Comment: The Government should invest in innovative projects that will help New Zealand's economy recover while accelerating the transition to a climate friendly future, writes Federated Farmers climate change spokesman, Andrew Hoggard.
The Climate Change Response (Emissions Trading Reform) Amendment Bill passed its third reading in Parliament last week.
Whether it was the rush to get it through in time for election campaigning purposes, a clash of viewpoints, or something else, the result is that the concerns raised by Federated Farmers and others during the consultation process have not been addressed.
While the Bill causes uncertainty for farmers in New Zealand as to how agricultural emissions will be treated in the future, this uncertainty is dwarfed by the potential impacts the Bill may have on the wider economy.
The number of carbon credits in the market 2021-25 has been capped at 160 million, with each unit representing the right to emit one tonne of carbon-dioxide equivalent (Co2e).
Of these, 90 million will be auctioned into the market somewhere between $20 per tonne and the ceiling price of $50 per tonne.
With businesses and households all around New Zealand squeezed by the fall-out from Covid-19, more cost pressure for consumers – and for farmers – on prices for electricity, petrol, diesel and the like will go down like a cup of cold sick.
I don' think there has been any analysis undertaken since the pandemic on how these changes to the ETS will impact our economy, our international competitiveness, and therefore the standard of living enjoyed by all New Zealanders.
The biggest bone of contention for farmers is the incentive this legislation sends to those who would ramp up the conversion of productive farmland into fenceline-to-fenceline pines planted, not for wood but for carbon credits.
Some 70,000 hectares of productive sheep and beef land has already been converted to forestry since 2019, and carbon-related investment has been a major driver for this.
We know from going through the last 12 months of Overseas Investment Office decision summaries that we're averaging a loss of 1-2 sheep and beef farms every month to conversion to forestry by foreign investors alone.
With pine forests grown just to clip the carbon credit ticket, there's no pruning gangs, no sawmilling jobs at the end of it.
The mostly absentee owners/investors will just plant the trees and close the gate, effectively abandoning the land from ever re-entering productive use.
Farm production and export dollars are lost. Farm workers and contractors lose their jobs, families move out, there's less spending in rural townships, rural school rolls suffer as do sports clubs and all the rest of the district's community networks.
Instead of big polluters being incentivised to look at new technologies to drive down their fossil-fuel burning for the long term, they can take the easier path of stop-gap offsetting.
One positive – instead of putting agriculture into the ETS under a pointless processor-based levy system that would have done nothing to encourage farmers to invest in ways to reduce livestock emissions, the government and iwi agreed to the Primary Sector Climate Change Commitment put up by our sector.
Otherwise known as He Waka Eke Noa, it involves a series of commitments, with milestones, to get to a point where farmers can practicably measure on-farm emissions, and have workable and affordable options to reduce these without reducing food production.
Unfortunately, the reform legislation fails to even deal with the primary sector's simple request to align the agreed He Waka Eke Noa milestones with the farm production year, rather than the calendar year.
This is important because farmers' software systems are production year-based and having to do a whole lot of back calculations for a calendar year platform is complicated and time-consuming.
It's also disheartening, and hardly good faith as we set out on the He Waka Eke Noa partnership, to find the "fall-back" (read "threat") of putting agriculture in the ETS is still written into the legislation.
Federated Farmers remains committed to taking innovative and ambitious action towards fighting climate change and despite the challenges posed by the Covid-19 pandemic we remain committed to achieving a 2050 warming neutral New Zealand agricultural sector.
Increasing the costs of inputs that do not currently have an alternative in most of New Zealand via the ETS, will quickly hurt farmers, consumers and the wider economy.
It makes much more sense to see more investment in innovative projects that will help the New Zealand economy recover while accelerating the transition to a climate friendly future.
One obvious project would be for the Government to reconsider previously rejected large scale water storage projects, which both deliver renewable electricity while enabling New Zealand to better prepare for the expected future droughts brought on by climate change.
And the government could reverse the effective ban on Genetically Modified Organisms (GMOs) in New Zealand and allow trials to happen on our own shores of the ground-breaking varieties of grass that can lead to less greenhouse gas emissions from livestock.