This is about the Government's response to the first report of the Interim Climate Change Committee. The proposal is extremely disappointing. It involves 'feather bedding' New Zealand's pastoral agriculture sector into the emissions trading scheme by giving the public a Hobson's choice of two completely compromised proposals.
First weak option; agriculture joins the emissions trading scheme from 2025 with the weakest obligation possible (i.e. after a free allocation of emissions units equal to 95% of emissions - and at the most complex way possible - at farm level.
Or - the second weak option; the industry runs their own scheme, also based on a free allocation of emissions units equal to 95% of emissions at farm level from 2025.
The Ministry helpfully provides a set of questions submitters have to navigate through. Some of which pre-suppose certain limits to the answers. I have underlined each question and then provided my response.
1. What is the best way to incentivise farmers to reduce on-farm emissions?I do not agree that this is the correct question to ask. The framing of the question pre-supposes the answer. The more objective, neutral and policy-relevant question is "What are the best policies to reduce emissions from the pastoral agriculture sector?"
I consider that the proposals are compromised and inadequate responses to the urgent need to reduce agricultural emissions. They are clearly not fit for purpose.
The proposals are so weak in terms of price, scope, timeliness, exceptions, excessive unit allocations, complexity and difficulty of implementation - that they are worse than doing nothing.
The proposals, if implemented, would undermine the role of the yet to be established Independent Climate Commission by predetermining the agricultural emissions targets and 5 year budgets.
I recommend that neither proposal is accepted.
I recommend that pastoral agriculture be entered into the emissions trading scheme at processor level from 2020 with no free allocation of emissions units.
2. Do the pros of pricing emissions at farm level outweigh the cons, compared with processor level, for (a) livestock and (b) fertiliser? Why or why not?
Even the consideration of pricing emissions at farm level is the incorrect framing to apply. Farm level pricing would not be fit for purpose. It is highly problematic in terms of price, scope, timeliness, exceptions, excessive unit allocations, complexity and difficulty of implementation. Processor level pricing is efficient and sends an effective emission price back through the value chain.
3. What are the key building blocks for a workable and effective scheme that prices emissions at farm level?
There are no feasible building blocks for a workable and effective scheme that prices emissions at farm level. The framing of this question is not appropriate as it presupposes the outcome.
The notion of a "workable and effective scheme that prices emissions at farm level" is currently a figment of the imagination.
From the point of view of establishing reasonably effective policy, it has become an unrealistic and unachievable expectation of 'best' policy. In this consultation, it has the role "letting the perfect be the enemy of the good" and being given as a reason to try to implement the most difficult , the most time-consuming and most impractical point of obligation.
4. What should the Government be taking into consideration when choosing between Option 1: pricing emissions at the processor level through the NZ ETS and Option 2: a formal sector-government agreement?
The Government should be considering the interplay of the 2019 'zero carbon bill' debate and of the dogged determination of the pastoral agriculture interests to avoid any regulation of their emissions.
I question the utility of negotiating a detailed ETS/emissions policy agreement with pastoral agriculture sector, when the pastoral agriculture organisations do not accept or agree with the higher level goal - the proposed 2050 methane target in zero carbon bill. How can there be a 'partnership' approach when the partners do not even agree what the methane target is?
Dairy NZ, Federated Farmers, and Beef and Lamb NZ have a uniform and consistent position of opposing any methane target above 'business as usual' incremental changes in efficiency. The only mitigation they will tolerate will be technology-based 'supply side' reductions in intensity in per unit of output. Such technology has been researched at the tax payers expense for about a decade.
In short, their position on New Zealand's 'zero carbon' targets, is that there should be no absolute reduction in methane emissions, no absolute reduction in stock numbers and no changes in land use in the pastoral sector to lower-emission land use.
Given the firmly and repeatedly articulated viewpoint of the pastoral lobby, I was very surprised on 16 July 2019, to read about Ministers Shaw and O'Connor announcing "Consensus reached on reducing agricultural emissions".
This must a different definition of 'consensus' than the one from my dictionary. The Ministers and the pastoral lobby have opposite views on the proposed 2050 methane target in the zero carbon amendment bill. How can a partnership compromise proceed without agreement on the basic methane target?
The tactics of the pastoral agricultural lobbyists are clear; to delay policy timing/implementation by promoting the problematic farm-level obligation and to minimise policy scope by including minimal targets and exceptions/discounts through excessive free allocation of units. Then wait out a period of 'wet bus ticket' compromised and ineffectual policy until it is removed by the next National-led Government.
Todd Muller of the National Party is on record that the next National government will lower the 2050 the methane target (speech to Federated Farmers Taranaki AGM in Stratford on 24 May) and that National will never put pastoral agriculture in the emissions trading scheme (interview with Jack Tame of 'Q & A' on 23 July).
If the proposed 2050 methane target is lowered to about 20% over 30 years (the same as past efficiency gains), as Dairy NZ, Federated Farmers, and Beef and Lamb NZ have submitted, I absolutely question if is there any point adopting either proposal.
Research into mitigation of agricultural emissions
The Productivity Commission (2018) on pages 312 and 313 notes that the Government invests roughly $20 million each year into mitigation research, most of which helped fund three research centres.
1. The Pastoral Greenhouse Gas Research Consortium, set up in 2003. 2. The New Zealand Agricultural Greenhouse Gas Research Centre, established in 2009. 3. The Global Research Alliance on Agricultural Greenhouse Gases (GRA) in 2009.
As a taxpayer, I do not begrudge the significant investment of tax that has been invested in researching mitgation technologies for methane and nitrous oxide. I accept that the benefits could help many countries. However, I do not see that research can be a substitute for mitigation for an indefinite time.
I consider that indefinite time has passed and there is a 'quid pro quo' that applies. Given the research funding, and given the past decade-long exemption of agriculture from the ETS, I think it is now unconscionable for pastoral agriculture to be evading emissions reduction policies. I consider this applies whether the evasion of policies is - by seeking a 'zero methane' target or by seeking 95% free allocation of units or by seeking farm-level point of obligation. This just isn't acceptable.
5. As an interim measure, would Option 1: pricing emissions at the processor level through the NZ ETS with recycling of funds raised back to the sector to incentivise emissions reduction or Option 2: a formal Government-industry agreement for reducing emissions be best? Why?
What will be best will be emissions pricing implemented on the basis of standard economics principles such as 'pricing the externality', 'polluter pays', 'finite emissions cap' and 'processor level point of obligation'.
I recommend that pastoral agriculture be entered into the emissions trading scheme at processor level from 2020 with no allocation of emissions units.
6. What additional steps should we be taking to protect relevant iwi/Māori interests, in line with the Treaty of Waitangi?
The Ministry should already have carried out a suitable process of consultation with iwi and hapu. The consultation document does not mention any consultation. I find that unsatisfactory. The Ministry should be taking into account the principles of the Treaty of Waitangi. That requires, at a minimum, consultation. The Productivity Commission 2018 report into the low emissions economy discussed issues affecting iwi and hapu and it is a poor reflection on the consultation document that it doesn't.
7. What barriers or opportunities are there across the broader agriculture sector for reducing agricultural emissions? What could the Government investigate further?
The main barriers to reducing agricultural emissions are the pastoral agricultural lobbyists Dairy NZ, Federated Farmers, and Beef and Lamb NZ and their preferred political party the National Party. Their positions and actions and statements show that they are a generation behind urban New Zealanders (and many farmers) in terms of responding to climate change. They say they accept the science and that it supports their position of no policy and no absolute reduction in emissions. And that they are already the world's most efficient farmers. They are, to coin a term, 'mitigation deniers'.
The Government should investigate "less cows" - which is otherwise known as 'demand side management' or changes in land use (to lower emissions uses).
The ICCC report only mentions the option of change in land use once in it's report. Todd Muller has even embarrassed himself in stating to TV One, to Radio New Zealand that Te Papa is not allowed to mention "less cows" in the context of a exhibition on declining water quality.
8. What impacts do you foresee as a result of the Government’s proposals in the short and the long term?
In the short term the implementation of either proposal will involve almost insurmountable practical difficulties that will result in no practical reduction in greenhouse gas emissions from pastoral agriculture.
Nor will the Government be thanked for it's compromise. It will only earn further scorn from the agriculture sector for 'imposing' an 'impractical' policy on them. There is nothing some agricultural interests like more than criticising governments and bureaucrats for not being 'practical'.
In the long term the implementation of either proposal will be remembered as yet another failed implementation of emissions pricing where the political lobbying of the sector's vested interests prevented effective policy.
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