On The Battle Over Emissions Pricing

Published: Thu 13 Oct 2022 12:24 PM
According to the leader of the National Party, farmers are this country’s true conservationists, and tireless in their efforts to protect the environment on which their livelihood depends. Hmm. This must mean that some other bunch – trolls, aliens, the gangs? – is polluting our waterways, draining our aquifers, poisoning our tapwater with nitrates, and putting the health of newborn babies at risk.
You get the picture. If farmers are already so environmentally woke, then how come having them pay a wee bit extra for the pollution being caused by their business activities would - allegedly – put many of them in peril of financial collapse. This week, National leader Christopher Luxon told RNZ’s Kim Hill that (a) he accepted the He Waka Eke Noa report that is the basis of the emissions pricing models now being mooted, while also (b) depicting those same models in apocalyptic terms as likely to “decimate” sheep and beef farming in this country, and put one fifth of them out of business.
Charitably, Climate Change Minister James Shaw has called Luxon
as being “confused” on the emissions pricing issue:
"The Government's proposal for agricultural emissions pricing is directly based on the modelling and the system put forward by the sector partnership He Waka Eke Noa. When Mr Luxon comes out swinging in response to the Government's proposals and says we should go back to what the sector was proposing, he should be upfront about what he is actually calling for."
Right. So… According to Federated Farmers and National, the modelling indicates that in a worst case scenario, some 20% of sheep and beef farmers and 5% of dairy farmers could be put out of business by 2030. In fact, the modelling outputs vary wildly– as models are wont to do – depending on the premises, on the prices and on other inputs:
Modelling displayed within the He Waka Eke Noa impact and cost-benefit analysis report showed impacts on sheep and beef profits could range from 2 per cent to over 44 per cent, based on different methane prices and prices for carbon emissions.
Ironically – given Luxon’s preference for pricing to be “industry led”, the sector’s own models would (in some circumstances) produce even worse outcomes.
Shaw said the Government ran its own numbers and found that the agricultural emissions targets were achievable at a lower price point than that modelled by the sector. Meaning the Government's proposal will in fact have less of an impact on sheep and beef farmers than the partnership's would."Or is it tokenism?
It seems agreed that the economic impact of the government pricing proposal would fall more lightly on dairy farmers. Not many people are happy about that. Significantly, farmers are not being required to limit their use of fertilisers or to reduce the size of their herds. (Some farmers may choose to go down that route, to reduce the emissions bill they would otherwise have to pay). Greenpeace has deplored the light handed nature of what the government is proposing, and called it out as an exercise in greenwashing.
[Greenpeace] says the Government’s proposals would favour the agriculture sector’s worst climate polluter – intensive dairy – and disadvantage less polluting, extensive beef and sheep, and Māori-owned farms. We need a system that actually reduces emissions, fairly, transparently and effectively. The Government’s proposals fail to achieve this. Greenpeace suggests phasing out the drivers of intensive dairy directly. We need a sinking lid on synthetic nitrogen fertiliser and imported feed.”
For their part, the Greens have also argued that the government proposals don’t go far enough. The Green Party has produced a useful table showing how it would have preferred to proceed. Reportedly, Climate Change Minister James Shaw was overruled in the Cabinet discussions, as revealed in a Cabinet minute published by Stuff:
The minute “noted” the Minister of Climate Change's concerns regarding uncapped emissions, a low marginal price, and the risk of emissions reduction targets being traded off against other considerations when prices are set.”
Shaw was much keener on having a cap and trade scheme – similar to the emissions trading scheme –running in the agricultural sector because it would put a cap on allowable emissions and let the market set the price.Polluter Politics
Much of this comes back to a very familiar story. Farmers may be responsible for nearly 50% of this country’s greenhouse gas emissions, but requiring them to take significant corrective action is regarded as being too politically fraught. The result of that timidity is entirely predictable. Because the majority of farmers aren’t being given a strong enough financial incentive to change their ways, the current rates of pollution continue apace – dressed up, at best, with a few carbon offset plantings on the side. Needless to say, the legacy of the past decades of accumulated pollution goes completely unaddressed.
As this week’s response by Federated Farmers and National indicate, the rural sector remains hostile to any climate change response that can’t be guaranteed to have a cost-neutral impact on current levels of farm income. As a result, taxpayers are on course to pick up almost the entire tab for the greenhouse gas reduction commitments we have made by 2030, and by 2050.The Plan, So Far
So what, actually, is being proposed? Extensive, years-long consultation between farming groups, government and other stakeholders has culminated in the He Waka Eke Noa report recently presented by farmers to Parliament. That report still has bi-partisan political support from National, as – to repeat - Christopher Luxon confirmed to RNZ’s Kim Hill earlier this week. All the subsequent arguments this week have been over how the government has decided to advance the report in a consultation paper that will not be finalised until next year, with a commencement date due in 2025.
The He waka Eke Noa report would see farmers paying different rates for their methane and carbon dioxide emissions, with the levies collected going into an Emergency Response Fund to be spent on plans to reduce emissions. As Bloomberg News put it:
Revenue from the levy will be recycled via incentive payments designed to encourage the uptake of approved mitigation technologies such as methane inhibitors, which will reduce a farmer’s total bill. Money will also be directed to research into new ways to limit greenhouse gas emissions.
The central theme of the report requires farmers to pay individually by farm, rather than having the whole sector’s emissions managed solely via the Emissions Trading Scheme. Subsequently, the government has taken the advice of Climate Change Commissioner Rod Carr, who rejected the idea of paying farmers for their on-farm vegetation, hedgerows, and other sequestration efforts:
Dr Carr said farmers should not be paid for carbon absorption by on-farm vegetation, which was largely already covered by the Emissions Trading Scheme (ETS).
"The proposed approach [i.e. of allowing individual farmers to be rewarded directly for their sequestration efforts] would likely be expensive, complex, inequitable, and difficult to audit and enforce - without significantly improving emissions reduction outcomes. Farmers already have access to the NZ ETS for some on-farm sequestration…
The other deeply related point of contention this week has been over the government’s move to take the pricing decisions out of the hands of the farmers themselves:
The price to be levied on farmers will be set by ministers based on advice from the Climate Commission. That’s a departure from the partnership’s idea of a sector advisory group providing guidance. Prices will be set annually although there is scope for less frequent fixing of the methane price, according to government documents.
One can easily see why James Shaw wanted the pricing decisions to be kept at arm's length from politicians, by an emissions cap and trade system. One can see even more readily why farmers – and the National Party – would prefer farmers to be empowered to (a) directly set the prices they have to pay for the greenhouse gases they emit and also (b) to deduct the vegetation they believe is mitigating the environmental impact of their farming activities. You don’t have to be a cynic to imagine how placing the main price mechanisms (and the levy deductions regime) squarely in the hands of those responsible for the problem might turn out in practice.
Basically, the government – the country, the planet – can’t afford to accede to farmer demands on these issues. If those demands were embraced - and they will be if there is a change of government next year – New Zealand will have succeeded merely in creating a world leading example of greenwashing.
Footnote One: Why is the pricing scheme likely to impact sheep and beef farmers more heavily? Simple: because they make less money per hectare. As one expert told the NZ Herald :
"If sheep farming isn't very valuable per tonne of carbon emitted, then we have to do less of it. If you put a levy on them the sector is going to get smaller. There is no way around that.
For the exact same reason, dairying – given the booming global dairy prices – are better placed to ride out the pricing impact, and treat the emissions levies as just the trade-off for continuing to do business-as-usual. (And that’s regardless of the impact of business-as-usual on the environment.)
Footnote Two: In reality, we won’t be losing one fifth of sheep and beef farmers by 2030. The process of annual price setting would ensure it didn’t happen. Moreover… Even the National Party promoting that scariest of modelling scenarios is simultaneously claiming that ag-tech advances are so awesome, we won’t really need to do much at all by 2025, when the emissions charges are set to commence. National really can’t have it both ways. They can’t claim the boffins will have the problem significantly licked by 2025, while promoting an apocalyptic scenario for only five years later.
Footnote Three: In a similarly confused vein… National routinely portrays itself as the enemy of bureaucracy. Yet surely it would take an army of bureaucrats to manage its proposal to measure each hedgerow and farm planting, to calculate the sequestration value, deduct it from the levy and repeat the whole process again on an annual basis, lest the farmer has removed the levy-deductible hedgerow in the interim.
That’s exactly why Rod Carr described that approach as “expensive, complex, inequitable, and difficult to audit and enforce - without significantly improving emissions reduction outcomes.” All spin, no substance, again.Songs with animals
Here’s a couple of wildly different songs. The track by Suzzy Roche ( formerly of the Roches sisterly group) comes from a mega set of For The Birds albums by a variety of artists ( Nick Cave, Animal Collective, Sean Penn, Tilda Swinton) in which all the songs and poems are thematically related to bird life. Hearing Suzzy Roche just mention the names of all the birds is a buzz, even before you get to the social reality that the song’s title gently addresses:
Moving along… There’s a dog audibly present on this video. It comes from an obscure 1989 album by Lee Tracy and Isaac Manning that combined old soul music with electronica in startling ways that still sound utterly contemporary. “ I Need Your Love” is one of the less abrasive tracks on the album – which can be checked out on Spotify - but it is mesmerising in its own sweet way:
And here’s another sample, from the same album. Love is everlasting, and the beat goes on:

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