Farmers may win ETS reprieve

NZ farmers are unlikely to be included in the emissions trading scheme in 2015. Photo / Kenny Rodger

New Zealand farmers are unlikely to be brought into the emissions trading scheme in 2015 unless scientific advances are made in reducing animal emissions and our trading partners make giant strides in putting a price on carbon, the Government says.

Speaking at the Federated Farmers National Council yesterday, Climate Change Minister Nick Smith noted the Government had already said it would not proceed with the inclusion of agriculture and other sectors until it sees comparable progress from other countries.

The entry of the agricultural sector into the emissions trading scheme (ETS) has been delayed once - from 2013 to 2015 - and the Government has also increased measures to shield the sector from the full impact of the scheme once it does enter.

Talking to reporters later, Smith said the Government would act on a review of the scheme next year before deciding whether agriculture's entry would be delayed.

"Part of the review will be looking at what progress has been made in comparable countries.

"Unless there is progress from other significant trading partners then a National Government would be unlikely to proceed with the inclusion of agriculture."

However, ahead of next month's climate change summit in Cancun, Mexico, prospects of any carbon pricing regime in the United States or Australia have deteriorated.

Australian Prime Minister Julia Gillard in August abandoned plans for a European-style ETS and has a committee looking at whether to proceed with an ETS, a carbon tax or a hybrid.

US President Barack Obama parked his plans for an ETS after the Republicans took control of the House of Representatives at the midterm elections and has adopted only modest goals for Cancun.

"There's a real question mark as to whether the Gillard Government is going to be able to make progress in getting a carbon price into their economy. I'm more pessimistic about the US," said Smith yesterday.

Another big factor in the Government's decision over agriculture was whether a "technological breakthrough that we really need" could be found enabling farmers to reduce animal emissions.

Smith said the third important consideration was the economy.

"When the economy is just recovering as it is at the moment, we are hesitant of adding additional costs."

Smith's comments were welcomed as "fantastic" by Act deputy leader John Boscawen. "[Agriculture] shouldn't have been there in the first place. We're the only country in the world to have agriculture in an ETS and the sooner the Government announces it is taking it out the better."

Green Party co-leader Russel Norman said New Zealand risked getting left behind if it delayed agriculture's entry into the scheme.

"If we want our agriculture and other sectors of the economy to be technological leaders rather than being dragged behind then we need to give prices signals that reward good practice."