Farmers are cautioned that despite being kept out of the Emissions Trading Scheme, there will be no free pass given by high value markets to allow emissions to continue unrestricted.
The government has confirmed agricultural ruminant emissions will be kept out the ETS, with a new Pastoral Sector Group established to develop a strategy to deal with pastoral methane.
Agricultural Minister Todd McClay said the government is committed to meeting climate change obligations without shutting down New Zealand farms.
“It doesn’t make sense to send jobs and production overseas while less carbon-efficient countries produce the food the world needs,” he said.
But Troy Baisden, University of Auckland professor and co-president of the NZ Association of Scientists, said farmers are being done no favours if there was no viable system put in place to help regulate and reduce emissions.
“The ETS is a mess, and it would be a bizarre directive to expose farmers to it. But if they are thinking they can rejoice , they need to think again.
“They may well come to prefer the NZ government comes up with a solution that works for them. They will not be happy if several hundred European diplomatic staff start working for the likes of Nestlé to impose rules on trade that make less sense than what our government and industry could come up with.”
He pointed to pressure already in place on Fonterra suppliers to deliver Scope 3 emissions reductions, directly resulting from overseas corporate expectations.
The decision to definitively keep farming out of the ETS confirms the death of He Waka Eke Noa (HWEN), in terms of which the primary sector was required to come up with a suitable split gas approach otherwise it would be included in the ETS.
Baisden said HWEN did provide an opportunity to come up with a workable solution, but it was difficult to know what level of tension there was between different pastoral groups that contributed to its ultimate failure.
Red meat producers wore the greatest impact on their profitability when a split gas pricing scheme was ultimately announced.
Professor David Frame of Victoria University agreed that a split gas approach outside of the ETS has to mark a way forward for agriculture.
“I am delighted that agriculture is no longer included in the ETS. However, the problem now is you do not have a big stick. The conversations we have to have now are the ones we should have had earlier.”
He said there are good ideas on how to better reduce agri GHGs, including some of the work by the Parliamentary Commissioner for the Environment, Simon Upton.
That included offsetting a portion of the national herd’s emissions with on-farm plantings. Farms that achieve reductions above and beyond their planted areas over time could then trade their “surplus” offsets in a type of cap-and-trade system.
However, before anything could be hammered out, Frame said, the obvious income inequality between drystock and dairy farmers has to be acknowledged and allowed for in policy and price settings.
“Otherwise, you run the real risk dairy farmers will simply buy up forest on drystock farms and have little incentive to make changes.”
Beef + Lamb NZ chair Kate Acland said the decision meets BLNZ’s argument that including agriculture in the ETS would be a disastrous outcome.
Welcoming the disbanding of HWEN, she said the red meat sector was prepared to be part of a new group discussing how to manage NZ’s agricultural emissions, but any involvement requires full transparency and discussion with its farmers.
“We will not allow this to be a repeat of the HWEN process.”
She reiterated that BLNZ does not support a price being placed on agricultural emissions to achieve reductions, claiming emissions reductions are already happening more quickly than needed.
“The significant decline in stock numbers as a result of afforestation in the last few years means our sector will likely exceed the current target of a 10% reduction in methane by 2030.”
