Bakers prefer butter, helping prices soar
Consumers around the world are willing to pay more for products containing dairy and this is driving demand for butter and cream, says Fonterra.
"The submissions process provides an important opportunity to re-examine how we account for agricultural emissions," Brook says.
"We have to get this right so that when eventual liability to surrender carbon credits for agricultural emissions is introduced, we can be confident that the apportionment of accountability is accurate and fair," she says.
"It is also important to ensure that the Government has accurate data now to influence priorities for investment in research for the reduction of emissions without compromising production."
The consultation document updating the regulations for agriculture in the New Zealand ETS reflects work by the Agriculture ETS Advisory Committee on the practical and technical aspects of bringing agriculture into the scheme.
"The changes that are being proposed now to the regulations will affect not only the accuracy and fairness of reporting as between different agricultural sectors, but also in due course which agricultural sectors will bear what liability to surrender carbon credits," Brook says.
One important principle driving the changes which the Government wants to make is to ensure that different agricultural sectors are not subsidising each other.
"According to the Consultation Document the current approach to the reporting of emissions for the beef meat industry includes about 26% of the emissions from dairy cattle. One proposed change would amend this, so that the dairy industry correctly accounts for all its emissions," Brook says.
"Under the current reporting regulations the sheep meat industry is accounting for emissions from all sheep in New Zealand, even though wool production accounts for about 30% of total sheep emissions. That is also to be corrected under one of the changes in the Consultation Document.
Another crucial issue the consultation document considers is which agricultural sectors should be included in the Scheme and which should not. Where should that line be drawn?
"The wool industry is not currently included in the Emissions Trading Scheme 'for administrative and practical reasons'. Should it be included? If so, where would the point of accountability for emissions lie? If it is not included then New Zealand's international liability in respect of emissions from these sheep will be borne by taxpayers generally rather than by the wool industry," Brook says.
The regulations require agricultural emissions to be reported by the meat and dairy processors, not by farms, at least for now. While this is administratively simpler, it also means emissions calculations are currently based solely on production levels, Brook says.
