The Government will begin charging farm-level emissions at the “lowest possible price” from 2025 under a new plan released on Friday.
Agriculture Minister Damien O’Connor announced the decision in a press release which committed to setting up a system to measure and price agricultural emissions.
Farm-related emissions make up half of all New Zealand’s greenhouse gas emissions, mostly methane, and have to be reduced in order to meet 2050 net-zero climate targets.
A partnership (He Waka Eke Noa) between the government and the farming sector was established to set up a pricing scheme, but negotiations reportedly broke down in May.
The new plan unveiled on Friday pushes the start date for emissions pricing back by nine-months, giving it a start date of October 2025.
O’Connor said the agriculture sector will have to adapt to a low emissions economy over the coming years, with or without Government intervention.
“It’s a fact of business in the 21st Century, but with the support of the government we can make that transition in a pragmatic way with the sector.”
The government had listened to farming leaders and was being “flexible” in its approach.
“In my meetings with sector leaders, they have reiterated their commitment to taking a collaborative approach on agricultural emissions through the sector partnership He Waka Eke Noa and acknowledge work is needed to meet our climate targets,” he said.
The plan will take a split-gas approach, which recognises that methane remains in the environment for a shorter period of time than carbon dioxide and nitrous oxide.
Farms will have to begin reporting their emissions in the last quarter of 2024 and the pricing will begin the following year. This price will be set at “the lowest level possible to meet the reduction goals”.
Work will also be done to find “scientifically valid” ways to recognise on-farm emissions sequestration within the existing emissions trading scheme.
“Our decisions accommodate the key issues raised by the partners on timelines, and also set a framework for the factors that will determine the farm-level levy price,” O’Connor said.
A law change would be required to stop farms from being thrown into the Emissions Trading Scheme from January 2024, as currently legislated.
Parties pushback
The National Party previously supported the He Waka Eke Noa process but withdrew its support shortly after the Federated Farmers’ chair, Andrew Hoggard, signed up to be an Act Party candidate.
National announced a new plan which would delay emissions pricing until 2030.
An independent board would be established next year to implement a system, although the ministers of climate change and agriculture would both have a veto power.
Todd McClay, National’s agriculture spokesperson, said the party was confident climate goals could be met without “closing down” the farming sector.
“A strong agriculture sector means a strong New Zealand economy which will help us to reduce the cost of living, lift incomes and deliver the public services New Zealanders deserve.”
Labour’s plan also received criticism from the other side of the aisle. James Shaw, co-leader of the Green Party, refused to support the deal, despite being a Government minister.
“In my role as the Minister of Climate Change, I have made clear to my Labour colleagues why I do not support their preferred option for pricing agriculture emissions. We have agreed to disagree.”
He said there needed to be a cap on total emissions that reduces over time, like in the Emissions Trading Scheme (ETS).
“Our emissions only started to come down when I introduced a cap into the NZ ETS in our first term of Government.”
“We should learn from the mistakes that were made with the NZ ETS when it comes to a pricing system for the remaining half of our emissions that come from agriculture.”
The Green Party would set an annual cap on methane emissions and reduce it every year to make sure targets in the Zero Carbon Act were met.
Farmers would be able to trade units amongst themselves and set their own prices, without speculators or outside organisations.
“Landowners could earn revenue from the ETS by planting trees, rewetting peatlands or any other scientifically valid way of removing carbon dioxide from the atmosphere,” he said.
Teanau Tuiono, the Green Party’s agriculture spokesperson, said New Zealand faced “a stark choice”.
It could elect a National-Act government, which would delay emissions pricing, or a Labour-Green government that would “demand that agriculture fully plays its part in protecting the climate”.
Federated Farmers
Mark Cameron, the Act Party’s Primary Industries spokesperson, said Labour and the Greens were waging a “war on farmers”.
“In 57 days, farmers can have certainty that He Waka Eke Noa will be gone and they can carry on farming without the threat of emissions taxes hanging over their business,” he said.
The same press release quoted Act Party candidate, Andrew Hoggard, who played a key role in negotiating Labour’s emissions pricing plan as part of the He Waka Eke Noa partnership.
Hoggard stepped down from his role at Federated Farmers earlier than planned, when it was revealed he had signed on to stand as an candidate for the Act Party.
Federated Farmers no longer supports the He Waka Eke Noa plan. President Wayne Langford said the announcement was “tone deaf”.
"At a time when farmers are struggling to keep their heads above water and are looking for support, they’re instead being weighed down with more uncertainty, complexity, and cost,” he said.
Langford said the plan was not “designed in partnership with the sector” and it could lead to a 20% reduction in sheep and beef farming.
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