Climate Change Minister James Shaw feared the Government's preferred option to address agricultural emissions could be "ineffective" and risked not meeting targets.
The Government today released for consultation its plans for a world-first scheme that will see farmers paying for agricultural emissions in some form by 2025.
The Government accepted most of the recommendations made by the He Waka Eke Noa industry partnership but rejected two primary recommendations, including that levies paid via the scheme to be set by the sector, and instead would be set by Ministers.
This would involve Ministers deciding periodically how much farmers should be paying for their methane emissions, with input from the sector and Climate Change Commission about how they were tracking on targets.
Shaw instead wanted a cap set on overall methane emissions and the price then set by the market. That way it would be protected from any future political interference.
Under the co-operation agreement with Labour, Shaw, who is also Green Party co-leader, normally sits outside of Cabinet but comes inside on climate-change issues.
The Government has committed to a 10 per cent reduction in methane emissions from agriculture and landfills by 2030, going up to a 24-47 per cent reduction by 2050, compared to 2017 levels. It comes alongside a net-zero emissions target for 2050.
It was argued, in a Cabinet paper released today, in the past a low marginal price and no cap on emissions had been "ineffective at reducing emissions".
Under the proposed option, Ministers and Cabinet would also have to update the levy rates periodically to ensure it was effective.
"The Minister of Climate Change is concerned this process will allow meeting emissions reductions commitments to be traded off against other considerations," the paper said.
Officials ultimately argued downsides of Shaw's proposal were that it could be "too complex" to be implemented by 2025 and could have "lower sector support".
The paper also stated Shaw was "concerned" the pricing system would "not provide sufficient certainty that Aotearoa New Zealand will achieve its climate change targets".
Shaw, who recently had to fight to regain his Green Party co-leadership after being accused of not achieving enough in his portfolio, reiterated his preferred option of setting an emissions cap for methane.
Part of the consultation document included investigating this for a later introduction.
"I think it could be more robust in a system that uses an absolute cap," Shaw said.
"The option that I was putting forward was for a system that doesn't rely on modelling."
He said that approach was used in the Emissions Trading Scheme.
"However, officials are very clear, they didn't think they could get it up and running in the 36 months remaining to us. And also, the sector itself strongly rejected it.
"I'm always very wary about prices set politically. But ultimately, that's why we've punted for having the [Climate Change] Commission provide that advice."
Prime Minister Jacinda Ardern said the decision was based on making the proposal "workable" and timely".
"There are just some things that functionally you would not be able to implement across the country in their timeframe."
Concerns over rural impacts, 'emissions leakage'
National, meanwhile, has tread a cautious line in its response, both reiterating its bi-partisan support for overall emissions reductions targets while highlighting the impacts on rural communities.
National's agriculture spokeswoman Barbara Kuriger said they were committed to reaching the country's emissions targets but felt today's announcement put consensus with the industry at risk.
They were concerned about modelling showing international emissions could increase as jobs and production is shifted offshore as a result of measures here, known as "emissions leakage".
The plan stated: "If suppliers of dairy, meat and wool products in other competing countries fill this gap in world markets, agricultural emissions in these competing countries will likely rise.
"If those emissions increases are not offset by reductions elsewhere in those economies, this process reduces the effect that Aotearoa New Zealand's emissions reductions have on overall global emissions."
It has estimated as much as 65 per cent of reductions here could be "leaked" by countries offshore.
"Worryingly, the large falls in sheep production in New Zealand could lead to higher global emissions as more sheep production moves overseas to less-efficient farms," Kuriger said.
They were also concerned the plan did not allow farmers to earn extra income from some forms of on-farm planting and carbon capture.
"Broad industry support is crucial for any enduring solution to agricultural emissions."