Moves to change Emissions Trading Scheme settings is a long overdue acknowledgment that the ETS isn’t working, says Beef + Lamb New Zealand.
The organisation has been calling for changes since the introduction of the Zero Carbon Bill in 2019, noting that the sheep and beef sector and rural communities have been impacted by policy settings that encourage whole-farm land-use change into forestry, driven by returns achieved by returns from entry into the ETS.
“It’s heartening to see the government has listened to us, to farmers and to the wider public, and we now have some concrete and substantial options on the table that aim to address the issue,” Beef + Lamb NZ chief executive Sam McIvor said.
The government has announced a review of ETS settings, fearing that it currently encourages planting trees to offset emissions rather than their reduction.
“The government has acknowledged that too much exotic planting is happening and that the current ETS settings are not driving real emissions reductions,” McIvor said.
He described the review as significant in terms of the scale of reform being considered – but also the volume of information generated.
The four options are to leave it as it is, increase demand by allowing the government and overseas investors to purchase units, restrict the type of unit emitters can use to settle the ETS obligation, and lastly to institute two prices, one for emission reductions and another for removals.
“From our initial analysis, some of the options for changes to the ETS settings are going to be more effective than others and some seem to be out of step with what the Climate Change Commission has recommended,” McIvor said.
“Our early analysis also indicates there are some good concrete options for changes to the permanent forest category of the ETS.”
McIvor also welcomed the fact that recognition of a wider range of forms of sequestration will be considered.
That includes pre-1990 natives and wetlands, either through the ETS or other mechanisms, as well as giving greater reward for these types of sequestration, which also deliver wider environmental outcomes, such as biodiversity.
