The partnership between the primary sector and the Government has come up with two options to price emissions, but the group says neither will see a significant reduction in emissions on their own, Marc Daalder reports

Putting a dollar price on emissions from agriculture won’t actually see them fall, according to He Waka Eke Noa.

The partnership between government agencies and primary sector bodies released two draft options for pricing agricultural emissions on Wednesday as alternatives to the sector being moved entirely into the Emissions Trading Scheme (ETS).

But neither of the two options, nor the ETS backstop, would be expected to reduce emissions by even 1 percent by 2030, modelling commissioned by He Waka Eke Noa found.

“These reductions are based on pricing alone. The majority of emissions reductions are expected to be achieved through recycling revenue into research and development, incentives to uptake technology, or actions on-farm that help reduce emissions,” the draft discussion document, which has gone out for targeted consultation, says.

Proposals criticised

Forest & Bird climate advocate Geoff Keey said the plans should be scrapped.

“He Waka Eke Noa had one job, to come up with an emissions reduction plan for agriculture that would cut emissions. They have completely failed. This plan is bad for the climate, bad for the future of farming, and taxpayers are going to have to pick up the tab,” he said.

“The agriculture industry has had over 30 years to deal with its climate problem. Once again they’ve failed, and now the Government needs to get on with the job agribusiness won’t do, and put them in an improved ETS.”

Greenpeace Aotearoa campaigner Christine Rose agreed.

“The He Waka Eke Noa voluntary partnership with big agribusiness polluters is like a round-table of greedy foxes discussing security measures for the hen house. It’s time to walk away,” she said.

“The dairy industry has shown that it will always resist measures to reduce emissions. Today’s proposal is just more of the same deflection and deferral and doesn’t stack up. The Government must get real and put rules in place that will actually reduce emissions. We know what needs to be done, Jacinda Ardern and James Shaw need to show some mettle, stand up to the dairy industry and include 100 percent of agricultural emissions immediately.”

The modelling was based on a scenario where emissions were charged at the ETS price and where they received a 95 percent discount from the start of pricing in 2025.

The actual details of how any levy would be calculated has yet to be settled, He Waka Eke Noa programme director Kelly Forster told Newsroom. But the price would be informed by both the need to incentivise farmers to reduce emissions and ensuring that agriculture remains productive and profitable.

“It’s really just the beginning [of consultation],” she stressed. More information, including on how levies might be calculated, would be distributed when industry groups took the proposals to their members in February. Later in 2022, the situation will be reviewed by the Climate Change Commission and Climate Change Minister James Shaw will then have to make decisions based on advice from the commission and from He Waka Eke Noa.

In comments to Newsroom, Shaw didn’t share his own view of the proposals but said he looked forward to the completion of the work.

“If we are to meet the climate targets we have set, we must tackle agricultural emissions – either through a new agricultural pricing mechanism, or by including agricultural emissions in the exiting Emissions Trading Scheme,” he said.

Farm- or processor-level pricing

The two options devised by He Waka Eke Noa each have their own benefits and costs.

The first option is a farm-level pricing scheme in which each farm would calculate its own emissions. A separate price would be charged on emissions of methane – a short-lived gas – than on nitrous oxide and carbon dioxide. Farmers would also get a discount on their levy for sequestration of carbon dioxide through vegetation that isn’t already eligible under the ETS.

Under the farm-level system, costs would increase for hill country and deer farmers, while dairy farmers would benefit, when compared with the costs of entering the ETS.

This option would reward farmers who have already reduced emissions on their farm, as they would have less to pay than others. However, it came with steep administrative costs - the annual price tag for running the scheme was some $113 million.

"The downside is that it is complex to implement a farm-level price across 25,000 farms," Forster said.

"There are some things that farmers can do to reduce emissions but we don’t have a whole lot of options on the table at the moment. There is a question of cost-benefit of implementing a farm-level system at the moment."

That spurred He Waka Eke Noa to look into a different system, in which levies would be charged at the processor level based on average emissions across the sector. Costs would then likely be passed through back to farmers. That strips out some of the incentive for reducing emissions on each farm.

However, this option would account for that by allowing farms to sign up to Emissions Management Contracts. This would recognise on-farm emissions reductions and sequestration, possibly through a rebate.

Forster said the focus was making a split gas pricing scheme work.

"That was one of the core principles for the partnership ... designing a pricing mechanism that could recognise the different characteristics of the different gases," she said.

It was also important to make sure that offset costs from sequestration represented real emissions reductions.

"Some of the things that you’re always trying to balance there are international principles around what’s called additionality - making sure that what we are rewarding is in fact credible, both at a domestic and at an international level - but also recognising where possible that the sequestration is real, it is really happening."

Forster said the discussion document, which is the first major release from He Waka Eke Noa since it was launched in 2019, was a "big milestone".

"Collaborating on the design of a pricing mechanism is challenging. You’ve got very diverse views sitting on that group," she said.

"There is a strong commitment to partnership and to providing a good alternative for farmers. It’s taken time, it has been challenging and everyone has had to make compromises along the way."

Marc Daalder is a senior political reporter based in Wellington who covers climate change, health, energy and violent extremism. Twitter/Bluesky: @marcdaalder

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