Labour and Greens may take agricultural emissions deal to election

Climate Change Minister James Shaw. Photo / Bevan Conley.

Climate Change Minister James Shaw has acknowledged that time is running out for final decisions to be made on agricultural emissions pricing before Parliament’s last sitting day on August 31.

If nothing is agreed upon, Labour and the Greens would need to take their respective positions to the polls in October, rather than agreeing on a scheme and introducing legislation to Parliament this year as planned.

“Our timelines have always been under pressure, but that doesn’t change the fact that we’re committed to agricultural emissions pricing,” Shaw said.

When asked how likely it was that a decision on pricing would be made before the election, Shaw replied: “I can’t say”.

“The more relevant thing is actually how little time there is before the election,” Shaw said, noting that the dominance of Covid-19 and Cyclone Gabrielle meant there were fewer Cabinet meetings before the election and less time for the Parliamentary Counsel Office (PCO) to draft legislation.

Shaw said it would be “speculating” to discuss the likelihood that an agreement was not reached this term.

“Everyone wants to see progress and we’re pushing it as hard as we can.”

He said the next round of decisions on the policy were “imminent”.

In December, the Government responded to outcry from farmers at an earlier proposal to price agricultural emissions and said final decisions would be made and legislation introduced by the middle of this year. That policy was drawn up on the back of the He Waka Eke Noa sector-led agricultural emissions pricing proposal.

The Herald understands the Labour side of the coalition is also looking at the idea of taking the issue of agricultural emissions pricing to the polls, although it is possible a deal will be agreed before then.

The clock is ticking down not only to the election but also to 2025, when agriculture would enter the Emissions Trading Scheme (ETS) if no agreement on an alternative method of pricing is reached.

In December the Government tilted in the direction of the He Waka Eke Noa group, deciding to set the levy at the lowest possible price to reduce emissions. This cut against advice from the Climate Change Commission, which wanted the rising price of emissions to drive innovation and emissions reduction.

Contention over that price is still live within the Government and between the Government and the agricultural sector.

Agricultural emissions pricing may be taken to the election. Photo / Judith Lacy

“The sector has continued to raise concerns about what the price will be, how the price will be set. They also have concerns about or a sense of uncertainty about how sequestration will be treated,” Shaw said.

In December, the Government said it would look at broadening what would qualify as sequestration under the scheme, allowing farmers to get credits for more of their sequestration efforts.

Shaw said there would “definitely” be decisions made on some of these issues before the election.

“We remain committed to it and we know that time frames are extremely tight and so we know we’ve got to make progress and so does the sector,” Shaw said.

The National Party now agrees that some form of emissions pricing would be necessary to get to net-zero emissions by 2050, although it was leaning closer towards the He Waka Eke Noa position.

“The fact that we’ve now got to a situation where even the National Party says, ‘yes’, emissions pricing and [action on] agriculture has to occur, is quite remarkable. I mean ... that’s extraordinary - but we actually have to get some runs on the board and make some actual progress,” Shaw said.

When asked what it was like dealing with Prime Minister Chris Hipkins as opposed to his predecessor, Jacinda Ardern, Shaw said Hipkins was “determined to see progress”.