Govt urged to reduce ETS units
The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as possible.
In 2019, following the passage of the Zero Carbon Act, the Government consulted on bringing agriculture into the Emissions Trading Scheme (ETS). The agricultural sector, working together, convinced the Government not to do this and to work with the sector and iwi on an alternative approach for managing our emissions - through the He Waka Eka Noa partnership - with a view to introducing the framework in 2025.
However, the Government made it clear that if we did not meet certain milestones, it would bring agriculture immediately into the ETS. There is already legislation in place that would allow it to do this - the 'ETS backstop'.
The partnership needs to provide advice to the Government by the end of April 2022 on an alternative framework.
The partners in He Waka Eka Noa (including the Government) have developed two alternative options to the ETS. A high-level explanation of these options has been released, along with an outline of what the ETS backstop would like.
Information is being made available now, so you have time to understand what's being considered, how the options work and how they compare. There will be a full formal consultation process in February where you can provide feedback (more detailed information will be released in late January ahead of this).
B+LNZ has worked to try and come up with a better system for agriculture that seeks to fairly treat different types of farming systems and the different stages of farmers in their development, as well as working for other sectors. We have been part of this process with other agricultural organisations, including DairyNZ and Federated Farmes, and the Government and iwi.
Our key priorities have been:
- de-linking the methane price from the carbon price (to reflect the separate greenhouse gas targets in the Zero Carbon Act)
- getting more recognition of the sequestration happening on farms than currently under the ETS
- the ability for farmers to be recognised for progress on reducing their warming impact, and
- money raised being invested back to agricultural research or on-farm changes that reduces emissions.
Our vision is to establish a framework that is separate for agricultural emissions from the ETS and which can be evolved and improved over time.
While they're not perfect, we believe the alternative emissions pricing options have advantages over the ETS for sheep, beef and dairy farmers. We believe they provide farmers with a lot more control and options to reduce the costs they face over time, either through getting their on-farm actions recognised or through better recognition of their sequestration.
The proposals are a starting point and will evolve as science, measurement and technology allow more accurate recognition of what's happening on individual farms.
New Zealand is the only country into the world to have taken a split gas approach to methane emissions, through the Zero Carbon Act. B+LNZ does not agree that the methane targets in the Act are justified based on the science around methane's impact on warming.
However, we can't change the targets through He Waka Eke Noa and this is a separate process. There will be a review of the targets in 2024 and we are committed to working with Federated Farmers, DairyNZ and others to get the targets reviewed using the latest science.
It's important to note that if we're unable to reach agreement on a pricing framework and agriculture goes into the ETS, in effect we will have lost the split gas outcome and it won't matter what the targets are as the methane price will simply be linked to a rapidly-increasing carbon price.
Source: Beef+Lamb NZ.
