Government backs down on plans to include farmers in Emissions Trading Scheme

The Government has snubbed the recommedation to bring farmers into the Emissions Trading Scheme (ETS), opting instead for a sector-led plan to address agricultural emissions.

Agriculture has been exempt from ETS since it was established in 2008.  However, in July, the Interim Climate Change Committee (ICCC) suggested including agriculture by 2025.

The plan was widely criticised by farming groups, who wanted to leave agriculture out of the ETS altogether.

An industry group representing 11 primary industry bodies came up with an alternative proposal 'Primary Sector Climate Change Commitment: He Waka Eke Noa - our future in our hands to manage agricultural emissions.' 

Under the proposal, the industry would pay nothing for emissions until 2025, and the agriculture sector would instead enter into a voluntary agreement with the Government rather than join the ETS. 

Prime Minister Jacinda Ardern said it was a historic consensus with the primary sector.
Prime Minister Jacinda Ardern said it was a historic consensus with the primary sector. Photo credit: Newshub

In a surprise turnaround, the Government has announced that it has agreed to the industry proposal in what it describes as a "world-first partnership to reduce primary sector emissions in one of the most significant developments on climate action in New Zealand's history". 

It would mean farmers and growers would be able calculate their emissions and offsets at the farm gate by 2025, instead of joining the ETS.

The five-year joint action plan includes:

  • improved tools for estimating and benchmarking emissions on farms
  • integrated farm plans that include a climate module
  • investment in research, development and commercialisation
  • increased farm advisory capacity and capability
  • icentives for early adopters
  • recognition of on-farm mitigation such as small plantings, riparian areas and natural cover.

Cabinet has also agreed that in 2022 the independent Climate Change Commission will check in on the progress made and if commitments aren't being met, the Government can bring the sector into the ETS at processor level before 2025.

Prime Minister Jacinda Ardern said it was a historic consensus with the primary sector.

"This plan provides the primary sector with certainty and puts us shoulder-to-shoulder on a path to reduce emissions, with ongoing support to help with the plan, such as the $229 million Sustainable Land Use investment.

"This will reduce emissions by giving farmers the autonomy to plan to do so and reward those who do," she said.

Deputy Prime Minister Winston Peters said the Government had taken the concerns of farmers onboard.

"The decision to put in place a sector-led plan to reduce emissions at the farm gate shows we've listened to farmers," he said.

"We welcome the cooperation of our primary sector organisations who have been advocating for a smooth transition towards meaningful emission reductions," said Peters.

Major reforms to the ETS have also been announced with a cap on industrial energy and transport emissions, and forester incentives simplified.

"This will help keep our planet safe for future generations. With the world changing at break-neck speed, these changes will drive us towards a low emissions country," said Minister for Climate Change James Shaw.

"Changes also align the purpose of the ETS with the Zero Carbon Act and the Paris Agreement, so that New Zealand doing its bit to limit global warming to 1.5C," he said.

Minister of Agriculture Damien O'Connor said farmers understood that a changing climate affects them and many were already making changes on-farm.

Damien O'Connor said many farmers were already making positive environmental changes.
Damien O'Connor said many farmers were already making positive environmental changes. Photo credit: File

"The agreement with sector leaders shows the value of collaboration and provides certainty for farmers, but the hard work begins now to develop the tools and systems to account for on-farm emissions in 2025.

"The Government will back that with investment in research, extension services and advice for farmers," he said.

 Primary sector groups said it was a better way forward for the industry.

"We are pleased that the Government has recognised that it does not make sense to bring agriculture into the ETS and that we have a pathway to work with the Government to develop a more appropriate framework," said a joint statement from the 11 industry groups.

"The framework will address climate change within a whole farm systems framework, recognising that farmer's efforts to reduce emissions sit alongside water quality, biosecurity, biodiversity, animal welfare, and financial sustainability."

The Climate Change Response (Emissions Trading Reform) Amendment Bill will be introduced today and have its first reading in early November 2019.

It will then be referred to the Environment Select Committee and is expected to pass in early 2020.