A two-basket approach to climate policy is perfectly sensible and would be anything but a free ride to farmers. Recent assertions to the contrary by Jim Salinger and Raymond Desjardins suggest they may have misunderstood both the recent climate science and the policy logic that has led both the Productivity Commission and the Parliamentary Commissioner for the Environment to recommend two-basket approaches.

The first and simplest point to note is that the world has actually used a multi-basket approach to climate policy before. The Montreal Protocol worked pretty well – on some estimates it was more successful at lowering greenhouse gas emissions than the Kyoto Protocol. Montreal was based on a multi-basket approach. There's nothing inherently better about a one-basket approach to policy, and the reverse is probably true if the residence times of different pollutants span a large range.

In fact – as you already know – it is routine to treat pollutants differently in light of their properties. We create different workplace exposure standards for different pollutants. Often we specify both a workplace exposure standard and a short-term exposure limit, since the risks from some pollutants arise from their maximum dose, while the risks from others arise from lifetime exposure. We could create a one-basket system and treat the effects of different pollutants as fungible, via some way of forming equivalence on the basis of their workplace exposure standard. But this practice is explicitly ruled out in New Zealand's health and safety guidance.


Because the climate science community has never really been satisfied with GWP, former Climate Change Ambassador Adrian Macey and I along with colleagues from the UK and Norway suggested a new way of comparing greenhouse gases (called GWP*). It's actually an improved way of using the present metric (GWP) so as to measure short-lived gases such as methane more accurately. The basic points we made were featured in Chapter 1 of the recent Intergovernmental Panel on Climate Change Special Report on 1.5 Degrees, which said "When combined using GWP*, cumulative aggregate GHG emissions are closely proportional to total GHG-induced warming[...]. This is not the case when emissions are aggregated using GWP, with discrepancies particularly pronounced when SLCF [short-lived gases] emissions are falling." That's the IPCC's way of saying "if it's warming you care about, GWP* works, and GWP doesn't."

Yet Salinger and Desjardin claim that the two-basket approach is "is not based on sound science". Citing veteran climate scientist Tom Wigley, they argue "the response in mean temperatures from changes in greenhouse gases at any point in time is almost totally a result of the history of that specific gas, like methane, heating up to that date. The climate system does not care how the heating history arose. The climate system only cares about what the heating by that gas is to that date."

The details of this matter, because it shows why Wigley is right but Salinger and Desjardins are wrong. Warming is determined by greenhouse gas concentrations up to a particular moment in time; but these concentrations bear different relationships to emissions in the cases of long-lived and short-lived gases.

The climate cares about cumulative emissions of long-lived gases, because these accumulate in the atmosphere (kind of the point of being long-lived) to determine concentrations of those gases, while for short-lived species like methane, concentrations are only a function of recent emissions (because emissions from earlier periods have disappeared).

The difference can be illustrated by asking the following hypothetical question: what level of emissions reductions are required to prevent any further warming? The answers are:

· Net emissions of carbon dioxide must immediately go to zero (or negative)

· Net emissions of nitrous oxide must immediately go to zero (or negative)

· You can retain around 99.7 per cent of the previous year's methane emissions. A cut of 0.3 per cent in methane emissions, per year, is enough to prevent further warming from methane.

Whereas emissions of carbon dioxide and nitrous oxide accumulate, those of methane essentially just replace methane that's breaking down. It's true that, as Martin Manning likes to point out, methane's lifetime is lengthening. But it would have to lengthen enormously – by many decades – before it made a material difference to any of these points.

This difference between long- and short-lived gases and warming is missing from Salinger and Desjarns' discussion, but it is central to the longstanding scientific debate around greenhouse gas metrics.

Because the relationship between emissions and temperatures differs so much for long- and short-lived gases, we suggested that this difference could usefully inform policy. The Productivity Commission and the PCE both seem to think so, too. So did SCION and NIWA. It's clear we are right about the science, but there are a range of views on how policy should proceed. That's as it should be.

It is plainly wrong to claim that a two-basket approach is about "giving New Zealand farming industries another free pass in tackling methane reductions, which they have had ever since the introduction of the Emissions Trading Scheme".

Let's look at what has actually been said. The Productivity Commission wrote: "This "two-baskets" approach provides an opportunity for a distinctively New Zealand solution to its emissions profile. It would align New Zealand's mitigation policy more closely with the underlying science of warming, address the country's distinctive emissions profile, and could become a world-leading policy exemplar."

The Parliamentary Commissioner for the Environment wrote "In addition to reducing fossil carbon dioxide emissions to zero, methane and nitrous oxide emissions need to be reduced to keep the rise in global average temperature to well below two degrees Celsius. The level of emissions reduction targets for gross methane and nitrous oxide emissions would be determined by the extent to which a country intends to contribute to the global mitigation effort, and the relative abatement costs of methane and nitrous oxide."

Allen, Macey and I wrote "a policy that aimed for zero emissions of stock pollutants such as carbon dioxide and low but stable (or gently declining) emissions of flow pollutants such as methane.

"Achieving both goals would mean that a farm, or potentially a country, can do a better, clearer job of stopping its contribution to warming."

NIWA suggested something very similar to the position advanced by the PCE: "NIWA suggests [...] near zero emissions of carbon dioxide with net zero emissions of short-lived greenhouse gases such as methane. With this aim afforestation would be used to offset agricultural activities. [This] would more clearly and transparently focus efforts on reducing the burning of fossil fuels in preference for renewable energy, while allowing the natural uptake of carbon by trees to offset our need for agriculture."

And New Zealand's leading forestry research institute, SCION, put it more eloquently than we can in their submission to the Productivity Commission last year: "a "single all-gases mitigation target" [...] risks government doing the least possible to meet GHG accounting requirements and misses New Zealand's opportunity to be global trail-blazers in climate policy. The gas-based split target approach (two basket approach) is our preferred option."

All these groups were crystal clear that emissions of methane definitely should not grow, and probably should be reduced. That is absolutely not a free pass. In fact, each and all of these approaches, focused on the warming effects of different gases, would be far more punitive on increases in methane emissions than the most commonly-discussed variant of the single-basket approach. Such approaches could potentially also produce strong incentives to reduce methane. This is not necessarily the case with a single-basket approach. Consider the following.

In a single-basket approach, using an ETS carbon price of $25 a famer ought to pay times 28 times $25, which equals $700 per tonne, or around $70 per cow (since a big cow might emit 100kg of methane a year). But wait, there's more. The coalition agreement includes a provision that farmers should get a whopping 95 per cent free allocation. So instead of paying $70 per cow, the climate policy penalty on one additional cow in this scheme would be around $3.50. This is about as feeble as the ETS's effect on residential petrol consumption (about 2.5c per litre at the pump).

It's also far weaker on methane emissions than would have been the case with any of the two-basket schemes, all of which would insist on a hard cap, and probably declining emissions. Under the "ETS+95 per cent discount" scheme, increases in methane are far too lightly penalised, and as a consequence there would be little pressure against the further expansion of dairying, should there be a spike in demand associated with strong economic growth in the increasingly successful economies of Asia and Latin America.

It is true that an ETS+95 per cent discount scheme would include agriculture in climate policy. But it would do so in a way that demonstrably lacks environmental integrity by placing far too small a penalty on new cows and far too great a penalty on stable or declining herd numbers. Such an outmoded, Kyoto-era approach to climate policy, coupled with a huge dollop of largesse for farmers courtesy of the coalition agreement, is not bold leadership on the climate problem. It is, rather, a series of meek but predictable capitulations.

These arguments are not going to disappear. Other countries with substantial methane emissions especially in Latin America and Asia will face similar issues as climate policy starts to bite. In Asia, especially, where methane emissions arise primarily from rice production, people will rightly resent having their staple crop treated as being fungible with coal consumption.

In New Zealand, we know the science of this issue as well as anyone; it was interesting to note how, on his recent visit here, Myles Allen discovered a large reservoir of New Zealand farmers who could probably fit right in to his group in Oxford. We have at least two and probably several well-thought out multi-basket policy regimes. And we have a Minister of Climate Change who is well across all these issues. That all adds up to a great leadership opportunity for New Zealand - but we need to act before other countries catch up with us.

* Professor Dave Frame is director of the Climate Change Research Institute at Victoria University of Wellington. Dr Adrian Macey writes and lectures on climate change and other topics, and is a frequent media commentator on climate change.