Thomas Coughlan questions why agriculture is getting $750m in funding when the industry doesn't contribute to the ETS. Video / Mark Mitchell
Opinion by Damien O'Connor
OPINION
Last week, the Government made a positive step forward for New Zealand with our response to the He Waka Eke Noa partnership’s proposal for pricing agricultural emissions.
Our response was built on two years of world-leading work done by the partnership to find a way for our biggest export-earningsectors to play their part in achieving New Zealand’s climate obligations. The partnership comprises DairyNZ, Beef + Lamb NZ, Federated Farmers, the Federation of Maori Authorities and more.
Initial coverage of our announcement suggested our proposal was drastically different from He Waka Eke Noa. The Government has, in fact, accepted nearly all the primary sector’s recommendations.
Most importantly, we accepted the farm-level pricing system. This is despite a processor level being likely easier to establish and administer. The farm-level levy allows farmers to make decisions on how to adapt their businesses where required. This is the key part of what the sector recommended and we support it.
More broadly, we found outstanding issues in only two aspects of the proposal – who will set the price for split gases, and how sequestration is accounted for and managed.
Like any levy system, price setting needs independence - hence Ministers taking on this responsibility, with advice from the Climate Change Commission.
We also believe more work is needed on sequestration, which both proposals recognise the complexity of.
A lot of people have raised the need to recognise additional on-farm sequestration. To be clear, we’ve not ruled this out and I’m committed to doing more work on sequestration so farmers can use a system that is fair to claim for the work they’re doing to reduce emissions.
Planting pine trees for carbon sequestration has become a profitable land use. Photo / File
Sequestration credit just needs to be done in a way that is efficient, verifiable and does not create an unworkable burden. Those are the challenges that I want to hear people’s thoughts about, via the consultation we’ve just opened.
There has been a lot of talk about the modelling released with the proposals. The modelling, as is often the case, has to make some big assumptions - including for emissions prices, which are yet to be established, and the availability of mitigations like new technology to help reduce emissions.
Like the Partnership’s modelling before it, our response shows the red meat sector will be affected more than others. I do not, however, believe for one second that is where things will end up.
That’s because alongside the sector the Government is investing hundreds of millions of dollars in climate research through a joint venture with key sector businesses to deliver emissions reduction tools into farmers’ hands sooner.
This critical effort will deliver methane inhibitors, livestock that produce less methane, better application and use of fertiliser, the adaptation of effluent systems to reduce emissions and more. Another work stream in place through our Sustainable Food and Fibre Futures fund is assessing the part regenerative agriculture practices can play in driving environmental improvements to that help protect market access and underpin premium growth.
We’ll be doing more work on what parts of the sector the initial modelling suggests will be hit hardest and how the sector can be helped.
Significantly, we’ve accepted the sector’s recommendation that revenue created by emissions pricing will be used for research, development and more extension work to help the sector. That is a big commitment which will help drive innovation on top of the other investments.
Minister for Agriculture and Trade, Damien O'Connor. Photo / Andrew Warner, File
Through our co-investments, and by adapting systems like farmers and growers have many times in the past, I’m confident we can make the adjustments required to meet consumer demand for high-sustainability credentials and limit any impacts to the sector and rural communities.
There is no doubt that we are seeing the direct effects of climate change on the primary sector with more destructive floods and droughts in the past few years. Look at the damage done in Canterbury and the West Coast from severe flooding. It is costly and affects both production and livelihoods.
We cannot sit still as climate conditions worsen and leave it to others. Similarly, we cannot ignore the very clear market signals that people expect higher sustainability credentials.
If we do nothing, then that will have a far greater impact on the primary sector long term and issues like food supply and costs.
The high-quality free trade deals we’ve recently signed with the UK and EU have strong climate requirements and those demands will increase as we look to both protect current market access for our products and open up new markets.
Why do consumers overseas seek out products that come from New Zealand? It’s because they have an image of us in their minds and with it a perception that “if it comes from New Zealand, it must be good for them”.
That is brand value.
In the future, they will say “it must be good for me and the planet because it’s from New Zealand”.
Farmers and others now can comment on the proposed system.
Damien O’Connor is Minister of Agriculture, Trade and Export Growth and for Rural Communities
