A key plank of the He Waka Eke Noa (HWEN) partnership has been given the thumbs down by the Climate Change Commission in its independent assessment of how ready farmers and the sector are for emissions pricing.
The assessment will influence the government’s decision later this year as to whether agriculture’s proposal will sit outside of the Emissions Trading Scheme (ETS), or not.
The commission has acknowledged the sector’s efforts committed to developing a split-gas approach to farm emissions.
But it has also advised it wanted to see some critical changes made to HWEN’s plan for farmers to be paid for carbon absorbed by on-farm vegetation, used to help mitigate the financial impact of emissions pricing.
This would be from vegetation that is not eligible for the NZ ETS credits.
Commission chair Dr Rod Carr said the proposal would be expensive, complex, inequitable and difficult to audit and enforce.
The commission did not believe it would significantly improve emissions outcomes.
Carr said farmers already have access to the NZ ETS for some on-farm sequestration.
“A separate system for carbon absorbed by vegetation that is not recognised in the NZ ETS could better reward the wide range of other benefits on-farm vegetation provides, such as enhancing water quality and biodiversity and ensure equity between farmers and other sectors,” he said.
But this has raised strong disagreement from pastoral sector leaders.
Beef + Lamb NZ and Dairy NZ have jointly slammed the commission’s advice there be no recognition of sequestration on farm through HWEN.
DairyNZ chair Jim van der Poel said the proposal was a credible plan to support farmers to reduce agricultural emissions in a way that was practical and fair to all.
He said on-farm sequestration was a foundation of the HWEN partnership with government and it was imperative it remains so.
Recognising the balancing act to get HWEN over the line across the primary sector, B+LNZ chair Andrew Morrison said the cross-sector agreement was “finely balanced” and required significant negotiation and compromise to get it to where it was now.
“On that basis we urge government to accept our proposal without changes to continue that cross-sector support,” he said.
The commission’s analysis showed eligible farmers would be ready to participate in a scheme by its January 2025 deadline.
The system would, however, be reliant upon IT tech to record and measure gas emissions being built, alongside compliance and enforcement measures being put in place.
The commission also recommends pricing nitrogen fertiliser at the processor level within the ETS scheme as soon as practicable would help achieve broader and more equitable coverage of all nitrogen fertiliser emissions in NZ.
It maintains trying to recognise nitrogen emissions at farm from application is a complex, variable task.
Emissions from nitrogen fertilisers would therefore attract a levy at the processor level, similar to what emitting fuels do, like petrol.
This is also opposed by B+LNZ and DairyNZ.
Both groups maintain HWEN is designed to help farmers manage emissions through their whole farm system, and it did not make sense to remove one part of it.
HWEN programme director Kelly Forster said she welcomed the commission’s support for a farm level split-gas levy approach and the confidence the commission has in farmers being ready for a fam-level system by 2025.
She noted the commission has taken a different view to HWEN on recognising sequestration in non-ETS vegetation and on nitrogen fertiliser,and both needed further analysis before responding in detail.
“It is important to remember the HWEN recommendations are based on giving farmers control over all the levers that impact on their emission, including sequestration and fertiliser use, so they can take a holistic view across their farm system as they make decisions.
“We would not want this whole-farm system approach to be undermined.”