Climate change settings must enable farmers to continue production while allowing them to make efficiency gains. Photo / Bevan Conley
THREE KEY FACTS
Dr Jacqueline Rowarth is an Adjunct Professor at Lincoln University and on the board of directors of DairyNZ, Deer Industry NZ and Ravensdown.
OPINION
The Government’s newly released Climate Strategy makes good points under five themes.
These are infrastructure (Gabrielle and her pals), fair emissions pricing (incentivising reduction), affordable clean energy (renewables and more EV stations), innovation (businesses taking the lead), and nature-based solutions (biodiversity and more ways of storing carbon).
Quite how the points within the themes will be achieved remains the challenge.
Various working parties and commissions are at various stages, from inception to reporting, and the statement by Simon Upton, the Parliamentary Commissioner for the Environment (PCE) that “we currently have a fragmented environmental policy landscape with multiple policies that impact on land and water use” remains germane.
Fragmentation leads to duplication, gaps, unintended consequences and well-meaning people feeling dismayed.
In an attempt to integrate response and avoid any downside, the Government has established the Climate Change Chief Executives’ Board.
The board acknowledges the complexity of the challenges (reframed as opportunities) ahead – the complexities are too great to be able to be solved by one agency alone.
The executives comprising the board come from MfE, Treasury, Conservation, MPI, MBIE, Transport, Internal Affairs, and NEMA.
Mfat is absent, indicating that the focus on what New Zealand is trying to do in terms of climate adaptation is internal rather than external.
This is understandable — except that it might lead us into uncharted waters into which no other country ventures; rather like the removal of farming subsidies in the 1980s and, more recently, the Zero Carbon Act.
The global support (i.e., subsidies) for agriculture reached US$851 billion per year in 2020-22.
This is approximately NZ$1400b for the 54 countries covered in the OECD Agricultural Policy Monitoring and Evaluation 2023 report; New Zealand’s contribution was almost zero.
This funding pales in comparison with “fiscal support for fossil fuels” which increased in 2022 to US$1481.3b (NZ$2436b), up from US$769.5b in 2021.
The explanation was that “governments instituted measures to offset exceptionally high energy prices, driven in part by Russia’s war of aggression against Ukraine”.
The world invested almost six times New Zealand’s entire GDP (US$248.1b) in subsidising fossil fuels so that people could afford to continue their use.
New Zealand’s fuel tax reduction (March 2022 to June 2023) to help people continue their lives as normal was a drop in the ocean in comparison.
(Note that, although we praise ourselves for having a high proportion of renewable electricity, most of New Zealand’s energy is supplied by fossil fuels, including 99% of transport energy, and around 60% of industrial energy.)
Globally, governments still plan to produce more than double the amount of fossil fuels in 2030 than has been estimated to be consistent with limiting warming to 1.5°C.
It is bizarre that major producer countries have pledged to achieve net-zero emissions and have launched initiatives to reduce emissions from fossil fuel production, but none has committed to reducing coal, oil, and gas production in line with limiting warming to 1.5C.
No government policies or discourses to support a managed wind-down of fossil fuel production have been identified … and the subsidies continue.
Listen to Jamie Mackay interview Dr Jacqueline Rowarth on The Country below:
In food production, several countries, including New Zealand, are at various stages of taxing GHG emissions – but globally investing 3.4 times as much as New Zealand’s GDP in subsidising that same food production.
Some of the subsidies are based on green theories; many are considered to be distortionary.
Market price support accounts for most of the positive support to farmers.
It results from domestic or trade policies that raise or lower domestic market prices.
Examples are border tariffs, export taxes and price ceilings or floors.
Trade policies and reduction in tariffs are a focus for New Zealand exports (New Zealand has no import restrictions) and are at least one of the reasons that we are trying to reduce greenhouse gas emissions.
The largest share of support to farmers in the OECD comes from payments made on the basis of production area or animal numbers, or to top-up farmers’ receipts or incomes.
The OECD 2023 policy report highlighted that “the majority of producer support still takes the form of the potentially most distorting measures”.
Subsidies, however well-intentioned, and whether in fossil fuel or food, skew behaviour.
They can override market forces, confuse common sense and result in unintended consequences.
Regulations can have the same effect.
Carbon credits in New Zealand and the general belief in some countries and companies that planting trees can offset their commitment to reducing greenhouse gases … so that they can go on using fossil fuels; make the point.
New Zealand’s Climate Strategy is vital for the future; maintaining trade relies upon getting the settings right.
The settings must enable farmers to continue production while allowing them to make efficiency gains.
If the settings aren’t right, there will be nothing to export to keep the economy going.
The PCE has some ideas about how changes can occur, and fragmentation avoided.
An important suggestion, as Upton has said, is to “bring decision-making closer to the people who are having to make significant management changes or even change land uses”.
This echoes the National Government policy, so bring it on.
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