A legal degree may become a necessary skill for farmers as feel-good politicians and inadequate MPI officials move to implement their zero carbon goals, targets farmers would otherwise welcome

Finally, the day that concerned many farmers when Labour, New Zealand First along with the Greens managed to form an ‘against the odds’ government, has arrived; the Zero Carbon policy roll-out.

Farmers will not be blamed if they came away totally confused if they listened to the same media sources I did. Very little on the facts, some of theirs were blatantly wrong i.e. in TV1’s case saying that agriculture with methane was responsible for 48% of greenhouse gas emissions. (In fact, methane is approximately 33% - agricultural emissions are made up of approx. 2/3 methane and 1/3 Nitrous Oxide).

Nitrous oxide was not mentioned once in reports I listened to and a remarkable lack of detail around how it will be rolled out except for a snippet from the PM saying that Ag is crucially important to New Zealand and liabilities would increase at 1% per year for 30 years.

Among all this, farming leaders were not happy saying Methane (CH₄) was being dragged in at too higher rate and higher than the working party had recommended and Greenpeace saying farmers had been let off the hook.

So, what are the facts as we know?:

The aim of the Bill is to get to (net) Zero Carbon (except methane) by the soonest possible time. This is seen as 2050, (so perhaps not as urgent as we were led to believe). With the result to reduce any climate warming to 1.5^oC or less.

Agriculture has to reduce its gross methane emissions from a 2017 base figure by 10% by 2030 and by a figure between 24% - 47% by 2050. This means that offsets such as tree cannot be used to assist in this budget. For livestock farmers this will currently be problematic, and it is this area that will attract the most debate going forward.

Nitrous Oxide as with other gases such as CO₂ will need to be at net 0% by then. Sounds easy? Total net emissions lifted by 23% between 1990 and 2017 to be fair much of it has come from transport energy (38.2%) with agriculture lifting by 13.5% among that Sheep and Beef due to declining numbers has reduced by around 30% so, sorry, but dairying is the major ‘culprit’ here.

However, while agriculture is discussed at the sector level the policy will be targeted at individual farms and their emissions and liability.

Rather than being a free-standing bill, the measures are framed as an amendment to the existing Climate Change Act, as the Climate Change Response (Zero Carbon) Amendment Bill presumably to smooth its pathway through parliament.

The Bill includes a clause that the Minister (government) must review the 2050 targets by 2036 or earlier if the Minister request a review and changes to targets may come out of that review but only if a result of some very specific terms which cover almost every eventuality.

(a) significant change has occurred since the commencement of this section to 1 or more of the following, as they relate to climate change:

(i) global action:

(ii) scientific understanding of climate change:

(iii) New Zealand’s economic or fiscal circumstances:

(iv) New Zealand’s obligations under relevant international agreements:

(v) technological developments:

(vi) distributional impacts:

(vii) equity implications (including generational equity); and

(b) the Commission is satisfied that the significant change justifies the change to the target.

Emission budgets will be set for five-year periods once we are past 2025 and up to 2035 these will be all set by December 31st, 2021. In setting the targets consideration must be given as to how these targets may be realistically met plus another range of “cover all options” clauses.

If a budget period achieves greater savings than budgeted these can be carried forward into the next period and if a budgeted period falls short of budgeted emissions government may drag back up to 1% (borrow) from the following period.

Clause 5ZJ: Effect of failure to meet 2050 target and emissions budgets

It's a bit of a puzzle and legal whizzes may be able to shed further light on this as the bill says “No remedy or relief is available for failure to meet the 2050 target or an emissions budget, and the 2050 target and emissions budgets are not enforceable in a court of law, except as set out in this section”. Remedy and Relief translate into penalty however whether this applies to the Government of the day, which is what I suspect or to individuals, (which I doubt) I’m not sure.

The rest of the bill is in the main administration and deadlines for adaption polices to be formed.

So, for livestock farmers what does this mean?

 As usual the devil will be in the detail and that is yet to be revealed. Almost as an aside the PM said that the ETS would be the tool to achieve this. Which takes us back to the hoary old chestnut of: how will emissions be assessed on livestock farms?

Politicians like easy/simple solutions so are likely to go for an averaged stock-unit based system which is likely to blur the incentives as a specific measuring of individual farms will be overly complex and expensive. The averaging approach makes it difficult to see how new technologies such as vaccines, feed mixes, genetics and whatever else comes up in the future will be built into farm assessments given that every farm is different and may apply different technologies let alone the variations in stock weights and ages etc. Planting trees is relatively simple to measure in comparison.

Whatever is to be applied to farming I think setting up this bill to this stage will be seen as a simple exercise when compared to what’s ahead. This is when farming leaders will start to earn their pay as if the M Bovis programme is anything to go by MPI cannot be relied upon to have a detailed understanding of farming systems and provide the correct advice.

GDT thoughts

On to more mundane things the latest GDT, commentators including the Fonterra CEO are applauding the 11th straight lift in a row and that is certainly better than falls. However, as with the last three auctions Whole Milk Powder has fallen be it at only -0.5%. WMP is the main driver of the New Zealand dairy price and while prices are adequate at $3,249 the trend is a little disturbing. Given the overall GDT price was up +0.4%, Cheddar dropping by -2.4%, butter par at 0% change and the WMP -0.4% fall it is hardly a pass mark.