Pulling agriculture into the Emissions Trading Scheme (ETS) shouldn't be the only way farming is steered against climate change, the Parliamentary Commissioner for the Environment said today.

Dr Jan Wright this afternoon released a wide-ranging report investigating the two major agricultural greenhouse gases, methane and nitrous oxide, which form about half of New Zealand's greenhouse gas emissions.

Wright acknowledged ongoing debate about the agricultural sector's controversial omission from the ETS, saying the country's main mechanism for climate mitigation had been "polarised for too long".

Proponents for including biological emissions from ruminant livestock in the ETS focused on fairness to other industries and consumers, along with the distortion of the economy that came with excluding such a major industry.


But the Government remained against the move until it could be proven there were
"economically viable and practical technologies available to reduce emissions" and New Zealand's trading partners made more progress on tackling their own emissions.

Wright, who has previously argued for agriculture's inclusion, acknowledged a major sticking point in incorporating biological gases into the ETS was the location of the so-called "point of obligation".

If this was put at the processor level, the farmer who produced a kilogram of meat or milk with relatively low biological emissions would not be rewarded.

But if geared at the farm level, Wright said the compliance cost would be "very large indeed" because there were thousands of pastoral farms.

However, she pointed out that there may be ways for a partial inclusion of the biological gases into the scheme relatively quickly.

Nitrogen fertiliser could be brought into the ETS, as might farms above a certain threshold.

Yet the ETS wasn't the only way forward - and Wright saw immediate opportunities for reducing emissions lay in new native and plantation forests.

"It might not be the whole solution, but a million hectares of trees would make a big difference - not to mention the added benefits for erosion and water quality."


The Government had recently set up working groups to look at these issues.

Each year, the Government also invested about $20 million each year in research to reduce biological methane.

A methane vaccine would also be so valuable that the research aimed at developing it should be ramped up as much as possible, she said.

"Methane inhibitors are presented as an equivalent biotechnology, and the research is more advanced, but a vaccine would be superior in many ways."

Wright ultimately described her report as a "reality check".

"There are no silver bullets here, but we need to do what we can to curb these emissions - and we need to start now."

She warned the agriculture sector that change was inevitable, although farmers had shown time and again their ability to adapt to new challenges.

"The world will continue to need food.

"But in the long term the way in which food is grown, and the types of food grown, will have to change if biological emissions are to be reduced."

Ag emissions a 'challenge we must solve' - Bennett

Climate Change Minister Paula Bennett said the report was consistent with the Government's view that there was "no silver bullet" to fix the issue.

"Agricultural emissions make up 49 per cent of New Zealand's gross emissions. Reducing them while growing our economy is a difficult challenge, but one we must solve."

Minister for Primary Industries Nathan Guy said the report highlighted that a "broader discussion" was needed beyond whether agriculture was in or out of the ETS.

"For example, planting the right trees, in the right place, at the right time can buy us time to find options to reduce biological emissions from agriculture."

The Green Party responded to the report saying Government needed to be "straight up" with farmers and make it clear that business-as-usual farming couldn't continue in the face of climate change.

"The Government should instead be leading the way to re-think how we farm, where we farm and what we farm to try to reduce our emissions," party leader James Shaw said.

"There are already opportunities available to increase profitability and lower emissions, such as reduce stocking rates, diversifying land use, and switching to organic farming methods."

Transition needs to start now

ETS expert Dr Suzi Kerr, of Wellington-based Motu Economic and Public Policy Research, said the country needed to start making a transition now toward new land uses - including new types of food.

"On land where sheep and cows continue to be grazed, we need to move toward low-emission practices, including new technologies as they become available," Kerr said.

"Our long-term goal on that land is to produce ultra-low-emission dairy and red meat."

Many farmers were aware of these issues and deeply concerned about the resilience of their sectors, she said.

"Including biological emissions in the ETS, even if it only slightly increased the cost of dairy and red meat production, would send a signal to the wider farming community and those who support them in education, research and industry that it is time to move their attention, energy and creativity toward transition."

Inclusion in the ETS could be done with a focus on helping the rural community make a gradual transition, not with expectations that the relatively small group of farmers would bear a significant part of the cost of New Zealand's Paris commitment.

"In the short term, trees - including natives - are the main way that the rural sector can help achieve our Paris goals but we can't wait to start action on the longer game of reducing nitrous oxide and methane."

Federated Farmers remained against agricultural emissions being drawn into the ETS, arguing it would put New Zealand producers at a severe competitive disadvantage on international markets.

"We don't think the ETS is the appropriate tool for farming, but we will consider being involved in something else that makes more sense for farming," the lobby group's climate spokesman, Anders Crofoot, said.

"We are dealing with about 30,000 farms which are very different, with very different environmental impacts.

"As the report itself says, we could be looking at huge variations in emissions even between neighbouring farms."

Harry Clark, director of the New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC), noted the report covered breeding low methane-producing animals, identifying low-methane feeds, manipulating rumen microbial communities to reduce methane emissions, pathways for reducing nitrous oxide, and the use of trees to offset emissions.

But he said research and technical development was only the first step in a solution.