Prime Minister Jacinda Ardern has hit back at a farming lobby group's suggestion an emissions plan will "rip the guts out of small town New Zealand", saying it is largely based on their own proposals.
The world-first scheme that will see farmers paying for agricultural emissions in some form by 2025 is out for consultation from today.
It marks a significant step in a decades-long process to account for agriculture in climate change policy, which make up half of the country's greenhouse gas emissions.
It has already drawn strong criticism from some farming lobby groups who see it as a step too far and will only push emissions offshore, while environmental groups say it does not go far enough.
The National Party says it supports the long-term plans but expressed "concern" at the potential to lose industry support, and encouraged the Government to work closely to find an "enduring solution".
The consultation document, Te tātai utu o ngā tukunga ahuwhenua - Pricing Agricultural Emissions, on the scheme says it will be introduced in just three years and is expected to be signed off by Cabinet in 2023.
The system of farmgate pricing has been worked on since 2019 after calls from the sector to have a farmgate emissions pricing system that would reward climate-friendly farmers.
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.
The Government has accepted most of the recommendations made by the He Waka Eke Noa industry partnership but rejected two primary recommendations.
How plan differs from industry-backed proposal
Prime Minister Jacinda Ardern, speaking to media alongside Climate Change Minister James Shaw and Agriculture Minister Damien O'Connor from a Wairarapa farm this morning, rejected suggestions the primary sector wouldn't look favourably on the proposal, as it had been formed with its input.
Federated Farmers national president Andrew Hoggard has strongly opposed the plan, saying it will "rip the guts out of small-town New Zealand" by facilitating the conversion of sheep and beef farms in particular into trees.
"Federated Farmers is deeply unimpressed with the Government's take on the He Waka Eke Noa proposal and is concerned for our members' futures," Hoggard said.
"We didn't sign up for this. It's gut-wrenching to think we now have this proposal from the Government which rips the heart out of the work we did."
Hoggard said their main concern was around the Government reducing categories to sequester emissions through planting. The Government's plan also estimated to reduce land in sheep and beef farming by 20 per cent by 2030, compared to 5 per cent for dairy.
Beef and Lamb New Zealand was similarly worried the Government had proposed to reduce the categories of sequestration recognised.
"New Zealand sheep and beef farmers have more than 1.4 million hectares of native forest on their land which is absorbing carbon and it's only fair this is appropriately recognised in any framework from day one," its chairman Andrew Morrison said.
Ardern noted the disproportionate impact on sheep and beef farmers and said they were committed to working through the proposals with them to find solutions.
She said it was a "pragmatic proposal" that would reduce agricultural emissions while making produce more sustainable and enhancing the "export brand".
The proposal also differed from the sector's wishes that levies paid via the scheme were set by the sector, and instead would be set by the Government.
Ardern said she believed the Government setting the levy was a "more traditional" approach, compared with the partnership's preferred option.
Farmers did retain the ability to monitor their own farm emissions, and levy revenue would be recycled to farmers through technology, research and incentive payments.
Govt rejected Climate Minister's proposal
The Government also ultimately rejected Shaw's preferred option to see an overall emissions cap set and then let the market sort the price.
Shaw, who is also Green Party co-leader, feared future governments could then reduce the requirements and saw a cap and trade scheme as a more enduring solution.
The Climate Change Commission would play a "critical role" in setting the levy, Ardern said, by acting independently on evidence and research.
Shaw said modelling within the proposal gave him confidence it would allow New Zealand to achieve its climate change targets, potentially with less financial cost to farmers than expected.
However, he did acknowledge that modelling was not an exact science.
Despite Hoggard's criticism, Ardern was confident the proposal would be supported by the sector, as the "backbone" of the proposal was formed through consultation with stakeholders.
She acknowledged the proposal wouldn't be perfect and welcomed consultation, especially from those operating sheep, beef and deer farms for whom the proposal could have "unintended consequences".
Dairy committed to process
The farmer-funded DairyNZ said there was still work to do on emissions pricing for agriculture.
"Today's Government announcement is another step toward an agricultural emissions pricing system – but there is still work to do to get it right, and make sure it is fair and practical for farmers," DairyNZ chair Jim van der Poel said.
Van der Poel said that while the proposal had adopted many key recommendations from the He Waka Eke Noa Partnership that were informed by farmer feedback, the Government had made significant changes that would be a focus for the sector during the six-week consultation.
"The Government has accepted a lot of what farmers told us was important to them during our sector consultation earlier this year," van der Poel said.
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. The plan also did not allow farmers to earn extra income from some forms of on-farm planting and carbon capture.
"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.
"Broad industry support is crucial for any enduring solution to agricultural emissions."
Act primary industries spokesman Mark Cameron echoed Hoggard's concerns regarding sheep and beef farm conversion.
"Under the proposals, most sheep and beef farmers would be better off cashing up by selling their land for permanent carbon storage. Many meat processors will shut down, collapsing many small regional towns," he said.
"Act has always said the focus should be on working with the primary sector on more accurate measurement and management frameworks for methane emissions and ensuring there are no barriers to the uptake of new emissions reduction technologies."
Greenpeace meanwhile was far from pleased, arguing the proposals would fail to cut the sector's emissions.
While it backed the decision not to allow the industry to price its own emissions, it was sceptical about the system that had been put forward – going as far as calling it "greenwash".
It argued processor-level pricing should begin immediately, with manufacturers and importers of synthetic nitrogen fertiliser paying through the ETS.
According to the consultation document, the Climate Change Commission will now make the primary recommendation to Cabinet on price, a process in which farmers will be able to participate. Government ministers will make the final decision.
Initially, farmers were set to be folded into the Emissions Trading Scheme (ETS) if insufficient progress was made on farmgate pricing. However, under the new proposals, if the sector is not ready to start farmgate pricing by 2025, it will be subject to an interim backstop processor levy.
That would see importers and manufacturers paying for the emissions based on the amount imported or processed. Government ministers will recommend next year whether the processor levy needs to be brought in.
In the report, the Government admitted having concerns about the tight timeframe and that getting the system off the ground would "require a significant amount of work, relying on a tightly sequenced series of events".
That includes the risk that farmers, growers and the systems that needed to be in place would not be ready by 2025, causing a delay in pricing agricultural emissions – making it even harder and more expensive to achieve promised 2030 emissions reductions.