced Government figures which indicate:

* Sheep and beef farming could reduce by 20% and dairy by 5% by 2030

* Two-thirds of the reduction in emissions in New Zealand will be undone by higher emissions overseas as jobs and production shift offshore

* The plan does not allow farmers to earn extra income from some forms of on-farm planting and carbon capture.

“Worryingly, the large falls in sheep production in New Zealand could lead to higher global emissions as more sheep production moves overseas to less-efficient farms”.

In the NZ Herald, science writer Jamie Morton explains that the government has proposed separate levy prices for long-lived gases and biogenic methane, in line with the “split-gas” approach it has taken under its Zero Carbon Act.

Introducing these new levies, it says, would be enough to meet its target of bringing biogenic methane emissions down to 10% below 2017 levels by 2030 (later to be scaled up to a 24 to 47% reduction by 2050).

While long-lived gas prices will be set annually and linked to that of New Zealand Units within the ETS, these would be discounted and phased down over time.

The levy price for biogenic methane, meanwhile, would be a unique one based on progress toward domestic methane targets – and the government is consulting on whether this should be reviewed every three years.

The price itself was another question: in its own proposals put forward in June, He Waka Eke Noa recommended one of 11 cents per kilogram of biogenic methane.

That’s equivalent to about $3.93 per tonne of carbon dioxide equivalent (CO2-e) – and much lower than prices prevailing in the NZ Emissions Trading Scheme, now around $85 per tonne CO2-e.

While that was in contrast to what our independent Climate Change Commission suggested – it favoured a high-price model, but one with structured assistance – the Government saw He Waka Eke Noa’s overall pricing approach as the best one.

It said a final decision on pricing, however, would be informed by advice from the Climate Change Commission and set following consultation with iwi, Māori and the sector itself.

Farmers and growers would meet the threshold for pricing if they had at least 50 dairy cattle or 550 stock units (inclusive of sheep, cattle or deer), or applied more than 40 tonnes of nitrogen through synthetic nitrogen fertiliser.

Revenue from the pricing system would mostly go toward funding “incentive and sequestration payments” to support farmers taking mitigation measures to slash their emissions, with the rest paying for its administration.

The Government is also looking at two options to price emissions sourced from synthetic nitrogen fertiliser: pricing them at farm level and including them within a farmer’s emissions bill, or requiring manufacturers and importers to pay for emissions through the ETS.

Agricultural emissions mainly come through methane – burped out by ruminant livestock like cattle, sheep and deer – but also from nitrous oxide, via sources like fertiliser and urine.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton