Thursday, February 22, 2024

Methane research levy is the key, not a tax 

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Money would go to the development and technology transfer required for methane mitigation, says Keith Woodford.
These sheep are been monitored at AgResearch’s Ruakura site to see how they are affected by heat stress, with the work eventually leading to a heat stress index tool for farmers.
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In recent articles I have attempted to explain some of the global warming complexities of methane. I did that in the hope that the ongoing debate might at least have elements of genuine communication and debate, rather than the two-way throwing of verbal missiles. 

In this article I discuss a path to the future.

I have also recently begun the process, together with academic colleagues, of writing about global pastoral systems from a trans-disciplinary perspective, recognising that no single scientific discipline can hope to answer the big questions that span food production, the environment, climate change, economics and more than a billion livelihoods across the world. Our work there is ongoing. 

That work has led me back to the idea of a “wicked problem”, which by definition has no easy answer.  With wicked problems, if people think there are easy answers, they don’t understand the problem. An “easy answers” perspective leads quickly to verbal missiles, often personalised, where the other side is assumed to comprise of ignorant people. 

I need to lay out the specific wicked problem that we are dealing with here in New Zealand.

First, we need to recognise that the agrifood systems that underpin the NZ economy are much more than “farming” or even “agriculture”. When people quote the Statistics Department data on agricultural GDP, they never state that this is only the value contributed by the farmers’ own endeavours plus the on-farm workers. 

It excludes shearers and the contractors associated with hay making, silage making and fencing. It excludes the veterinary, accounting and farm advisory professions.  It excludes the people working in the fertiliser and farm-chemical industries. It excludes the farm machinery companies. It excludes livestock agents. It excludes the contribution of anyone associated with the meat companies, the dairy companies, the transport companies and the export companies. 

NZ’s pastoral industries alone last year contributed $37 billion worth of exports. It should therefore be obvious that NZ cannot afford to destroy its pastoral industries. People in regional NZ have a good understanding of this, but people in the big cities often lack this insight. Hence there is a political divide, although leaders on both sides of politics do understand when reminded of the importance of agribusiness.

Second, the evidence that methane is a greenhouse gas is irrefutable and has been known for well over 100 years. There is no serious argument against the science that each additional molecule of methane that is emitted makes the atmosphere warmer than if it were not emitted.  

However, there is also a valid argument that if the intent is limited to ensuring the methane cloud does not grow any further, then, because of the relatively rapid decay of historical emissions, it is not necessary to reduce methane emissions to zero.  Also, the extent to which methane is relevant to future global warming is genuinely contested. 

Conversely, it is also correct to say that reducing global methane emissions right now could make a worthwhile contribution to the 2050 global political target of ensuring the temperature increase above pre-industrial temperatures would be no more than 1.5degC. 

This is because the effects of a reduction of methane emissions occur quickly, whereas for carbon dioxide the short-term effects are much less dramatic.  However, this must not hide that, to the extent future global warming is going to be a problem, it is carbon dioxide that is going to be the key driver, both pre and post 2050. In scientific terms, there is nothing magic about 2050. 

More than 150 countries, led by the United States and the European Union, have now signed a pledge at the United Nations Framework Convention on Climate Change that they would work collectively to reduce methane emissions by 30% by 2030. 

If achieved, this is expected by the Intergovernmental Panel on Climate Change and the UNFCCC to reduce 2050 global temperatures by about 0.2degC, compared to what they would otherwise be. 

Given that NZ has the highest methane emissions per capita of any country in the world, it would be difficult for NZ to now say we are going to do nothing. 

Although NZ has signed up to the collective pledge, its own contribution to the collective is a 10% reduction in emissions by 2030 and a 24% to 47% reduction by 2050. 

This reflects that many countries, unlike NZ, do have relatively easy options for substantially reducing the methane that escapes from the natural gas and oil. However, not one of those countries is volunteering to seriously damage its economy.

The fact that NZ’s international methane commitments are structured differently than for the longer-lived carbon dioxide and nitrous oxide, with these collectively committed to net zero by 2050, is recognition that short-lived and long-lived gases do need to be considered differently.

Aligned with this, over the past three years a broad consensus has emerged across most but not all of the NZ political spectrum that methane should not belong in the Emissions Trading Scheme (ETS). That has been a big step forward. 

The ETS was designed as a “cap and trade” tax system to encourage companies and individuals to move away from fossil fuels to other forms of energy. Despite some big flaws, it can work for carbon dioxide.  A key reason that it can work for carbon dioxide is the presence of clear options for companies and individuals to move to other forms of energy.  

In contrast, pastoral farmers do not have significant options currently available to reduce methane emissions except by destocking. NZ’s topographical features, plus low natural fertility, a temperate maritime climate, and distance to markets, all favour pastoral endeavours rather than arable crops. In most cases, pine forests are the only economic alternative.

A consequence of this is that simply taxing methane is not the way forward. No one else in the world is doing this. Rather, the need is to turn the thinking around and start by asking the question: “What are the research, development and technology-transfer requirements if the methane intensity of pastoral agriculture is to be reduced, and what funding does this need?”

It is remarkable how the farmer-based organisations have focused on, and then disagreed among themselves over, what a tax might look like, although all the rural organisations were in tune when it came to opposing the Labour Government as to who should make the tax-rate decisions. 

What was lost in that debate is that any methane levy – which is different to a tax – needs to be an outcome of a considered process whereby the research, development and technology transfer required for methane mitigation are identified, with this leading to the funding levy required specifically for that purpose. 

The pre-2024 Labour Government did commit to methane taxes being reinvested in methane mitigation strategies, but this was putting the cart before the horse. Turning things around so that agreed mitigation strategies determine the necessary funding levies changes the whole dynamic. It makes the levy purposeful, just like existing research and development levies are purposeful.  

By far the simplest way to allocate the levy among farmers is based on their individual methane emissions. This provides individual farmers with an incentive to reduce their emissions and thereby pay a lesser proportion of the levy.  

It has been traditional in NZ that the government also contributes to research and development with the rationale being that all New Zealanders benefit from the resultant economic consequences. Therefore, it is reasonable to assume that the government would become a partner in the levy system.

One of the current issues is that most farmers can now quote their total greenhouse gas emissions in terms of the flawed carbon dioxide equivalence (CO2e) system, but there are multiple calculators that provide somewhat different answers. 

The farmer organisations now need one calculator that can be applied to all ruminant species and all pastoral systems. Also, with methane now to be outside the ETS, it is the methane numbers, not CO2e numbers, that we need to know.  In regard to methane, the CO2e equivalence is no longer relevant at the farm level. These issues and associated thinking need to be sorted out now.

In regard to magic methane bullets, there has been a tendency to overhype the potential. All of the technologies, such as vaccination, Bovaer (3-NOP) and asparagopsis seaweed, have big challenges to overcome before they can be applied in pastoral situations.  There are no guarantees that any of them will be the pot of gold at the end of the rainbow. 

However, Fonterra is working on an interesting probiotic product it calls “cowbucha”. This would be given to very young stock so as to programme the rumen in such a way that ever after it would produce less methane. This is currently proceeding through “proof of concept”.

One technology that is apparently close to commercialisation has been developed by Ravensdown from Lincoln University research. This has the potential to greatly reduce methane emitted from dairy effluent ponds. Breeding for low-methane-emitting sheep and cattle is already underway. The challenge is that the heritability of methane-emitting differences is low. 

The fundamental problem remains that we are tying to outsmart nature and nature itself is rather smart. It will be a long journey, but we cannot walk away.

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