Guy Trafford has read the Government's proposed response to HWEN and thinks the immediate strong negative reaction by farmer lobby groups is somewhat overdone

What the Government has laid out as a document for discussion for the future farming emissions reduction programme is very close to what the interested sector groups put to the Government as a plan they could live with. Given this, the heated response from some farming groups, but notably Federated Farmers, is perhaps surprising and needs a closer look.

The fact that Greenpeace do not agree with is no surprise and likewise Groundswell. Greenpeace will not be happy until all animal farming is gone (perhaps a slight exaggeration) and Groundswell seem to believe farmers should not be paying for any externalities.

So, without looking at all the finer details, what are the major differences from what was proposed earlier this year?

1. The Climate Change Commission, in consultation with farming will set the price for methane, not He Waka Eke Noa. Not a surprising outcome given that the farming sectors would be trying their utmost to pay the minimum. He Waka Eke Noa had put forward 11 cents per kg of biogenic methane which when converted to a CO2e basis is said to come out at $3.93 or less than 5% of the current ETS price. How often the price will be reviewed is up for discussion with the government suggesting every 3 years but seems open minded here.
2. The other major point of contention appears to be around benefits gained from sequestration. The government is going down a pathway that would not recognise some classes of sequestration such as small woodlots, shelterbelts and scattered trees. There is actually nothing new here as under the ETS the rules have been:

To qualify as forest land in the ETS, the trees in the forest must:

• cover at least 1 hectare in area
• be species that can reach at least 5 metres in height when mature in that location
• have (or be expected to reach) canopy cover of more than 30% in each hectare
• be at least (or expected to reach) 30 metres across on average.

In my experience, trees, such as poplars etc, planted at 100 per ha should meet the requirements. Even under He Waka Eke Noa proposals there is nothing to stop farmers being able to claim these ETS credits. However, they cannot use them to offset the farms methane emissions. Presumably it then becomes a bit of a money go round for those farmers who do chose to plant eligible trees. They receive monies from ETS in one hand and use (a small proportion of) it to pay for their methane emissions with from the other. Farms with little lower-class lands such as dairy or finishing are less likely to use this option. Having a separate He Waka Eke Noa system for plantings not recognised within the ETS was /is always going to be problematic and bureaucrats don’t like things being less than simple.

After finding President of Fed Farmers Andrew Hoggard and the other recent leaders a more rational lot than their predecessors his all guns firing approach to this seems a reversal of style. No doubt the fact that the governments modelling has shown that the new policy is likely to see a reduction in Sheep and Beef farming by 20% probably due to the tree planting responses as above whereas dairying would reduce by (only) 5% has hit a chord.

However, models while useful are almost always wrong and if the 20% is as it should be contained to the worse 20% of any farm the outcome may not be that dire.

Those farms likely would receive an income stream greater than they would have from the proceeds (less costs) of farming inferior land. It certainly doesn’t have to mean that 20% of total farms (as units) would disappear. At least that is my reading.

Groundswell are calling for (yet another) nationwide protest as they appear to be disagreeing with any form of rules-based system which may have $s attached, calling the latest proposal a “nuclear moment”. Hopefully, Hoggard’s response to push back is not driven by the need to appear more acceptable to the more extreme elements such as Groundswell.

There is a 6 week period for consultation to take place, no doubt the price of methane will be a major point as could the rate of increase in reduction although the current -10% by 2030 appears constrained with it going up to between -24% to -47% by 2050.

Given that farming could have been dragged into the ETS in 2025 if no workable proposition was agreed with, those who are vehemently against the government version of He Waka Eke Noa could have been looking at something far more draconian. Treasury agree with thrust of programme but have reservations about success of getting emissions to planned reduced levels by 2030.

Due to some of the intricacies in setting up a farm-based emissions assessment system, an interim processor based levy in 2025-27 or until farm based system ready will be the starting point.