Tuesday, July 5, 2022

NZ first to price emissions, but won’t be the last

While NZ is the first country to implement an agriculture-specific emissions tax, other countries have signalled that it could follow suit.

Earlier this month, New Zealand made world headlines for “taxing burping cows and sheep” when the Primary Sector Climate Action Partnership – He Waka Eke Noa submitted its recommendations to the Government for how agriculture is to reduce emissions and sequester carbon. 

NZ’s agricultural sector is already world-leading when it comes to sustainable practices, but as many nations endeavour to reduce global warming, efforts to achieve this have put the spotlight on agricultural emissions as well.  

The submission comes after months of deliberations and roadshows around an alternative greenhouse gas emissions pricing framework in an effort to prevent the sector from being included in the Emission Trade Scheme (ETS), which would see the sector lose its hard-fought split-gas outcome that recognises the shorter life of methane in the atmosphere.

The move to price ag emissions could see NZ become the first country in the world where farmers have to pay for their livestock’s emissions.

Farmer roadshows across the country earlier this year had indicated farmers generally supported a farm gate reduction plan, but were hesitant about moving straight into such a scheme.

However, lingering dissatisfaction, seemingly brought on by each industry facing different challenges under the proposed regulations, which will be introduced in 2025 should the Government accept the recommendations, means that not everyone is happy with the HWEN plan.

NZ Institute of Forestry president James Treadwell said HWEN is a culmination of a decade of inaction from the agriculture sector and lacks a road map for the realities of climate change. 

There is also concern about how the recommendations will impact drystock farmers.

B+LNZ farmer director Nicky Hyslop says the body had issues over HWEN’s modelled impact of methane charging on drystock operations, which could see them lose at least 10% of net profits, given the variety of farm systems within that definition.

On the international front, Australia’s Agriculture Minister Murray Watt weighed in on NZ’s plan to tax ag emissions, saying “a tax similar to the one floated in NZ is not something the (Aus) government is considering”, adding “the Government will continue to support and work with our agricultural industries to reduce their emissions.”

However, the UK, which NZ signed a trade deal with earlier this year, has also discussed including agricultural emissions in its own ETS as part of the first step to imposing carbon border taxes that could protect British producers from cheaper imports. 

The US is also keeping a close eye on the European Union’s proposal to introduce the world’s first carbon border fee, wary of how it might impact American trade and manufacturing.

The EU, which NZ is yet to secure a viable trade deal with, brought carbon border adjustments into the spotlight last year in a proposal which would support initiatives to meet its goal to reduce its total carbon footprint by 55% by 2030 and to net zero by 2050.

Canada, which currently faces a legal challenge from NZ over its failure to uphold its end of the bargain in the Comprehensive and Progressive TransPacific Partnership trade agreement, also recently announced a credit system for greenhouse gas offsets, a major part of its plan to cut carbon emissions, starting with a set of rules stipulating how projects can generate tradable credits by capturing gas from landfills.

The country’s government said protocols for four other sectors, including agriculture and forest management are under way.

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