The Government claims its plan for pricing agriculture emissions is pretty much what the farming sector said it wanted, so why the rural uproar with claims farmers and their communities will be wiped out?
What's in the Government's proposal for reducing agricultural greenhouse gases that's different enough from the $51 billion-plus sector's own blueprint to provoke Federated Farmers into calling it "a gut-wrenching" outcome that will "rip the heart out of small town New Zealand"?
The first thing to know is New Zealand, whose economy relies heavily on agriculture export production, is the first country in the world to try to put a price on agricultural emissions.
Second is that to date, the sector has not been pulled into the well-established Emissions Trading Scheme, despite howls of protest from environmentalists but after recognition from experts that its variables and special features would be like forcing a square peg into a round hole.
There are only two areas of major difference between what the Government is proposing and what He Waka Eke Noa (HWEN), the primary sector climate action partnership that came up with agriculture's blueprint, recommended - but in those, it seems they might as well be talking different languages. (The Government was represented on HWEN).
The two big contrasts are in their views on emissions pricing and carbon sequestration recognition. (Carbon sequestration is the process of storing carbon - carbon dioxide is naturally captured from the atmosphere through biological - think farming, think forestry, grasslands, tree planting - and chemical and physical processes).
According to HWEN, in both areas, what the Government wants to do will particularly hurt the country's sheep and beef farmers, backbone of the $12 billion red meat export industry.
HWEN programme director Kelly Forster says under the Government's pricing proposal, unveiled this week, it might hit its emissions reduction target but in doing so, wipe out 20 per cent of sheep and beef farmers.
"They've said in their report socio-economic impacts could be considered but are second to achieving the targets.
"Obviously that is something the sector can't stand behind."
But why would sheep and beef farmers be hit by emissions pricing more than dairy farmers?
"There's an assumption dairy farmers are worse in terms of emissions but that's not the reality. Yes, sheep and beef farm emissions are significantly lower per hectare, but they have a lot more hectares," says Forster.
That means a sheep and beef farm could have similar total emissions to a much smaller, more intensely farmed dairy property.
"The atmosphere doesn't care if it (emissions) comes from one or two hectares. It just sees a kilogram of methane. The reason why the burden falls more heavily on the sheep and beef sector is they don't make as much money as dairy," says Forster.
A Government paper discussing the impacts of the Government proposal seems to support HWEN's view that achieving its emissions target overrides socio-economic considerations.
"If agriculture emissions are not priced, or if the price is too low to reduce emissions, Aotearoa New Zealand is unlikely to achieve its emissions reduction goals. In this event, the Government will have choices about how to make up the shortfall... Other sectors may be required to pick up some of the shortfall in reductions needed."
The paper notes any form of agricultural emissions pricing system will have "significant" flow-on effects for wider society and the general public, the economy is likely to be affected, including exports, land use in New Zealand will change, and the cost and availability to consumers of some food and fibre products may change.
HWEN worked for more than two years on its recommended blueprint of how the sector should implement an emissions reduction framework by 2025, after the primary sector won its long argument against being pulled into the ETS.
In the area of how emissions should be priced, HWEN recommended an oversight board to advise on prices with ministers making the final decision. The Government wants Crown entity the Climate Change Commission to advise those ministers on price setting.
HWEN wanted separate levy rates for short and long-lived gas emissions and a separate price for sequestration. It urged a careful trajectory towards setting rates, with consideration given to the availability and cost of on-farm mitigations, social and economic impacts on farmers and their communities, and the risk of "emissions leakage" as overseas agriculture competitors cashed in on New Zealand's global-busting move.
How the Government has responded to this, says HWEN, is to say "ministers would need to be satisfied that price is sufficient to meet targets".
Still on emissions pricing, while HWEN and the Government agree a unique levy should be set for methane emissions, HWEN wanted a price ceiling - the Government proposes no ceiling.
HWEN wanted the levy for long-lived gas emissions initially set at the level required to cover sequestration and regime admin costs and to fund action, research and development. The Government wants the prices of long-lived gas emissions set annually and linked to the New Zealand unit price, with a proportional discount starting at 95 per cent and phased down to 1 per cent a year.
As for their differences when it comes to recognising sequestration, HWEN's Forster says that's "pretty easy" to grasp.
"There are a lot of different categories of sequestration. We broke them into categories to make it practical to apply a calculating framework of rewarding them (farmer and grower sequestration efforts).
"Of the eight or so categories we recognised, they are recognising two.
"The implications again fall back on the sheep and beef sector. We know they have more opportunities to plant trees so that exacerbates the challenges the sector will have with an emissions price but also, it doesn't hit a general sense of fairness... you are being charged on your emissions but you are also not being recognised for sequestration happening on your farm."
Beef+Lamb NZ says red meat farmers have more than 1.4 million hectares of native forest on their land absorbing carbon. It says it's only fair this is recognised by the new emissions pricing regime from day one.
HWEN wanted recognition of additional on-farm sequestration from a wide range of permanent and cyclical forms of vegetation to offset the cost of the emissions levy. It recommended that from 2025, the new scheme should recognise vegetation that is part of existing planting programmes, and from 2027, it should recognise all categories of vegetation and back date recognition to 2025.
Longer term, HWEN wanted sequestration transitioned into the ETS once the ETS was improved and expanded.
The Government's response is to propose from 2025, rewarding sequestration from riparian margins planted after 2008, and reward, through contract payments, additional sequestration from active management of indigenous vegetation.
The Government also proposes a portion of the levy be set aside for sequestration payments, an application process, and a contract set for a number of years.
Long-term, the Government proposed incorporating vegetation categories into the ETS, and said it was considering an approach to "propose new categories" for inclusion in the ETS "where an individual pays for science and measurement."
The Government says agriculture accounts for nearly half of New Zealand's gross greenhouse gas emissions. They mainly come through methane – burped out by ruminant livestock like cattle, sheep and deer – but also from nitrous oxide, stemming from sources like fertiliser and cow urine.
The Government has committed New Zealand to becoming a world leader in climate change action.
A new domestic emissions reduction target by 2050 was set into law in November 2019 with the Climate Change Response (Zero Carbon) Amendment Act. The target is for net zero greenhouse gas emissions by 2050 (other than for biogenic methane).
The Government established the Climate Change Commission in December 2019 to: provide advice to Government on climate change mitigation and adaptation and monitor progress towards the new 2050 target emissions budgets and the implementation of a National Adaptation Plan.
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