KEY POINTS:
As the Government has another go at coming up with a climate change policy, it faces having to make important decisions on what to do about agriculture, the source of half New Zealand's greenhouse gas emissions, and forestry, the main provider of offsets to emissions.
An underlying principle of the discussion documents issued by the Government before Christmas is that "all sectors of the economy should plan an equitable part in the national response to climate change".
But it adds that some will be able to achieve emissions reductions more easily than others.
The Forest Owners Association is worried about a possible repeat of the 2002 decisions to effectively shield agriculture from Kyoto obligations, at the expense of forestry.
"It is the intensification of agriculture, primarily the growing national dairy herd, that has been and will continue to be the major emissions problem for New Zealand," it said in its submission.
The association cites projections that agricultural emissions in Kyoto's forest commitment period, 2008 to 2012, will be 38 per cent above 1990 levels.
Similar growth is expected in transport emissions which are also treated leniently, at least in the short term, in the Government's proposals.
Federated Farmers says imposing price-based or regulatory measures on farmers would be pointless as they have no practical options to reduce emissions, except to produce less food.
Instead, it wants longer-term research on ways of helping farmers reduce methane and nitrous oxide emissions on their farms.
But that line of argument may not sit well with policymakers who remember the ferocity of Federated Farmers' campaign against the "fart tax", a levy to pay for precisely the research it is now suggesting.
The Pastoral Greenhouse Gas Research Consortium, which co-ordinates the research, says in its latest annual report that although no methane mitigation technology has yet been proven, strong leads have been identified.
And it is quite bullish on nitrous oxide emissions, which account for a third of agricultural and a sixth of national emissions.
"Mitigation through nitrification inhibitors is well advanced and available to farmers now," it says.
"As the understanding of these products expands we believe producers will realise the opportunity they offer to more efficiently manage the nitrogen cycle within farm systems."
It cites trials showing enhanced grass growth from the use of nitrification inhibitors, as well as significant reductions in nitrous oxide emissions to the atmosphere and nitrates leaching into waterways.
One of the options being considered is a subsidy for up to 25 per cent of the cost of nitrification inhibitors, possibly paid for by a 10 per cent tax on nitrogen fertilisers.
Federated Farmers opposes the tax, but not a contribution to the cost of nitrification inhibitors, which could be seen as the purchase of an environmental service from farmers.
It gives guarded response to two more fundamental suggestions for dealing with agricultural emissions - a tradeable permit system and the use of offsets like forestry.
It says the initial allocation of permits would be contentious and potentially litigious as farmers sought compensation for loss of property rights and flexibility for new land uses.
The Forest Owners Association sees a lot of potential in farmers using offsets to cover emission increases.
In any case, it says, a clear sign is needed that land management decisions must take into account the effect of greenhouse gas emissions.
It repeats its opposition to any deforestation penalty when forests established before 1990s are harvested bu not replanted. It regards that as a retrospective tax on people who invested without any expectation that their ability to subsequently alter land use could later be impeded.
If farmers faced the cost of agricultural emission, the Forest Owners Association says, there would be no need for measures to constrain forest owners from changing land use.
Conversely, attempts to combat deforestation would not overcome the perceived returns from agriculture unless the true costs of these returns were reflected in the price of farm land.
The association says it welcomes the prospect of Kyoto credits, and associated liabilities upon harvest, being devolved for new forests established from this year on.
But it says it is unfair that the value created under Kyoto's rules by plantings since 1990 is not recognised.
The owners of Kyoto forests, established since 1990 on land not previously forested, continue to press for a share of that value, estimated at more than $1 billion, which the Crown on current policy retains.
Forest Owners Association chief executive David Rhodes says that the National Party, the Greens, the Maori Party and Act all recognise that the policy needs to change.
A May 2000 Cabinet paper from then-Foreign Minister Phil Goff talks of "allowing the owners of sink credits to trade them freely on the international market".
"New Zealand made it clear during the Kyoto negotiations that we do not intend to use the sink credits to in effect cross-subsidise our emitting sectors, allowing them to avoid taking action."
Yet with the exemption of agriculture in 2002 and the scrapping of the planned carbon tax in 2005, that is exactly what has happened.
THE SUBMISSIONS
The Forest Owners Association
* Is worried that agriculture will be shielded from Kyoto obligations, at the expense of the forestry industry.
* Wants a clear sign that land management decisions must take the effect of greenhouse gas emissions into account.
Federated Farmers
* Says having regulatory measures for farmers would be pointless as they have no practical way of reducing emissions, except by producing less food.
* Wants research on ways of helping farmers to reduce their methane and nitrous oxide emissions on their farms.
