The Government is proposing a levy on farmers for greenhouse gas emissions to begin in 2025.
The proposal is included in documentation released by the Government on Tuesday, which is the Government's response to proposals from the He Waka Eke Noa Primary Sector Climate Action Partnership bringing together industry, Māori and Government
The proposal is for "a farm-level, split-gas levy to price agricultural greenhouse gas emissions".
The Government said the proposal "would see New Zealand farmers lead the world in reducing emissions and help give NZ a competitive advantage in green conscious global marketplace".
In response, industry body Federated Farmers said the proposals "will rip the guts out of small town New Zealand, putting trees where farms used to be". The full media release from Federated Farmers is appended at the bottom of this article.
The opposition National Party spokesperson on agriculture Barbara Kuriger said the Government announcement "threatens the sector consensus by failing to recognise New Zealand farmers are already the most carbon efficient in the world". This full statement is also included at the bottom of the article.
The Government said modelling shows the proposal should meet Zero Carbon Act 2030 methane reduction target.
It said it had "largely" adopted the farming sector’s proposal to price emissions at the farm level, giving farmers control over their own farming systems with the ability to reduce costs.
Revenue would be recycled back into agriculture sector through new technology, research and incentive payments to farmers.
The Government is seeking feedback. This includes how the levy will be set, governance arrangements of the system, how farmers will report and pay for their emissions, and recognising sequestration.
If an alternative pricing system is not implemented by 1 January 2025, the Climate Change Response Act 2002 states that agricultural emissions will be priced under the New Zealand Emissions Trading Scheme (NZ ETS).
Consultation will close on 18 November 2022. Once submissions have been considered, final proposals will go to Ministers for approval in early 2023.
The Government said it included "many" of the recommendations of the He Waka Eke Noa Partnership of agriculture sector groups for farm-level emissions pricing, and proposed modifications in the consultation document based on advice from the Climate Change Commission.
Prime Minister Jacinda Arder said: “This is an important step forward in New Zealand’s transition to a low emissions future and delivers on our promise to price agriculture emissions from 2025.
“The proposal aims to give New Zealand farmers control over their farming system, providing the ability to reduce costs through revenue raised from the system being recycled back to farmers, which will fund further research, tools and technology and incentives to reduce emissions.
The details of the proposals are available here:
Climate Change Minister James Shaw said by 2025 New Zealand would introduce a system that means farmers pay a price for their emissions "and are rewarded for taking action to reduce their climate pollution".
“The levy improves on the proposal put forward by the He Waka Eke Noa partnership and brings New Zealand’s gross methane reduction targets within reach. It is better than the ‘backstop’ of bringing agriculture into the Emissions Trading Scheme, which could see agribusiness simply offsetting farm emissions without making any actual changes to reduce emissions on farms.
“Cabinet considered a range of options alongside the levy, including a system based on managing the total volume of pollution, rather than managing the price. While this was not Cabinet’s preferred option for 2025, we are seeking feedback on its merits.
“There are a few other outstanding issues which we are keen to hear views about, such as how nitrous oxide emissions from fertiliser should be treated,” Shaw said.
It’s been three years since the Government, farming leaders and Māori formed the world first He Waka Eke Noa – Primary Sector Climate Action Partnership (the Partnership) to reduce agricultural emissions.
In mid-2022, the Partnership provided the Government with its recommendations for a farm-level pricing system. He Pou a Rangi – Climate Change Commission contributed its own advice on agricultural emissions. The Government’s proposals build on those recommendations and advice.
Pricing agricultural emissions at the farm level presents the best opportunity for Aotearoa New Zealand to meet its climate change targets. It enables farmers to be aware of and have ownership of their emissions, including opportunities to reduce them.
Here are some of the details from the summary of the consultation paper.
The Government supports the Partnership’s recommendation of consulting on a farm-level, split-gas pricing system for agricultural emissions and the following elements:
- that business owners are responsible for reporting and paying for emissions
- using levy revenue to fund research and development into tools and technology to help lower on-farm emissions
- incentive payments to encourage the uptake of approved mitigation technologies how emissions are calculated.
The Government has proposed alternative approaches on some of the Partnership’s recommendations where they could be difficult to implement by 2025 or risk undermining the effectiveness and credibility of the pricing system. The recommendations are: a core levy in 2025 with enhancements built in over time
- sequestration recognised for riparian and indigenous vegetation
- a more streamlined governance structure
- a transparent, rules-based process for setting levy prices
- a review in 2030
- some collective reporting at first
- an interim processor levy as a transitional step (if required).
This is the media release from Federated Farmers:
The greenhouse gas reduction plan released by the government this morning will rip the guts out of small town New Zealand, putting trees where farms used to be.
The plan aims to reduce sheep and beef farming in New Zealand by 20% and dairy farming by 5% to achieve the unscientific pulled-out-of-a-hat national GHG targets.
This is the equivalent of the entire wine industry and half of seafood being wiped out.
The government’s rehashed plan to reduce on-farm greenhouse gas emissions throws out the two and a half years of work the industry did to come up with a solution, supposedly all that time in a ‘partnership’ with government to achieve a workable solution which would not reduce food production.
"This is not what we’ve got this morning. What happened to the ‘historic partnership’?
"Federated Farmers is deeply unimpressed with the government’s take on the He Waka Eke Noa proposal and is concerned for our members’ futures," Federated Farmers National president and climate change spokesperson Andrew Hoggard says.
"We didn’t sign up for this. It’s gut-wrenching to think we now have this proposal from government which rips the heart out of the work we did. Out of the families who farm this land.
"Our plan was to keep farmers farming. Now they’ll be selling up so fast you won’t even hear the dogs barking on the back of the ute as they drive off.
"Some overseas buyer can plant trees and take the carbon cash."
The scariest impact from the government’s rehash of the He Waka Eke Noa proposal was that it’s own modelling showed the impact on sheep and beef farming would be as high as 20%.
It also shows that world agricultural emissions would increase, not decrease, under this plan.
"The government’s plan means the small towns, like Wairoa, Pahiatua, Taumaranui - pretty much the whole of the East Coast and central North Island and a good chunk of the top of the South - will be surrounded by pine trees quicker than you can say ‘ETS application’."
So all the small town cafes, car yards, schools, pubs, rugby clubs, hairdressers and supermarkets can say goodbye to the small town business supported by the agriculture around them.
This is the statement from the National Party:
Today’s farm emissions announcement threatens the sector consensus by failing to recognise New Zealand farmers are already the most carbon efficient in the world, National’s Agriculture spokesperson Barbara Kuriger says.
“National is committed to emissions targets, including reaching carbon Net Zero by 2050, the Paris Climate Agreement and reductions in agricultural emissions.
“National recognises New Zealand farmers’ significant contribution to the economy. Agriculture earns half this country’s export revenue.
“We are concerned that today’s announcement puts consensus at risk. The Government’s own figures indicate:
- Sheep and beef farming could reduce by 20 per cent and dairy by 5 per cent by 2030
- Two-thirds of the reduction in emissions in New Zealand will be undone by higher emissions overseas as jobs and production shift offshore
- The plan does not allow farmers to earn extra income from some forms of on-farm planting and carbon capture.
“Worryingly, the large falls in sheep production in New Zealand could lead to higher global emissions as more sheep production moves overseas to less-efficient farms.
“Broad industry support is crucial for any enduring solution to agricultural missions.
“This plan could have significant implications for our rural towns and communities. The Government has put at risk the consensus built by He Waka Eke Noa Partnership over three years.
“National supports efforts to reduce emissions and we encourage the Government to work with the sector to find an enduring solution.”
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