Friday, December 8, 2023

Gas tax closer

Neal Wallace
Livestock farmers could face an initial greenhouse gas emissions tax of $50 million a year rising to $1 billion, Interim Climate Change Committee David Prentice says. But some of the money might be used to help rural communities cope with the loss of jobs and services as farm animals are replaced by trees.
Reading Time: 2 minutes

The $50m is subsidised by the Government allocating units equivalent to 95% of emissions to the primary sector to help it transition and is calculated on a carbon price of $25 a tonne.

However, the tax might rise to $1b at an indeterminate time in the future.

The figures are in a discussion document delivered to the Agricultural Climate Change Conference in Palmerston North by Prentice.

The committee declined to be interviewed on Prentice’s presentation ahead of the committee presenting its report to the Government on April 30.

The document, on the committee’s website, reveals the committee’s thinking on charges farmers will face as the Government moves the economy to be carbon neutral by 2020.

It says an emission tax levied at farm level could be implemented from 2025. In the interim it could be collected by processors from next year. 

That will give certainty to the primary sector, respond to calls for agriculture to meet its emissions’ obligations and raise awareness with farmers who will see the deduction on kill sheets and milk receipts.

Money raised will be used to introduction the policy but also to help rural communities cope with the likely loss of jobs and services such as schools as farming families leave areas when farmland is planted in trees to offset emissions.

The committee is investigating the impact on rural communities.

Wairarapa farmer Anders Crofoot says rural communities are increasingly concerned at the impact of forestry on jobs and services.

A large farm in his region recently sold to a forestry company for a price beyond what sheep and beef farmers can pay and communities are talking about the impact of increased forestry.

“It’s entering the conversation.”

The document says the free allocation will also help farmers service debt from lower cashflow and loss of land value, the impact on processors of lower production and minimise the risk to international competitiveness.

Units could be allocated by grand-parenting based on historic emissions, on animal numbers or production, on a per hectare, flat-rate or land use basis, a proportional quantity of a farm’s annual emissions or annual product output.

The document notes reduced production is not the best method to protect international competitiveness or the wider community.

It also acknowledges grand-parenting is disliked by the sector and implementing it will be challenging.

Regardless of the system used the costs will not change but who benefits or is disadvantaged will.

Farm environment plans are considered a critical element in lowering emissions and the committee sees a chance to build on existing compliance documents to avoid duplication.

Available options to reduce methane include improving individual animal performance, using different feeds, less intensive farm systems, more efficient use of fertiliser and diversifying farm operations to cropping, horticulture and forestry.

Future options could include using low-emission genetics, methane and nitrification inhibitors and one day possibly a methane vaccine.

Federated Farmers climate change spokesman Andrew Hoggard says there needs to be a balance between reducing agricultural emissions, lower production and the associated economic impact.

He hopes the Government will listen to the growing consensus and consider treating methane, which lasts 12 years in the atmosphere, differently to carbon dioxide, which can last for 100 years, a move he says will assist farmers.

“Find me a reputable scientist in this field that says methane isn’t different.”

People are also reading