PM Jacinda Ardern dismisses claims Government has backed down on its ETS promises

The Government moved quickly today to dismiss criticisms that its plans to make New Zealand's rural sector greener was a backdown from a key election promise.

Instead, Prime Minister Jacinda Ardern, Climate Change Minister James Shaw and a host of farming and agricultural sector leaders today talked up the importance of the new scheme and the "world-first" Government-industry partnership.

Instead of taxing farmers on emissions between 2020 and 2025 – the Government has instead opted to work with the agricultural sector to manage and mitigate on-farm emissions through the He Waka Eke Noa programme

If the industry does a good enough job, and a new mechanism for pricing on-farm emissions is found, farmers don't have to worry about being included in the emissions trading scheme (ETS).

"We could have forced the sector into a pricing regime that it was completely allergic to," Shaw told media this morning.

"But, ultimately that would have been unsustainable."

But with this carrot comes a big stick – a "Sword of Damocles" as National's climate change spokesman Scott Simpson said.

But with this carrot comes a big stick - a "Sword of Damocles" as National's climate change spokesman Scott Simpson (left) said. Photo / Mark Mitchell

If the Interim Climate Change Commission (ICCC) is not happy with the industry's progress in two years' time, farmers will be brought into the ETS as early as 2022.

Ardern this morning called this a "fallback" option and announced the Government would be legislating to tax farmers on 5 per cent of their emissions if the sector fails on its He Waka Eke Noa obligations.

But major sector players, including Dairy NZ, are confident this will never happen.

Fonterra's chief executive Miles Hurrell said the announcement was a "significant step forward" and was a much better option than "imposing a broad-based tax".

Ardern and Shaw talked up the importance of the plan and why the Government needed to work with the agricultural sector, and not against it.

"We needed [a plan] that is good for the environment, but one that also supports our productive sector to make the transition that we need to make together," Ardern said.

"This agreement will stick and it means instead of debating what we do, we get on with doing it."

Not long after the plan was announced, the Government came under fire from Greenpeace who labelled it a "major sell-out".

"An emissions trading scheme without the [agriculture] sector in it is a joke and won't be able to combat the climate emergency – the greatest threat humanity has ever faced," the organisation said.

The ICCC did recommend a scheme where between 2020 and 2025, farmers would be taxed 1c on every kg of milk solids and between 1c-4c per kg of meat – this would raise roughly $47 million to further develop the scheme.

But Ardern admitted this morning that she was not convinced that scheme would have worked to change on-farm behaviours and ultimately reduce overall greenhouse gas emissions.

Dairy NZ is a major sector player.

Addressing Greenpeace's comments, she said the Government was "absolutely" not backing down.

Before the election, Labour promised to bring agriculture into the ETS in its first term.

In its coalition agreement with NZ First, the Government promised to bring the sector into the scheme, if the Climate Commission determines it should.

Ardern played on technicalities today when asked about why Labour and the Government were not sticking to its promises, telling reporters the Government was, in fact, legislating to have agriculture in the ETS.

But that legislation only kicks in if the agriculture sector does not step up, under He Waka Eke Noa.