Farmers exempt from 95 percent of emissions charges under new proposed rules
Tuesday, 16 July 2019
Agriculture, the most polluting sector of the economy, looks set to join the Emissions Trading Scheme (ETS), but under a sweetheart deal that will see it pay just 5 per cent of its total emissions cost from 2025.
That would equate to a charge of just $0.01c per kilogram of milk solids and $0.01 cent per kg of beef at the current ETS price of $25 a tonne of carbon.
Agriculture accounts for nearly half of total greenhouse gas emissions. It has been excluded from the ETS until now
The ETS works by forcing polluters to pay a price for their emissions, whilst paying a credit to owners of 'carbon sinks' like forests.
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* Interim climate change committee immediately asked how to deal with agricultural emissions
* The facts about agriculture's livestock emissions**
The proposals come from a report from the Government's Interim Climate Change Commission (ICCC) which was established to look at ways to bring agriculture into the ETS ahead of a final Climate Change Commission which will be created once the Zero Carbon Bill has passed later this year.
The ICCC has proposed bringing agriculture into the scheme from 2025 but under a 95 per cent discount rate, which means farmers will only meet the cost of 5 percent of their emissions.
The 95 per cent discount rate was part of Labour's coalition agreement with New Zealand First.
The agriculture sector has cautiously welcomed the report.
Labour had campaigned on bringing agriculture into the ETS by 2020 with National claiming the push-back to 2025 was a 'backdown'.
It's also not certain whether agriculture will fully enter the ETS, or whether the sector's emissions will charged another way.
The agriculture sector proposed a different transitional scheme, which they would manage, to eventually bring agriculture into an emissions pricing system by 2025.
The Government hasn't completely ruled their scheme out, but Climate Change Minister James Shaw suggested the Government was leaning towards the ICCC's proposal.
Under the favoured scheme, farmers would be responsible for collecting this data, reporting it, and paying directly for emissions.
But the ICCC warned this would be 'complex, challenging and will take time', particularly as the technology and capability to measure farm emissions was not yet in place on most farms.
It recommends phasing-in a scheme that will start in 2022, with the Government reporting on details of farm-level emissions pricing.
In 2023, farmers will be allowed to voluntarily report emissions to the Government, ahead of mandatory reporting which will come in 2024. Farmers will then be asked to pay for their emissions, with a 95 percent discount, from 2025.
The Government will also look at creating a fund, led by farming leaders, to help agriculture's transition into the scheme.
It's estimated the fund would earn $47 million a year, which would be recycled back to farmers to help them meet the cost of measuring their emissions
Also released today was the ICCC's report into Accelerated Electrification, which looks at moving New Zealand's electricity generation towards being 100 percent renewable by 2035.
Most of New Zealand's electricity is already generated by renewable hydro electricity, however fossil fuel generation is still regularly used for periods of peak demand and during times when hydro lakes are low.
The report, which had been leaked ahead of its release, encourages the Government to prioritise getting polluting cars off the road ahead of shifting electricity generation to being 100 percent renewable. It did however say that it supported the target of reaching 100 percent renewable generation by 2035 as 'a longer term aspirational goal
Energy Minister Megan Woods said Government would be 'pragmatic' about balancing the desire to decarbonise electricity generation with cost pressures faced by low-income families.