The Government has released the reports from the Interim Climate Change Committee, along with details on how it plans to respond to the recommendations.
A core recommendation stresses the need to see on-farm emissions accounted for and priced by 2025.
The committee recommends developing a fund to build the skills and technologies farmers will need to measure and manage their on-farm emissions. Farming leaders are offering an alternative sector-led proposal, which it would manage, to get the agricultural sector into an emissions pricing system by 2025.
The Government is seeking public feedback on the options, and plans to hold sessions around the country until August 13.
The SMC asked experts to comment on the reports and the Government’s consultation document, all released today.
Ivan Diaz-Rainey, Director, Climate & Energy Finance Group (CEFGroup), University of Otago, comments:
“We have two reports from Interim Climate Change Committee; one on electricity/energy and one on agriculture. Both help map out the future in their respective sectors. The agriculture report suggests the way forward in terms of pricing agricultural emissions. The suggested approach is through a farm-level levy/rebate scheme – if you were paying attention on the announcement last week on car importation then this should sound familiar. I think going for a farm level levy/rebate scheme is a much more sensible option than adding farm level agricultural emissions to the NZ ETS – farmers have enough price risks (price of feed, electricity, fuel and of their inputs as well as their outputs; price of milk, beef meat etc.) to worry about than to add carbon price risk to the equation. It is envisaged that this levy/rebate scheme will not come in until 2025. It is also nice as it provides carrots as well as sticks. I do wonder if the 2025 farm-level levy/rebate scheme will ever get implemented, however – there will be two elections in between which makes it all seem very aspirational.
“To ensure the sector starts mitigating before 2025, it is proposed ‘that agricultural emissions be priced through the NZ ETS at processor level as soon as practicable, ideally from 2020’, and that ‘fertiliser manufacturers and importers should also be fully included in the NZ ETS to cover emissions from nitrogen fertiliser’. This seems sensible and is probably the more tangible recommendation in this report with implications for the NZ ETS in the near term if implemented.
“The energy report raises the question of how achievable the 2035 100% renewable target is; suggesting getting to 100% may be very expensive, but a slightly lower target could be achievable at a reasonable cost e.g. 98% or so. This is all about dealing with dry years when there is less stored electricity in our hydro lakes. The report sensibly suggests not obsessing with 100% renewable and rather focusing more on electrification of transport and process heat with associated large carbon savings, all done at reasonable cost.
“So the bottom line is: let’s do electrification of transport and process heat which would yield big carbon savings but we may need some thermal generation for dry years. This is all very sensible based on current technologies but I suspect by 2035 100% renewables would be achievable economically even with transport and process heat increasingly electrified. There is a revolution in energy storage technology investment and cost reductions which are yielding dramatic result now. By 2035 there will no doubt be affordable solutions available even for long term storage e.g. hydrogen.
“This is not just a New Zealand problem. For instance, California, which has a huge industrial load has committed to 100% by 2045. Silicon valley Venture Capital and the R&D communities are focused on energy storage solutions – both long and short term storage. I would put money on them yielding affordable solutions to longer term storage within the next 15 years. Not because New Zealand needs it, but because lots of large economies need it.”
Conflict of interest statement: I do unrelated research work with Energy Link Ltd. – which did some of the modelling for the ICCC electrification report.
Professor Justin Hodgkiss, Co-Director, MacDiarmid Institute for Advanced Materials and Nanotechnology, comments:
“The ICCC report on accelerated electrification models different technological scenarios, ranging from business as usual, to rapid uptake of new, more effective technologies (including batteries and solar).
“The investment the Government is already making into deep research in materials science will position New Zealand to lead research into the hi-tech innovations the ICCC report discusses.
“Our work in the MacDiarmid Institute will contribute to the IP and innovation options NZ needs for the 10 and 20 year horizons, including that on:
- next generation solar photovoltaic materials;
- new types of batteries that can be deployed in the home or at the grid level to buffer the intermittency of renewable energy sources;
- hydrogen technologies, including electrolysis.
“The price of batteries, for example, is noted to be falling rapidly, and could be an essential component of an expanded renewable grid, complementing intermittent solar and wind sources. Hydrogen was found to be not yet cost effective, due to the current inefficiencies of producing (vie electrolysis) and storing hydrogen, but this was highlighted as an active R&D area where innovation could significantly change the options on the table.
“Capturing the benefits of the higher innovation pathway in the long run (e.g. cheaper solar, batteries, and hydrogen options), and ensuring that these costs are equitably shared, require commitment to R&D investment in the near term.”
Conflict of interest statement: The MacDiarmid Institute is a government Centre of Research Excellence.
Catherine Leining, Policy Fellow, Motu Economic and Public Policy Research, comments:
“There are four rationales for pricing agricultural emissions: encouraging lower-emission land uses, improving farm practices and technologies, distributing GHG target costs, and influencing consumer choices. The ICCC’s report considers how we can best use emission price incentives to align our agriculture sector with global decarbonisation.
“In December last year, the Biological Emissions Reference Group reported that there are technically and economically feasible options for reducing agricultural emissions using available technologies. Some of these face price and non-price barriers. Overcoming these barriers is where policy needs to focus first while technology development continues. Mitigation action for agricultural emissions does not have to wait, and emission pricing alone will not be enough.
“For fertiliser emissions, processor-level pricing is the obvious choice for both administration and effectiveness. For livestock emissions, the choice is more complicated. A clear message from the ICCC, the sector, and researchers is that changes in on-farm practice need an on-farm price signal and other measures to address non-price barriers. It is encouraging that both of the options in the Government’s consultation document would provide an on-ramp to on-farm emissions measurement, reporting, and pricing by 2025. Hopefully, both options would help reduce agricultural emissions pre-2025; if not, this burden would fall to other sectors or taxpayers.
“Under both consultation options, the government will need to align agricultural emission pricing with New Zealand’s emission reduction targets under the Zero Carbon Bill and the Paris Agreement, and design free allocation rules that incentivise both land-use change and improvements in on-farm practice and avoid significant emissions leakage overseas. It is important to note the government’s cost projections in the consultation document assume an emission price of NZ$25 per tonne, which is not in line with New Zealand’s targets under discussion.
“The key difference between the consultation options is how soon the agriculture sector would face a price. Under the Government’s proposal, pricing for both livestock and fertiliser emissions would begin at the processor level in 2021 with 95 per cent free allocation and revenue returned to the sector, and livestock emission pricing would shift to the farm level in 2025 with no change for fertiliser. Under the sector’s proposed formal agreement, sector-led initiatives would prepare farmers for emission pricing starting in 2025.
“Processor-level emission pricing from 2021 would impact immediately on land-use and consumer decisions to help reduce emissions, reinforce the credibility of the longer-term price signal, accelerate administrative preparations, and supply a pool of funding for sector investment and upskilling. It could also be paired with on-farm incentives. The measures in the sector-led approach would make an outstanding contribution to New Zealand’s low-emission transition if they were adequately funded, technically supported, and widely adopted. Can we be bold enough to launch a future where sector leadership and government pricing work together for mutual gain?”
No personal conflict of interest. Former Motu Senior Fellow Dr Suzi Kerr was a contributing author to the report of the Interim Climate Change Committee.
Professor Tim Payn, Chair of Sustainable Forestry, Toi Ohomai Institute of Technology and Scion, comments:
“This is a very clear, and comprehensive report which presents a series of recommendations couched within an ‘enabling environment’ frame, the committee frequently uses terms such as encourage, assist, motivate in the report and have developed a set of recommendations that are clear, transparent and actionable and will give farmers autonomy over choice of what actions to take to transition to a lower emissions profile.
“Simplicity and ease of use of any systems developed is another flavour that comes through the report – even though there is much underlying complexity in the emissions reduction area.”
Improved training and extension services
“Wide ranging consultation and discussion is apparent in the preparation of this report. One especially important area of engagement that the committee recognises is with youth, and they have specific recommendations about embedding climate change topics into vocational training and academic curricula. This is extremely important given the high average age of farmers and rapid technological changes in the agricultural sector. I would suggest also including school programmes, especially in rural areas, in their recommendations would be useful. Intermediate school age is when students often are most receptive to science and are making choices for their future study directions.
“Extension programmes are also very important – providing information on the topic in an easy to use form. One thing we have noted within Scion in the last year or so is a very large increase in interest in information on tree planting. A topic not often covered by farm advisers, but more specialist forest consultancy groups. Given the interest by farmers at looking at the farm emissions system as a whole, including the trees on the farm, we should work out how best to integrate tree or forest mitigation related information into the wider agricultural extension services.”
Trees on farms and ‘Netting off’
“It is excellent to see trees incorporated explicitly into the farm system (e.g. Figure 3.2), and significant consideration of this by the committee. Accounting for all emissions and sinks on a farm is attractive and bringing trees into the farm system makes sense. In the past, forests have been seen as separate to agriculture, technology has limited our ability to estimate carbon on some types of tree plantings, and Kyoto rules have limited ability to ‘count’ and report the carbon. However, new technologies such as remote sensing are advancing rapidly which will enable estimation of carbon even down to the individual tree level. From a farmer perspective the ability to use carbon fixed by trees on your farm to ‘nett off’ your emissions is likely to be very attractive, as long as measuring the carbon in your trees is easy and cheap, and it is straightforward to engage with the NZ ETS. This area is well worth exploration and development of systems for a range of tree species.”
Impact on rural communities
“The report notes the importance of policy settings effects on rural communities and the risk of negative impacts if there is rapid land use change, especially to forestry. This risk can be minimised if trees and forests are seen as a complementary, and on farm, land use and form part of the overall farm emissions picture. Significant areas of trees could be incorporated onto appropriate parts of farms without necessarily adversely impacting farm profitability and also having beneficial effects through diversification of farm value chains. It is good to see this perspective coming through in the report. To make the most of these opportunities and minimise negative impacts, cooperative farmer group initiatives within catchments or regions, linked to forestry groups such as regional wood councils would be beneficial.”
No conflict of interest.
Dave Frame, Professor of Climate Change, Victoria University of Wellington, comments:
“There has been much progress on climate issues in the past few years. The architecture of the Paris Agreement, its signing, the maturation of the ETS and the bipartisan parliamentary commitment to climate mitigation are all significant steps forward. The development of different perspectives for how agriculture can play its part in achieving good climate outcomes has also been an important step forward. The commitment to a net zero carbon dioxide (CO2) future is the central, vital piece of the picture, and there is now consensus around that as a long-term goal. The final thing to acknowledge, and celebrate, is that there is a very broad consensus that agriculture should be subject to climate policy. The ICCC should be congratulated for their part in developing that consensus.
“In view of these encouraging developments, the ICCC’s report on agriculture is unconvincing. It advocates an outmoded Kyoto-era approach to a Paris-era problem.
“The ICCC’s approach of putting methane in the ETS with a 95 per cent free allocation for farmers is a poor idea. It is unsatisfying environmentally, because it fails to sufficiently penalise new ruminant methane emissions, and it would not sufficiently reward the climate effects of declining ruminant methane emissions. The price implied by the ICCC’s recommended approach is too small a disincentive against further expansion of the dairy herd, because the price is simply too small to change behaviour.
“It should also be unsatisfying to farmers, because it perpetuates the myth in the public mind that the effects of ruminant methane are fungible with those of fossil CO2. They are not. Under the ICCC’s recommendation, the public will still get the impression that farmers are getting away with 95 per cent of their climate change emissions; when in fact the whole way of comparing the effect of different gases needs updating.
“The ICCC’s discussion of methane in chapter 3 is weak, failing to make the point that declining emissions of methane reduce warming, which is the main insight in the relevant science over the past few years. Similar obsolescence is also evident elsewhere: the report states: ‘New Zealand cannot wait until 2025 for the agriculture sector to contribute to efforts to reduce emissions’. This is true of nitrous oxide but not of methane. The long run effect of a decrease in methane is the same whether you make a cut now or whether you make it in ten years’ time.
“In the past year many individuals and public bodies made sophisticated arguments argued for separate treatment either of ruminant methane or of land-sector emissions. The ICCC’s one-basket approach is actually something of an outlier. Other bodies looking at the issue over the past year have argued for a ‘two-baskets’ approach, including the Productivity Commission, Parliamentary Commissioner for the Environment, Scion and NIWA.
“Yet there is a great deal of silver lining: the Government is seeking further inputs before deciding. This is good call. It creates the space for a further conversation about the issue, presumably because they believe that all those ‘two-basket’ voices have something to offer. My hope is that this, and the formation of a new Commission, will be a good opportunity for fresh thinking and fresh voices, more suited to the Paris-era of climate policy, to come through.”
No conflict of interest.
Dr Andrew Tait, Chief Scientist for Climate, Atmosphere and Hazards, NIWA, comments:
“The Interim Climate Change Committee (ICCC) acknowledges that farmers must be properly equipped to play their part to bring agriculture into New Zealand’s emissions trading scheme.
“NIWA has significant experience measuring paddock-scale greenhouse gas emissions and is ready and willing to contribute to the design and implementation of an effective and efficient on-farm monitoring scheme for all New Zealand farmers.
“While farmers – and the Government – want emissions to be calculated at the farm level where they have the most control over how they can manage their own emissions, this is going to be a massive challenge. It will require both bottom-up (farm-level) measurements and top-down (what the atmosphere “sees”) modelling. NIWA is already undertaking a large modelling and measurement project to better understand where our emissions are coming from as well as how much of these emissions are being taken up by forests and plants.
“Accounting for on-farm emissions and pricing them by 2025 is a short timeframe, but NIWA agrees there is an urgent need to design and implement a well-functioning accounting scheme that will provide farmers with the data to consider their emissions-reduction activities, and importantly, to be used to monitor the effectiveness of their actions.”
“Average climatic conditions for wind, solar and hydropower generation are available for any location in New Zealand, but more detailed information is still needed on the minute-to-minute, day-to-day, month-to-month and year-to-year variability of these renewable resources to optimise their potential.
“Furthermore, NIWA is modelling how these energy-generation resources might change in the next 20, 50 and 100 years – the lifetime of most renewable energy infrastructure – to maximise the likelihood that present-day investment in renewables will provide the desired benefits for decades to come.
“The ICCC comments on the need for additional renewable generation like wind and solar power as well as other options such as a pumped hydro scheme to cover dry years. NIWA already provides guidance to energy companies on the likelihood of dry seasons and years. This information helps generators manage their resources and optimise their energy production.
“NIWA’s weather forecast model, run at 1.5km resolution every 6 hours, is currently being used to create an historical 30-year high-resolution weather dataset for the whole country.
“When complete, the dataset will be the ultimate source of climate information for testing renewable energy generation potential anywhere in the country – and importantly, testing how the mix of current and future generation schemes can be run optimally to secure electricity supply on days when the wind isn’t blowing or the sun isn’t shining or when the hydro inflows are low. The data will be a game-changer for renewable energy system design and management in New Zealand.”
No conflict of interest declared.