Saturday, December 2, 2023

Sector must have a say on ETS settings: BLNZ

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Crucial to get NZ’s policy settings right without gutting rural communities, says Sam McIvor.
As Beef + Lamb NZ engages in the process on behalf of sheep and beef farmers, says Sam McIvor, ‘we will be seeking to ensure we find the right balance’.
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By Sam McIvor, Beef + Lamb NZ

We know there is confusion and some concern over the government’s proposed changes to the Emissions Trading Scheme.

It’s a complicated issue and Beef + Lamb New Zealand (BLNZ) has spent a lot of time examining the options and discussing this topic with our farmers and Farmer Council. It was pleasing that nearly 200 farmers filled in our recent survey on the proposed changes, which will inform our submission. 

I want to clarify that BLNZ is not anti-forestry and sees huge opportunities for the integration of trees on farms. However, like many farmers and communities, we are concerned about the scale and pace of whole farms that have been sold recently to convert into forestry, which has been driven by the carbon price. 

NZ is one of only two countries that allows 100% carbon forestry offsetting, and we have seen a major increase in the amount of offsetting in recent years.

All other countries have limits, and many prioritise the recognition of native vegetation sequestration over plantation forestry. 

Many New Zealanders don’t realise just how far our country is out of whack with the rest of the world.  It’s just us and Kazakhstan that allow 100% offsetting.

Fossil fuel emitters have an unbridled ability to offset all their emissions just by planting trees. This diminishes the incentive to reduce their emissions at source.

There are currently no policies to control how much offsetting can occur. 

There are many farmers either already capturing or interested in the potential financial opportunities for integrating trees within their farming operation, entering the ETS and getting carbon revenue.  

Some of our Māori levy payers see forestry/carbon revenue as a significant opportunity for income on land that they have been constrained in developing either by legislative or financial limitations.  Understandably they are concerned about the impact the proposed changes could have on their income.

The policy challenge is this – how can we find the right balance between avoiding the potential decimation of some rural communities through wholesale land use change while at the same time providing the carbon revenue opportunity for our farmers?  

On one hand the carbon-induced high farm sale prices have provided a great opportunity for farmers choosing to exit the industry. On the other hand these same high prices have provided a significant challenge for young farmers wanting to enter the industry.

The climate change commission has suggested about 50,000ha a year of new planting is required to meet the Zero Carbon Bill’s objectives.  From 2017 to 2021 more than 175,000ha of whole farms were sold out of sheep and beef land destined for forestry.  (Note that this excludes what has been happening within farms and, in some cases, whole Māori-owned farm conversions).

BLNZ’s Economic Service calculations show this would be a loss of about 1 million stock units and $218 million per year in export revenue or $3.2 billion in lost export revenue after 15 years.

As I’ve already noted, this is an incredibly complex policy area, and we acknowledge the arguments on both sides. As we engage in the process on behalf of sheep and beef farmers, we will be seeking to ensure we find the right balance.

All of the options provided by the government allow for offsetting, but conditions to manage the amount going forward must be put in place.

The clear message that we’re getting, even from farmers who want to take up carbon opportunities, is that they are concerned about the future of their communities and permanent exotic carbon forests.

History has shown that farmers and communities are good at finding answers to challenges, and particularly good at observing and learning from what hasn’t worked in the past.  

We need to take the time to ensure we get NZ’s policy settings right to address climate change without gutting our rural communities.

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