Primary sector climate action partnership He Waka Eke Noa has put forward its preferred system for how farmers will pay for their agricultural emissions instead of using the NZ Emissions Trading Scheme (ETS).
The Partners recommend a “farm-level split-gas” levy, meaning agricultural emissions are calculated and paid at the farm level, and the levy has different rates for short- and long-lived gas emissions. The Government will consider the recommendations and make a final decision at the end of this year.
The SMC asked experts to comment on the recommendations.
Dr Robyn Dynes, Senior Scientist, AgResearch, comments:
“As a food exporting nation, it is critical for the New Zealand primary sector to be taking concrete steps to reduce its agricultural greenhouse gas emissions. This proposed levy and approach recommended by He Waka Eke Noa (HWEN) provides a means to reduce emissions and support sustainable food production.
“This recommended pricing approach is part of a larger ongoing effort and investment over the last two decades by farmers, iwi, government and scientists to find solutions to help meet New Zealand’s targets for reducing agriculture’s contribution to climate change.
“By taking a farm-level, split-gas approach, it does allow farmers clarity on relative contributions to emissions within their own farming systems. It also gives them the ability to make changes and apply the greenhouse gas mitigations which will be most effective for their businesses, now and into the future as new mitigations come to market. This is important because we know the costs and imposition on farmers will vary significantly both across and within sectors.
“The recommended approach allows for ring-fencing of any levy revenue generated from Whenua Māori to be recycled back to Whenua Māori, which also allows scientists to focus on supporting Māori farmers and landowners to find climate change solutions that work for them.
“There are limited tools currently available to farmers to reduce their emissions and therefore levy costs. Existing options include low methane genetics in sheep developed by AgResearch in partnership with the government and industry.
“The encouraging thing as we look ahead is the signalled increase in investment coming from government and industry to accelerate the research and development of new mitigations, which may include methane and nitrous oxide inhibitors, new generation animal feeds that reduce emissions, and a methane-reducing vaccine. While the focus has been on methane produced by livestock as the largest single contributor to global warming from agriculture, we also need to recognise the role of nitrous oxide and ensure we are providing solutions fit for the spectrum of food and fibre producing industries.
“As we continue to engage with farmers, and develop and prove the efficacy of new tools, another important role for scientists will be gathering evidence to assist industry in understanding the potential to `stack’ these greenhouse gas mitigations and how much added value this might bring, including delivery to Essential Freshwater goals. One such example of stacking mitigations would be evidence of the size of the reduction in methane emissions where specialised feeds or feed additives are given to an animal that is already bred to produce less methane.”
Conflict of interest statement: “Colleagues and I at AgResearch have provided science advice to He Waka Eke Noa as part of its considerations and development of its recommendations to the Government.”
Emeritus Professor Ralph Sims, Sustainable Energy and Climate Mitigation, Massey University, comments:
“The He Waka Eke Noa analysis recommends individual farmers and growers use a calculator to assess their annual agricultural greenhouse gas emissions that each is responsible for. Biogenic methane is treated separately from long-lived nitrous oxide and carbon dioxide – with the latter only considered from urea manufacture. Carbon dioxide emissions from any fossil fuel energy sources used on farms are excluded; such as from diesel in tractors and harvesters, electricity in milking sheds and for water pumping, LPG for grain drying, coal or natural gas for heating greenhouses and other farm buildings.
“The levy to be paid by each farm business based on their emissions is assessed using set prices that rise. The annual levy paid can then be lowered by reducing emissions as well as sequestering carbon (e.g., through forest sinks).
“In the modelling used in the analysis for example, for the long-lived gases, a levy of $4.25/t CO2-eq in 2025 rising to $13.80 /t CO2-eq by 2030 is assessed to reduce emissions by 3% below 2017 levels across the sector in 2030.
“Given the current market price for carbon is over $75/tCO2-eq and rising, and the Government’s target for long-lived emissions in the Emissions Reduction Plan is net zero emissions by 2050, there appears to be a significant gap in what might be needed.
“The terms ‘renewables’, ‘hydrogen’, ‘biogas’, ‘bioenergy’, ‘solar’, ‘agrivoltaics’, ‘precision farming’, etc., are not mentioned at all – even though many landowners could in future diversify into such innovative land use areas of revenue generation and utilise currently available technologies more widely as is the case elsewhere in the world. Landowners could then gain credits from such on-farm activities.
“After many years of inaction by the agricultural sector, at least this analysis of emissions pricing through the industry partnership seems to show there is now a greater agreement across the industry that agricultural emissions actually have to be reduced.
“The global food supply system produces around one quarter of total greenhouse gas emissions with around half arising from behind the farm gate. Food systems cannot be exempted from significantly reducing emissions if the UN target of staying below a 2 degree Centigrade temperature rise is to be achieved. Forest sinks are at most only a temporary measure to buy some time whilst domestic emissions are reduced.
“Given that changing climate is already resulting in an increasing frequency and magnitude of extreme weather impacts, with droughts, floods, storms, etc. already being experienced in many regions, the farming sector has more to lose than most from the ever-increasing atmospheric concentrations of greenhouse gas emissions.
“It seems surprising therefore that these recommendations for pricing emissions and incentivising their reduction are not far more ambitious.”
No conflict of interest.
Honorary Professor Troy Baisden, Te Pūnaha Matatini Principal Investigator, Motu Affiliate, and University of Auckland School of Environment, comments:
“The He Waka Eke Noa emissions pricing proposal represents an approach designed to work for a majority of farmers, in a way that may also work with regulations designed to reduce impacts on water quality. A possible problem with the scheme is that it doesn’t encourage, and could hinder, radical innovation that doesn’t fit the calculators created, or that doesn’t benefit from the revenue recycled into research for the existing sector.
“Overall, there are reasons to think that the agriculture sector’s role in designing the emissions levy may make this proposal more effective than rules that would include agriculture in the ETS, if ETS pricing is unpredictable and its machinery is complicated to understand.
“The proposed levy’s recognition of the emission sources of the greenhouse gases with different characteristics and timeframes is a simple step toward understanding and controlling emissions. It would reward farmer-led innovation that reduces calculated emissions – as opposed to the default approach – which doesn’t reward farmers who produce more per unit of emissions. The proposed levy calculations may interact sensibly with water quality policies, since nitrate in water shares is driven by the same on-farm nitrogen excess as nitrous oxide emissions.
“The system’s approach of creating incentives for practices designed to reduce emissions follows the blueprint of policies that have worked for farmers facing environmental issues internationally and includes oversight so it can improve over time. It appears to keep the accounting and calculators reasonably simple, so they’ll be correct on average and encourage farmers to take the right actions with some flexibility.”
No conflict of interest.