COMMENT:

The prospects of a Zero Carbon Act, setting up a durable and depoliticised framework for climate policy, are not looking too bad.

While there are no doubt a range of views in the 14,000 submissions the Government received on the consultation paper on the subject, a consensus does seem to be emerging.

In recent weeks we have seen progressive statements from a Farming Leaders Group drawn from all the major industry bodies in that sector and from a Climate Leaders Coalition representing companies collectively responsible, they claim, for 22 per cent of private sector GDP.

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And crucially for the politics of it, at Fieldays last month, Opposition leader Simon Bridges acknowledged the need for a consensus between the major political parties for an institutional framework through which to address climate change, and offered to work with the Government.

The proposed Zero Carbon Bill has yet to be drafted, but what is envisaged is setting a statutory target of net zero emissions by 2050, with a mechanism to set a series of medium-term carbon budgets consistent with that goal, and establishing an independent and expert Climate Change Commission. The commission would monitor progress towards the goal and advise on policy to achieve it, with ultimate decisions made, of course, by the Government of the day.

Bridges wants assurances that the process of appointments to the commission is bipartisan, and that it will have to give appropriate consideration to economic as well as environmental impacts in giving its advice.

A key decision is how the legislation will define carbon neutrality, or net zero emissions.

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A key decision is how the legislation will define carbon neutrality, or net zero emissions.

What has cleared a potential roadblock to consensus here is the Government putting up as one of the three possible options a definition that would carve out methane for special treatment.

Methane, largely the result of the digestive processes of cattle and sheep, comprises 44 per cent of national emissions.

It is a potent but relatively short-lived greenhouse gas, which breaks down into carbon dioxide (CO2) and water. Before it does, it inflicts a lot of damage, though. A tonne of methane emitted today has the same global warming impact over the next 20 years as 84 tonnes of CO2.

But because it does not simply accumulate in the atmosphere indefinitely, there is a scientifically respectable case for treating it differently from the long-lived gases.
To stabilise the stock of CO2 or nitrous oxide in the atmosphere, you have to stop emitting them, or offset them by an expanding forest estate.

To stabilise the level of methane, you have to stabilise the flow, not reduce it to zero.

If you think it is good enough, at least for a mid-century target, to stabilise the methane level, in principle that would mean any further increase in dairy, beef and lamb production would have to be matched by a reduction in the emissions intensity of pastoral faming. In other words, fewer emissions per kilogram of meat or litre of milk.

Bridges says one of the guiding principles of National's approach is that the best way to achieve the innovation and technological change needed to meet any target is to continue to use market-based price signals, such as the emissions trading scheme is designed to deliver.

But there is a caveat: "We should also recognise that where technology does not exist to mitigate emissions, adding a tax just makes the industry worse off without reducing global emissions." The argument Bridges echoes — that at this stage farmers could not do anything to reduce emissions in response to a carbon price, except cull stock — cannot be swallowed whole, however.

The emissions intensity of pastoral farming has been improving even without any stimulus from climate policy. Between 1990 and 2012, methane emissions per kilo of meat or litre of milk improved by 1 per cent a year (relative to their average over that period).

Scientists at the NZ Agricultural Greenhouse Gas Research Centre expect intensity to continue to reduce, though at a slower rate. As in other industries, there are productivity gains to be had from narrowing the gap between average and best-practice performance.

Meanwhile, research is under way aimed at developing new technology to reduce methane emissions through a vaccine or inhibitors which target methane-producing organisms in an animal's digestive system.

In addition, some gains might be possible from selective breeding: if one cow lets rip copious eructations of methane while a similar cow next to her emits genteel lady-like burps, and if you can identify which is which, it makes sense to breed from the second one.

Adjustments to pasture species may help as well.

But as Andy Reisinger and Harry Clark of the Agricultural Greenhouse Gas Research Centre acknowledge in a 2016 paper on the subject, "Common to all these approaches is that they are not currently available". The timing of their potential introduction is speculative, they say, as is how effective they would be in reducing emissions.

Their best case scenario, with a high adoption of new technologies, would be a 30 per cent reduction in the emissions intensity of pastoral farming by 2050. The effect on absolute emissions from the sector would depend on how much intensity gains were offset by higher production.

The coalition agreement between Labour and New Zealand First provides that if agriculture is brought into the emissions trading scheme, only 5 per cent of its emissions would be subject to the carbon price, compared with 10 per cent for other emissions-intensive, trade-exposed industries. That is the policy response to the international competitiveness or "leakage" problem Bridges refers to.

Before we conclude that farmers should continue to get an entirely free ride here, we need to remember that they trade on a clean green national brand and that New Zealand is internationally accountable for all of its emissions, including the half that arise from pastoral farming.

If those who profit from those emissions entirely escape any cost, it falls on the rest of us.

That subsidy gets reflected in land prices. The beneficiary is the vendor of farmland, who gets a higher tax-free capital gain, while the buyer, the farmer of the future, just gets a correspondingly larger mortgage