Govt Hits Farmers with a Sledgehammer

Robin Grieve
Owen Jennings
Facts About Ruminant Methane
F.A.R.M Newsletter

You will undoubtedly have been shocked Tuesday to learn of the Government’s proposals for dealing with agriculture‘s Greenhouse Gas emissions.

After 30 years of demands, discussions, Parliament’s failure to create a sensible framework, months of work in HWEN dominated by levy bodies who lost the plot focusing on pricing emissions instead of reducing them and the unrealistic interventions of the Climate Change Commission we have ended up with a bureaucratic, cumbersome and totally unnecessary proposal.  We share your frustration, particularly as it comes on top of a raft of regulations, loss of property rights, costly dead weights lumbered onto your balance sheet.

Here is a short Press Release we made.   Further down is a synopsis of the current political situation in some depth.  You will hear more from us shortly.

Government takes Sledgehammer to Productive New Zealand.

The Government has shown it is more interested in methane optics – being first in the world to tax farmers – than it is in cost-effective solutions.   It is creating a huge totally unnecessary bureaucracy, putting farmers under even more regulatory and time-wasting pressure to achieve very little.  It is promoting trees at the expense of livestock, gutting rural communities, establishing eyesores that will blight our hills for decades to come as many trees will never be harvested.

The Government, He Waka Eke Noa, farm industry leaders and even the Climate Change Commission have become obsessed with pricing methane at the expense of reducing it.

After 30 years of demands, discussion and screw-ups by Parliament all that has been produced is a hotchpotch of bureaucratic and dangerous taxes.

It is time for government to stop talking to industry levy bodies who saw a chance to build a levy fees empire and engage with farmer political organisations only.

Summary of Political Situation regarding Livestock Emission Pricing.

Under the Climate Change Response Act, a system for pricing agricultural emissions needs to be in place by 1 January 2025, unless delayed by the Minister.

The Government is considering an alternative pricing system to the ETS and the He Waka Eke Noa  (HWEN) option.  It must report on any alternative system to the ETS for pricing emissions by the end of 2022.  An interim position has just been announced and submissions are requested. The interim document indicates the Government is more determined to price emissions than reduce them.

The Climate Commission in a report on the readiness of farmers and the Government for any pricing scheme made these recommendations.
See https://www.climatecommission.govt.nz/our-work/advice-to-government-topic/agricultural-emissions/

• Agricultural emissions of methane should not be included in the ETS at either processor level or at farm level. (1)
• A detailed system outside the ETS is the best approach but farmers and the Government will not be ready for such a scheme by 2025.
• Farmers and the Government can be ready for a basic pricing system but while this may incentivise land use change it will not provide incentives for farmers to reduce emissions in any other way
• The alternative pricing scheme HWEN, should be changed to not include the ability of farmers to get credit for on farm vegetation within the scheme.
• The ETS should be changed to allow more on farm vegetation to be included in the ETS.
• Nitrous oxide emissions from fertiliser should be included in the ETS at processor level as soon as possible. (2)

F.A.R.M.’s analysis of the situation is that neither the ETS nor HWEN, nor the Government proposal on pricing agricultural emissions are viable options for politicians to rely on for pricing methane emissions. The Climate Commission has ruled out the ETS.  HWEN was forced on farmers under threat of being put in the ETS. With that threat gone and the changes the Climate Commission recommend making it even less palatable to farmers than it was before, it should be scrapped.  It has no validity. It was not a good scheme in the first place and what little farmer support it had will be even less now. The Government has no legitimate pricing system options to consider and decide on by the end of 2022 as it is legally required to have.

Actions suggested:

• The legislation needs to be changed to remove the requirement for ruminant methane to be included in the ETS by 2025.
• The New Zealand Government needs to immediately seek changes to international carbon accounting rules to recognise on farm mitigations for nitrous oxide, which the Climate Commission report identifies they lack.  (3)
• The New Zealand Government should be seeking changes to the international carbon accounting rules to recognise the scientific and significant differences between short lived gases and long-lived gases. These differences need to be fully reflected in policies.
• The goal of climate policy is to achieve net zero emissions, yet what ‘net zero’ means is not well understood regarding methane emissions in a split gas system. The Government appears to have no idea what net zero methane is. Having adopted a split gas approach to climate policy what ‘net zero’ is for each gas must be defined. The Climate Commission needs to be asked to advise on this.

The ETS and HWEN and the Government’s pricing proposal are designed primarily to price emissions, not reduce them. That is their limitation. None of these options will result in meaningful reductions in emissions. Designing a scheme that is primarily focused on reducing emissions should be the focus of the Government and all options should be on the table, not just pricing. Cap in trade systems, tradeable methane quotas, financial incentives and other options exist. The Government acknowledges the benefits of a tradeable methane quota and its opposition to such a scheme lacks credibility.

The legislation needs to be changed to allow a farmer representative body (not a levy paid group) to engage with the Government to develop a scheme that will achieve the legislated emission reductions.
The methane reduction targets as legislated are not justified in terms of halting methane’s contribution to global warming. The Government’s official position on methane’s contribution to global warming is outlined in the Ministry for the Environment consultation document for the Climate Change Response amendment bill (carbon zero) and states that when emissions of methane are stable, “they do not contribute to any further increase in global temperatures”. The only reason given by the Climate Commission to reduce methane is to offset CO2 emissions. This confirms that methane reductions are a benefit to CO2 emitters.

• Action. The Government and the Climate Commission need to explain why if farmers are placed in any pricing scheme, they should pay to benefit CO2 emitters?
  
• The Climate Commission has stated that “agricultural emissions pricing is an important tool to deliver emissions reductions Our advice is that a farm-level pricing system, supported by well-designed, well-thought-through policy, will be key to achieving emissions reductions in line with the budgets and targets for Aotearoa.” Yet the Commission has not been able to provide this advice under OIA requests.
  
• Action. The Climate Commission must be asked to provide all advice it has received on pricing agricultural emissions and as well as that, all advice it has received or sought on any other possible options to bring about agricultural emission reductions. If the Commission has not sought advice on possible mechanisms other than pricing it needs to explain why it has not. It also needs to be asked to provide its evaluation of alternative mechanisms and give reasons why a pricing mechanism is what it recommended.

(1) The Commission states that processor level involvement in the ETS will not incentive the actions that are needed on farm to reduce these emissions. It also states that on farm involvement in the ETS is not practical because the ETS was not designed to be able to cope with individual farms participating in the scheme. This is an obvious failure in the legislation that enacted the ETS.

The other concern the Commission has is that if farmers reduce emissions by more than 5%, they will benefit financially from the free allocation that farmers will receive in the same way other trade exposed industries that reduce emissions do. The Commission advocates using a pricing scheme to incentivise emission reductions but does not want farmers to benefit financially if they reduce emissions. This position by the Commission is a little strange considering a pricing scheme is all about financial incentives.
By stating that these livestock emissions should not be put in the ETS the Commission puts paid to decades of controversy and this should bring in to question the credibility of all those who have advocated for these emissions to be included in the ETS.

(2)  Nitrous oxide emissions from fertiliser are less than 20% of farm nitrous oxide emissions and splitting obligations for one greenhouse gas across two systems is a desperate move by the Climate Commission which is determined to do something but has little answers when it comes to nitrous oxide emissions. The Commission recommendation is based on two factors.
A. On farm mitigation options are not well understood. This represents a failure of science to understand nitrous oxide emissions and suggests more research is needed or those involved in this research need to be held to account for the quality of their research so far.

(3) B. International carbon accounting rules do not recognise the on-farm mitigations that are known. This is a failure of the carbon accounting system, and the New Zealand Government must hold to account those who have failed to deliver a fit for purpose carbon accounting system and seek changes. It should also seek advice from the Climate Commission on what changes are needed and why it has not recommended that these changes are made to the system
Parliament so far in terms of livestock emissions has:

• Adopted climate policy that uses a carbon accounting system which overstates the impact of ruminant methane by several hundred per cent if not more
• Adopted carbon accounting rules which do not recognise real measured on farm mitigations for nitrous oxide emissions
• Adopted an all gases all sectors emission trading scheme which was not fit for purpose.
• Adopted a spilt gas approach to climate policy with the goal of net zero emissions by 2050, but it has not defined what net zero methane emissions are.

Farmers and the people of New Zealand are being let down by all these failings by the New Zealand Parliament, we urge parliamentarians from across the house to recognise this and engage with farmer representatives to start the process of fixing past mistakes and deciding a path forward. The Government proposal to price agricultural emissions, if adopted, will be another failure by the New Zealand parliament to introduce sound and credible climate policy as it relates to livestock emissions.