World-first agreement reached on plan for reduction of agricultural emissions

Prime Minister Jacinda Ardern
Prime Minister Jacinda Ardern pictured at the opening of a new venison processing plant last year.

After much discussion, the Government has announced this morning it has agreed to work with the primary sector on the reduction of agricultural emissions. This is being hailed as a world-first partnership in one of the most significant developments on climate action in New Zealand’s history.

A plan has been agreed to join forces to develop practical and cost-effective ways to measure and price emissions at the farm level by 2025, so that 100 percent of New Zealand’s emissions will be on the path downwards.

“I’m proud that we have a world-first agreement as part of our plan to tackle the long-term challenge of climate change and we’ve done that by reaching an historic consensus with our primary sector,” Prime Minister Jacinda Ardern said.

“For too long politicians have passed the buck and caused uncertainty for everyone while the need for climate action was clear.

“This plan provides the primary sector with certainty and puts us shoulder-to-shoulder on a path to reduce emissions, with ongoing support to help with the plan such as the $229 million Sustainable Land Use investment.

“This will reduce emissions by giving farmers the autonomy to plan to do so and reward those who do,” she said.

Represents the right appproach for the red meat sector

Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA) have welcomed the agreement which they believe is the best way to deal with agricultural emissions at farm level, says B+LNZ chairman Andrew Morrison.

Andrew Morrison
Andrew Morrison.

“This agreement represents a good outcome for farmers and acknowledges that the current Emissions Trading Scheme (ETS) is unsuitable for agricultural emissions,” he says.

“By working with the government, we now have the best opportunity to develop a framework that is practical and simple for farmers, rewards positive change and supports the sector to reduce and offset farming’s emissions.”

The sector had been concerned at proposals to introduce a price on emissions at the processor level through the ETS from 2021, which would in effect have been a blunt tax on farmers, says John Loughlin, chairman of MIA.

“A farm-based approach will incentivise and reward farmers who are already doing the right thing.  Pricing emissions at the processor level through the ETS would have done nothing to reduce on-farm emissions.

John Loughlin
John Loughlin

“The government has agreed to the alternative partnership approach that was put forward by 11 agricultural organisations including B+LNZ and MIA, called He Waka Eke Noa. While the approach agreed with the government will involve establishing a price on agricultural emissions by 2025, crucially this will not happen through the ETS and will happen at the farm gate.

”The establishment of a farm level emissions budget is pragmatic and sensible, says Morrison.

“It will lead to farmers paying for emissions fairly, based on their own circumstances, and enable them to count their offsets such as from trees on their farms.

“We will also be able to help develop an approach that not only reflects methane is a short-lived gas, but also recognises sequestration.

“New Zealand is the first country to price agricultural emissions, and through this agreement, our sector has a shot at designing this system to ensure that it is fair for farmers.”

However, B+LNZ and MIA are concerned the government is introducing legislation to have a back-stop in place ahead of a review of the progress on setting up the pricing system in 2022. If it is not happy with progress, the government will revert back to the processor inclusion in the ETS.

“We are disappointed with the approach as it is unusual to introduce legislation that may never be implemented,” says Morrison.

“However, the onus is on us to work with the government constructively and effectively on what we all agree is the preferred approach.”

What’s in the plan

The agreed five-year joint action plan includes:

  • Improved tools for estimating and benchmarking emissions on farms
  • Integrated farm plans that include a climate module
  • Investment in research, development and commercialisation
  • Increased farm advisory capacity and capability
  • Incentives for early adopters
  • Recognition of on-farm mitigation such as small plantings, riparian areas and natural cover

The Government recognises partnering with Māori will be critical to the success of this joint action plan.

In addition, Cabinet has also agreed that in 2022 the independent Climate Change Commission will check in on the progress made and if commitments aren’t being met, the Government can bring the sector into the ETS at processor level before 2025.

Decision shows “we’ve listened to farmers”

“Our decision to put in place a sector-led plan to reduce emissions at the farm gate shows we’ve listened to farmers,” said Deputy Prime Minister Winston Peters.

“We welcome the cooperation of our primary sector organisations who have been advocating for a smooth transition towards meaningful emission reductions,” he said.

Major reforms to the ETS have also been announced to make it fit for purpose, with a cap on industrial energy and transport emissions, and forester incentives simplified.

“This will help keep our planet safe for future generations. With the world changing at break-neck speed, these changes will drive us towards a low emissions country,” Minister for Climate Change James Shaw said.

“Changes also align the purpose of the ETS with the Zero Carbon Act and the Paris Agreement, so that New Zealand is doing its bit to limit global warming to 1.5C,” he said.

“Farmers understand that a changing climate affects them and many are already making changes on-farm to meet that challenge and to enhance our reputation for safe and sustainable food production while maintaining our competitiveness in international markets,” Minister of Agriculture Damien O’Connor said.

“The agreement with sector leaders shows the value of collaboration and provides certainty for farmers, but the hard work begins now to develop the tools and systems to account for on-farm emissions in 2025.

“The Government will back that with investment in research, extension services and advice for farmers,” Damien O’Connor said.

The Climate Change Response (Emissions Trading Reform) Amendment bill will be introduced to Parliament today, have its first reading in early November and then be referred to the Environment Select Committee. The Bill should pass in early 2020.

Agriculture will enter the ETS in 2025 at farm-level for livestock emissions and processor level for fertiliser emissions in 2025 and the level of free allocation will be set at 95 percent. A review is planned for 2022 to look at what progress has been made, what barriers may have arisen and to develop an alternative pricing mechanism to the ETS for farm level pricing, amongst other things. Farmers will be required to report their emissions from 2024.

More information:

  • He Waka Eke Noa press statement. In addition to B+LNZ and the MIA, the Primary Sector Climate Change Commitment includes Apiculture NZ, DairyNZ, Dairy Companies Association of NZ, Deer Industry NZ, Federation of Māori Authorities, Foundation for Arable Research, Federated Farmers, Horticulture NZ and Irrigation NZ.

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