KEY POINTS:
The Sustainability Council says a report commissioned by the Ministry of Agriculture gives the lie to claims that the only way farmers can reduce emissions is by cutting production.
The report by scientists at Landcare Research, Lincoln University and AgResearch summarises the current understanding of how well chemicals
called nitrification inhibitors work in the context of New Zealand pastoral farming.
They ensure nitrogen, which is added to the soil in animal wastes or urea fertiliser, is retained in forms pasture plants can use rather than lost as nitrous oxide - a potent greenhouse gas - or nitrates which leach into waterways, polluting them.
MAF commissioned the report as part of a bid to persuade UN climate authorities that they should be factored in, as a credit or offset, when calculating the national inventory of greenhouse gas emissions.
The inventory determines the size of the bill taxpayers will face over the next five years, since it is now inevitable that New Zealand will be a long way from meeting its target for net emissions under the Kyoto Protocol. Even with a price on emissions from transport from 2009 and electricity from 2010, three-quarters of the cost of complying with Kyoto over the next five years will fall on the taxpayer.
Nitrification inhibitors have been on the market since 2004 but in different forms from the two main fertiliser companies, Ballance and Ravensdown. Confusion arising from their competing claims may have hindered uptake of the technology, said MAF's director of natural resources policy, Mike Gebson.
But the Government is keen to encourage the use of nitrification inhibitors and is working with the industry to foster it, he said.
The report cites a field trial at Lincoln where applications of nitrification inhibitors over four years resulted in an average 21 per cent increase in pasture growth.
"We think it is economic to use them even without a price signal," Mr Gebson said.
A discussion document last year included among the options under consideration the carrot of a subsidy payment and the stick of a tax on urea fertiliser. Both ideas have been dropped in favour of the economy-wide emissions trading scheme due to begin next year.
But the Government does not plan to include agriculture in the scheme until 2013.
Sustainability Council chief executive Simon Terry, an economist, puts the cost of exempting agriculture over the next five years at $1.5 billion, again assuming a $30 carbon price.
"Taxpayers are being told they need to fork out a $1.5 billion subsidy when it is now confirmed that farmers can cut emissions worth at least $400 million using just one of the cost-effective techniques available," he said.
Even when agriculture is included in the emissions trading scheme in 2013 the Government has indicated that it will still cover agriculture emissions up to 90 per cent of 2005 levels. MAF scientist Gerald Rice said that would still leave the industry exposed to the price of carbon on nine million tonnes of emissions a year on current projections.
THE PROBLEM
* New Zealand's emissions of greenhouse gases increased nearly 25 per cent between 1990 and 2005, the UN says.
* A third of that increase came from agriculture, mainly because of more dairy cows.
* Two-thirds of agricultural emissions come from cattle and sheep belching methane. The other third is nitrous oxide, which packs a global warming punch 310 times greater than carbon dioxide.
* But compounds called nitrification inhibitors show promise as a means of curbing nitrous oxide emissions.
POTENTIAL BENEFITS PUT AT HUNDREDS OF MILLIONS
The Landcare report includes an estimate of how much difference it would have made if every last hectare of dairy land had had nitrification inhibitors applied to it in 2004 at the optimal time of year. It is not considered suitable for most sheep and beef operations.
It would have reduced national emissions of nitrous oxide by a fifth, the equivalent of 2.4 million tonnes of carbon dioxide. That would have nearly halved the growth in agricultural emissions since 1990 (Kyoto's baseline year).
Even allowing for continuing growth in the national dairy herd, over the next five years the savings would be worth $400 million, assuming a carbon price of $30 a tonne.
That is what high-quality, low-risk emissions permits are worth on the international emissions trading market. But the $400 million figure is an upper limit, based on 100 per cent uptake of the technology by dairy farmers and ideal conditions.
The effectiveness of nitrification inhibitors varies with factors such as temperature - they are much more likely to be useful in Southland than Northland - and how soon they are applied to pasture after grazing.