Analysis: The National Party’s plan to price climate pollution from livestock kicks the can down the road another five years.
Currently, pricing is set to take effect from the beginning of 2025, but Christopher Luxon said on Monday the party would legislate to change that deadline to “no later than 2030”, if elected. That would be yet another setback in the decades-long debate over making farmers pay for their climate pollution.
The first price on agricultural emissions – the so-called fart tax under Helen Clark’s government – was originally set to take effect from mid-2004. When that was defeated, agriculture was given until 2012, when it would enter the Emissions Trading Scheme. In 2008, National postponed that entry date indefinitely.
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In 2019, the Government and primary sector leaders announced an agreement to price emissions from 2025. The He Waka Eke Noa partnership was set up later that year in an effort to find a way to price emissions outside of the Emissions Trading Scheme.
National’s policy has been welcomed by the primary sector, which had bristled at the Government’s own extraordinarily generous offering. The Government’s policy would have outright paid farmers to reduce emissions, with the Treasury and Climate Change Commission saying they doubted it would actually work.
Delaying the introduction of pricing will threaten the country’s ability to meet its 2030 target for biogenic methane emissions, which includes waste and agriculture. That target requires biogenic methane in 2030 to be 10 percent below 2017 levels.
Projections released by the Climate Change Commission earlier this year show, even if waste emissions are reduced in line with its advice, the target will not be reached under current policies for agricultural emissions. Biogenic methane in 2030 would be only 7.7 percent below 2017 levels.
Agriculture spokesperson Todd McClay said National hopes to bridge the gap by relaxing limits on genetically-engineered and genetically-modified technologies in New Zealand, which could potentially cut emissions from livestock. But if they were confident these technologies would work, there would be no need to delay the pricing until 2030. And without the price as an incentive, there’s little reason for farmers to spend money to adopt these technologies, even if they eventuate.
Lowering ambition
Instead, the policy shows National has little intention of meeting the current 2030 target. It will “review methane targets in 2024 for consistency with no additional warming from agriculture”. A review of the methane targets is already required by the Zero Carbon Act, but re-aligning them to a level consistent with “no additional warming from agriculture” is new.
It happens to be exactly what the big three primary sector groups – Federated Farmers, Dairy NZ and Beef + Lamb – called for last year. On Monday, Fed Farmers highlighted this part of National’s policy in particular, in a victorious press release.
“Farmers would be particularly pleased to see a firm commitment to review the current unscientific and unrealistic methane reduction targets that could only have been achieved through unacceptable reductions in sheep, beef and dairy production,” the organisation wrote.
The 10 percent target by 2030 – alongside the 2050 target of a 24-47 percent reduction from 2017 levels – was based on pathways outlined in the IPCC report on limiting warming to 1.5C. These seek to reduce warming from methane, which will have a faster cooling effect on the atmosphere than cutting carbon emissions.
Targeting no additional warming from methane is a low bar, locking in a vast amount of historic heating from New Zealand’s farming sector that exceeds the rest of the country’s contribution to climate change. Agriculture is behind more than 60 percent of New Zealand’s warming to-date.
The IPCC found that a 0.3 percent reduction a year would flatten warming from methane. That equates to 3.9 percent by 2030 and 9.9 percent by 2050 – more than halving the ambition of the current targets.
When asked whether the new targets would be set in alignment with these numbers, a spokesperson for National said the outcome of the review wouldn’t be predetermined. But National has referenced the 0.3 percent figure in two previous press releases this term.
Additional emissions (from agriculture or any other sector) will also need to be offset through the purchase of offshore credits to meet New Zealand’s Paris target, which National has pledged to achieve. At $41 to $227 a tonne, according to Treasury, the difference between current policies for agriculture and the Climate Change Commission’s pathway could cost the country between $75 and $400 million.
Even after pricing nominally begins in 2030, however, there is no guarantee that agricultural emissions will begin to decline. That’s because the party has pledged to set the price at a level where there is no decrease in agricultural production.
“The price will be set at a level that encourages on-farm mitigation but does not result in Kiwi farmers having to reduce production, which would likely result in farmers overseas increasing their production to make up the difference,” a spokesperson said.
This is in theory an attempt to prevent emissions leakage, whereby a carbon-efficient farmer closes up shop and is replaced by a carbon-intensive one in a jurisdiction where there is no emissions price.
But the farm-level pricing scheme embraced by He Waka Eke Noa, the Government and National places a heavier burden on the dirtier farmers. While New Zealand’s average farmer may well be more emissions-efficient than the average overseas farmer, some of our competitors are very, very close to us. The carbon-intensive Kiwi production that is displaced by an emissions price will very likely be replaced by less emissions-intensive overseas production.
If the most emissions-intensive production in New Zealand is replaced by average American milk or Australian beef, global emissions will still fall.
Still, National will set its price based on no reduction in production whatsoever. That means no adoption of existing on-farm practices which cut emissions moderately, production slightly and profits not at all. Instead, it means the scheme would be wholly reliant on technology, as-yet-unproven at scale, which can be implemented to slash emissions without reducing any production.
If that technology hasn’t appeared by 2030, what will National do? There’s no price level which would meet the requirement to avoid reducing production.
Political consensus gone
National has found itself in the same boat as the big agricultural lobby groups – having underestimated the resistance of the bulk of farmers to climate action.
While those groups realised in 2019 they could not put off emissions pricing forever, and they could shape a more favourable policy if they took a seat at the table, that wasn’t representative of the attitude of their members.
Just a year ago, Manaaki Whenua surveyed farmers and found fewer than half believed they should have to cut their emissions. That’s without even considering a serious price to force them to do so.
The arrival of Groundswell on the scene and the recent announcement that longtime Fed Farmers president Andrew Hoggard was running for ACT will have scared the lobby groups and National, respectively.
That’s how we ended up with the sector roundly rejecting the Government’s response to He Waka Eke Noa, which hardly differed on the most important issues from the policy the sector had united behind a few months earlier. That polls had begun to show a change of government was possible, even likely, will have cemented the view that the sector might be able to get a better deal if they return to kicking up a fuss, rather than keeping a seat at the table.
National has shown them that analysis was correct. Make enough noise and you’ll get offered yet another delay in pricing – out to a total of 26 years from when the original levy was set to launch.
Perhaps McClay and Luxon hope that, by 2030, the sector will have come around and recognised the need for a credible price. But the opposition to climate action is deeply entrenched and there are few signs it is changing quickly enough. Because for every year we delay, the problem gets worse.
Eventually, kicking the can down the road won’t be possible. As National acknowledges in its policy document, “doing nothing is not an option: Customers and other countries want to see agricultural emissions reduce and could block our trade if New Zealand does not act.”
New Zealand has a narrow window of opportunity to lead the way to a new, climate-friendly way of farming. Otherwise we’ll be forced into following the rest of the world as climate laggards, taking the same path we would have anyway, but without enjoying any of the benefits.
