The Government's ETS scheme is a world-first says Agriculture Minister Damien O'Connor.
The Government had chosen to work with farmers to develop a plan, called He Waka Eke Noa, over the next five years to reduce greenhouse gases.
This would be achieved by improving on-farm emission monitoring tools, increasing greenhouse gases reducing technology and developing plans which included a climate module.
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However, there was a warning that if the sector didn't do enough to mitigate on-farm emissions, it could be brought into the ETS as early as 2022.
It was important that New Zealand led the way globally with He Waka Eke Noa said Minister for Agriculture Damien O'Connor.
"Consumers around the world and the supermarket chains in particular are looking at our systems and if we can show them that we are doing everything we can to reduce emissions through good farming systems, then that puts us on the top shelf of their supermarkets" he told The Country's Andy Thompson.
Listen to Andy Thompson interview Damien O'Connor on The Country:
O'Connor insisted the Government did not want to bring farmers into the ETS, but that it would be used as the "stick at the end of the day" if no progress had been made.
"We don't want that. I don't think it will be necessary at all".
Meanwhile National Leader Simon Bridges praised the government for working with farmers, but questioned why it needed a backstop in the law which he believed meant "we'll get you in 2025 if you haven't done this".
"I would've thought a partnership means you don't need to [say that]".
Bridges told Andy Thompson on The Muster the Government had to be open to biotech and gene editing if it was going to work with farmers to get emissions down by 2025.
"What if the progress hasn't been made, and the reason for that is because those science-based mitigation options aren't there?"
Listen to Andy Thompson interview Simon Bridges on The Muster:
O'Connor said there was "a lot of confusion" around the value of GE technology, including GM ryegrass being tested in the US.
"People claim to have wonderful solutions. I've yet to see one put on my table. Even early indications of the ryegrass indicate that there's actually not the significant gains that people have talked about.
"We need proof. We don't need stories".
O'Connor told Thompson he was confident that He Waka Eke Noa was the correct course of action, due to the abilities of Kiwi farmers.
"I've always believed that on-farm is the best way to go. Farmers are innovative, we get clear signals they'll move in the right direction".