With the prospect of a more stringent emissions reduction target for 2030, the days of the free pass are over.
New Zealand will almost certainly pledge a more ambitious medium-term reduction in its greenhouse gas emissions at the global climate change summit in Glasgow in November.
The peer pressure is serious.
The G7 powers at their recent summit in Cornwall committed to cutting their collective emissions by 2030 by around half from 2010 levels, or over half compared with 2005.
New Zealand's current target under the 2015 Paris agreement, which we are not on track to meet, is a 30 per cent reduction from 2005 levels. But the latest national greenhouse gas inventory records that our net emissions in 2019 were 13 per cent above 2010 levels, so heading in the wrong direction.
Not to increase the level of ambition in our nationally determined commitment at Glasgow would be conspicuous for a country which trades on a clean, green brand but ranks fifth highest in the OECD for emissions per capita and third highest per unit of gross domestic product.
We have that dubious distinction because of the outsize contribution of pastoral farming to national emissions. Agriculture accounted for 48 per cent of national emissions in 2019, when the global average is around 13 per cent.
New Zealand is internationally accountable for all of its emissions. If the farmers who are responsible for nearly half the country's emissions, and profit from them escape any cost, and therefore receive no price signal to reduce them, then that is a subsidy from the rest of the economy. The days of that free pass are numbered.
He Waka Eke Noa, a collaborative process between farmer bodies and the Government, is developing a regime for measuring, managing and pricing emissions at the farm level to come into effect in 2025.
The Climate Change Commission is charged with reporting next year on whether sufficient progress is being made to meet that target date. The default, if it is not, would be an emissions price imposed at the processor level, a one-size-fits-all outcome which would be unfair to progressive farmers and also inefficient, as it is behaviour at the farm level that pricing needs to affect.
Whether an emissions price ends up being applied at the farm or processor level, it is accepted that agriculture will be treated like other emissions-intensive trade-exposed (EITE) sectors where "leakage" is an issue.
Leakage is the risk that relatively emissions-efficient producers subject to an emissions price lose market share to more emissions-intensive foreign competitors which do not face a similar price, and the planet is worse off. Under the emission trading scheme that is dealt with by a free allocation of units which limits the proportion of an EITE firm's emissions which are subject to the price.
Of the two agricultural greenhouse gases, methane and nitrous oxide, the former gets the lion's share of attention. That makes sense in terms of levels, but not in terms of growth rates.
Enteric methane, belched by cattle and sheep, represents 38 per cent of national emissions, while nitrous oxide accounts for 10 per cent.
But since 1990 — year zero in the greenhouse accounting world — methane emissions have grown by only 5.5 per cent, compared with 45 per cent for nitrous oxide and 46 per cent for carbon dioxide. Nitrous oxide emissions have accounted for 59 per cent of the increase in agriculture sector emissions since 1990.
And whereas methane is a potent but short-lived greenhouse gas, nitrous oxide like carbon dioxide persists in the atmosphere, which is why legislation requires emissions of it to fall to net zero by 2050.
The Climate Change Commission's report to the Government a month ago recommending emissions budgets out to 2035 and recommending broad policies for achieving them, believes it is feasible to reduce both enteric methane and nitrous oxide 11 per cent by 2030. By contrast it calls for net CO2 emissions — net, that is, of sequestration in forests — to be cut 47 per cent by 2030.
Its strategy relies on extrapolating forward a longstanding trend improvement in productivity — output of meat or milk solids per head — but using that to maintain current aggregate levels of production from fewer animals doing less belching and urinating.
It believes that can be achieved by the diffusion of best practice and improving genetics.
"The key requirement for any practice change to reduce total biogenic methane emissions, and not just emissions intensity, is to reduce total dry matter consumption," it says.
"The challenge for farmers is to find a better balance between livestock numbers, production levels and feed inputs (supplementary feed and fertiliser) which enables them to maintain farm profitability while reducing emissions."
The magnitude of that challenge looks a lot greater in the Mataura valley than Wellington's Aro Valley.
What the commission has to say about nitrous oxide is illustrative of its thinking.
"The amount of nitrogen added to the farm system in the form of feed and fertiliser, as part of feed management, will affect how much nitrous oxide is emitted from soil. A system that has fewer animals but maintains the same production requires less feed and thus less nitrogen fertiliser or imported feed inputs, which would reduce nitrous oxide emissions," it says.
Urea fertiliser accounts for about a quarter of nitrous oxide emissions. The commission believes "precision farming" approaches such as sensors and targeted application mechanisms would enable reductions in fertiliser use without compromising pasture growth.
It acknowledges eliminating synthetic nitrogen fertilisers on dairy farms would mean lower levels of production but it says the evidence regarding the economic impact is mixed. While some farms would certainly become less profitable there was also evidence others could maintain or even increase their profitability while eliminating synthetic nitrogen. It could also have co-benefits in terms of run-off and water quality.
In addition, what livestock eat affects how much nitrogen is excreted and thus the nitrous oxide emitted from soils, it says. New Zealand pastures have relatively high nitrogen content, which means that grazing livestock generally consume more nitrogen than they need and the excess ends up in urine and dung.
"Some pasture species, such as plantain, can reduce total nitrogen excretion in urine. Pasture can also be supplemented with lower nitrogen feed, such as fodder beet," the commission says. "Research is also under way to develop a genetically modified type of ryegrass with lower nitrogen than the current pasture."
And some farmers could reduce emissions by reducing the use of palm kernel extract as supplementary feed with lower-nitrogen maize silage.
The Government is required to deliver a national emissions reduction plan by the end of the year. How much of the commission's advice on agriculture survives scrutiny by Ministry of Primary Industries officials and sector groups' lobbying remains to be seen.
But with the prospect of a more stringent national emissions reduction target for 2030 on the one hand, and the pitilessly immutable laws of arithmetic on the other, the status quo is not an option.
Squeeze on costs collides with rising excises to sour sentiment.