11 Jun 2024

Agriculture ETS delay: Govt accused of risking NZ's competitive advantage in foreign markets

6:00 pm on 11 June 2024
Labour Party MP Jo Luxton listens to evidence in Select Committee.

The longer the government waits to decarbonise the economy, the more expensive it would become, Jo Luxton says. Photo: VNP / Phil Smith

The government is putting market access for agricultural exports at risk after its latest ETS decision, Labour agriculture spokesperson Jo Luxton says.

The coalition has confirmed it will keep agriculture out of the Emissions Trading Scheme (ETS).

It is scrapping the sector-led group He Waka Eke Noa and setting up a new Pastoral Sector Group to "constructively tackle" biogenic methane.

It will amend the Climate Change Response Act to remove agriculture, animal processors and fertiliser companies from entering the ETS in 2025.

Federated Farmers, Beef + Lamb NZ and DairyNZ have all welcomed the decision, however, Labour and the Greens are among those who are critical.

Labour said the government was doing everything it could to delay taking action on climate by deciding years of work on agricultural emissions would start from scratch.

The longer it waited to decarbonise the economy, the more expensive it would become and the greater the damage to the farming sector and industries, Luxton said.

"It puts market access at risk for our agricultural products."

She said the last government delivered seven new and upgraded trade deals, however, the country needed "to stay ahead of the pack on exporting clean, green, low-emissions products" to get the most out of those opportunities.

"Offshore buyers demand products that are produced sustainably, and our primary producers rely on these markets. National is risking our competitive advantage by taking New Zealand backwards on climate action."

The government needed to make it clear how it still intended to get to net zero by 2050, she said.

Green Party co-leader Chlöe Swarbrick said the government was in denial over its climate responsibilities.

She said the government had once again kicked climate action down the road by removing agricultural emissions from the ETS.

"Climate delay is the new denial. Today's announcement from the government that it will shred progress on agricultural emissions pricing is just the latest episode of disregard for our climate and environment," she said.

Green Party MP Chloe Swarbrick

Chlöe Swarbrick says farmers need to remember they are among the worst hit by the impacts of climate change. Photo: RNZ / Angus Dreaver

She accused Agriculture Minister Todd McClay of losing touch with reality by claiming the country will still be able to meet its climate change commitments.

"From pouring oil, coal and gas on the climate crisis fire, the government has now put half of our emissions which come from agriculture into the industry-led too-hard basket.

"Meanwhile, farmers on the ground are among those hit the first and worst by climate change."

Swarbrick said the science was clear on the need to reduce methane emissions.

"Fair pricing is a crucial way to achieve this, putting the sector on an even footing with the rest of our economy."

Greenpeace Aotearoa said the dumping of He Waka Eke Noa was no great loss, however, the establishment of the Pastoral Sector Group was another version of it.

Spokesperson Niamh O'Flynn said both were designed by the dairy industry to delay climate action.

"The dairy industry is New Zealand's biggest climate polluter, and successive governments have failed to take any action to restrict its emissions.

"Allowing dairy and agribusiness to continue avoiding responsibility for their emissions via the ETS just means that the rest of us, including other industries, will pay the price through increased costs and increasing pollution from climate disasters and fresh water."

ACT's Mark Cameron and David Seymour speak to the media

Mark Cameron Photo: RNZ / Angus Dreaver

Meanwhile, ACT said the announcement recognised farmers as "the backbone of our economy".

"Under Labour and the Greens, farmers were being lined up as a sacrifice to the climate gods," the party's rural communities spokesperson Mark Cameron said.

The country could meet its emissions obligations "without knee-capping rural New Zealand's productive potential", he said.

"We're maintaining a split-gas approach to methane and carbon dioxide through to 2050, and reviewing the methane science and targets. And we will ensure farmers are able to offset on-farm sequestration from their emissions liability.

"Real environmentalists would support this approach as it stops production moving to more carbon intensive countries."

Sector groups welcome decision

Kate Acland

Kate Acland Photo: Beef & Lamb

The producer group Beef and Lamb New Zealand says removing agriculture from the ETS is pleasing.

Chairperson Kate Acland said the group had consistently argued that agriculture going into the ETS would be disastrous - removing it provided certainty.

Acland also welcomed the official disestablishment of the He Waka Eke Noa Primary Sector Climate Action Partnership.

"While we are prepared to be part of a new group that discusses how to manage New Zealand's agricultural emissions, any involvement will be with full transparency and discussion with our farmers. We will not allow this to be a repeat of the He Waka Eke Noa process," she said.

She said pricing agricultural emissions would not achieve reductions, and they were happening already, more quickly than needed.

"The significant decline in stock numbers as a result of afforestation in the last few years means our sector will likely exceed the current target of a 10 percent reduction in methane by 2030.

"Based on this there is absolutely no justification for a price. This is a non-negotiable for our farmers.

"Our view is that we should be focused on the outcome we are trying to achieve - the management of agricultural emissions - and be open to solutions and different ways of achieving this."

Sheep and beef farmers have reduced their absolute emissions by more than 30 percent since 1990 and were offsetting a significant proportion of their remaining emissions through the trees and native vegetation on their farms. Recent analysis by AgResearch indicated that sheep production was already 'warming neutral', she said.

Federated Farmers president Wayne Langford said the previous government was too focused on pricing farmers, driving blindly towards unachievable, political, unscientific methane reduction targets.

"There was a complete disregard for the significant and unjustifiable costs this would place on hardworking farming families and the wider New Zealand economy."

Langford said Federated Farmers would never accept a plan that would see 20 percent of sheep and beef farms, and 5 percent of dairy farmers, priced out of existence.

Federated Farmers' bottom lines were that methane targets would be reviewed; viable and cost-effective tools would be available for farmers, and no emissions leakage would occur.

"Today's government announcement gives us a lot of confidence for the future," Langford said.

DairyNZ chair Jim van der Poel said the announcement was positive, after a lot of uncertainty for dairy farmers.

If the previous government's policy had continued, production would have been shifted to less-efficient milk producers offshore. This would have hurt farmers and the economy and led to more global emissions.

He said all paths ahead must take a science-based approach.

"While there are currently no significant technologies to reduce methane emissions from New Zealand pastoral farms, our farmers continue to make strong progress towards measuring on-farm emissions, and we look forward to contributing to the government's methane-reduction work."

DairyNZ would continue work on affordable and effective tools and technologies for reducing emissions at farm level, "including testing methane-reducing compounds and delivery options for our pasture-based farms, and exploring low-emissions forages and genetics".

The government has previously indicated it will introduce a fair, practical pricing system by 2030.

"As a sector, we need clarity around targets and how a pricing mechanism would work with appropriate timeframes and incentives, as well as a selection of practical solutions for use on farm, before any emissions pricing system can be effective," van der Poel said.

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