Bryce Edwards: The contentious “historic consensus” for farmers on climate change

Bryce Edwards: The contentious “historic consensus” for farmers on climate change

The supposed end of the 20-year standoff between environmentalists and farmers was announced last week, with the release of the Interim Climate Change Committee’s report on “Action on agricultural emissions”. It was celebrated as an “historic consensus” between farmers and environmentalists, as the agricultural sector was agreeing to pay for part of their methane emissions.

Since then, however, the “devil in the detail” suggests that the situation is much more complicated and disputed than it might have first appeared. There now seems to be a long way to go before a real agreement or consensus is found for getting farmers to pay for emissions.

There should be no doubt that this new stage of discussions is significant. For the best overall coverage of what it all means, see Thomas Coughlan’s news report, Farmers exempt from 95 percent of emissions charges under new proposed rules.

This reports that a consensus now exists for farmers to pay for emissions by the year 2025, with the likelihood that each individual farmer will be brought into the Emissions Trading Scheme (ETS). As Coughlan explains, “The ETS works by forcing polluters to pay a price for their emissions, whilst paying a credit to owners of ‘carbon sinks’ like forests.”.

Coughlan reports that “Labour had campaigned on bringing agriculture into the ETS by 2020 with National claiming the push-back to 2025 was a ‘backdown’.” The reason for this backdown is mostly related to the technical issues. Farmers need to first be able to measure, manage and report those emissions.

According to David Prentice, the chair of the Government’s Interim Climate Change Committee (ICCC), “there is significant work involved in developing accounting and reporting systems to enable this… We estimate this to be at least five years off” – see RNZ’s Farmers propose agriculture sector-led approach to emissions plan.

With 2025 agreed upon as the earliest date to bring farmers into a permanent system of emissions payment – probably via the ETS – the main disagreement is currently about what to do in the meantime. The ICCC has put forward one proposal, involving levies to be charged on “processors” of agricultural products – such as Fonterra dairy factories. This money would be funnelled back into research on technologies to help farmers reduce emissions. This system would also involve rebates to farmers who achieve emission reductions.

The second proposal is put forward by farming groups, who want to pay for the research themselves via levies through their traditional sectoral groups. Submissions are now open for four weeks on these two proposals. But the Government has already indicated that it prefers the first option, recommended by the ICCC.

Farmers not keen on Emissions Trading Scheme

Although farmer groups have been reported as welcoming and being amenable to the new recommendations for agricultural emissions charges, the consensus doesn’t necessarily go much further. Certainly, the idea that in 2025 farmers will be part of the ETS is not accepted – see 1News’ Federated Farmers: We have not agreed to any Emissions Trading Scheme.

As this item reports, “Speaking this morning to TVNZ1’s Breakfast programme, Federated Farmers CEO Terry Copeland clarified that while his organisation has agreed to work with the Government to reduce climate change, it has not joined any ETS.”

The traditional “farmer’s friend”, the National Party, is also opposing farming being simply incorporated into the ETS. For example, today one senior National MP is clearly stating that farmers shouldn’t be in the ETS – see: Judith Collins: Government has thrown Kiwi farmers ‘under a bus’.

Richard Harman also reports: “yesterday, Leader Simon Bridges was saying National opposed farming going into the ETS or any levy system until farmers had the technological and mitigation tools that would enable them to reduce their emissions. The party’s Climate Change spokesperson, Todd Muller, said that the Government was saying they had reached a historic agreement with the sector on a five-year work programme before on-farm pricing was established” – see: Now it gets hard – making farmers pay for methane.

Also, according to Harman, “96.5 per cent of Federated Farmers Members have responded to a Feds survey saying they would oppose farming being part of the ETS without significant conditions.”

The Business NZ lobby group is also putting forward the arguments against farmers being too heavily hit by emissions pricing, with its chief executive, Kirk Hope, saying it’s too early: “The problem for farmers is that there is no way currently for them to reduce emissions other than by reducing stock numbers. Science and technology will provide solutions over time – low emission breeds, low emission feed –  but those technologies are not here yet” – see: The risks for farming from emissions charging agreement.

Hope also argues that an overly-aggressive pricing system for farmers would create overall negative outcomes: “If New Zealand’s agricultural production declined as a result of emissions policies, the gap would easily be filled by less efficient agricultural producers overseas. The overall result would be higher global emissions, higher food prices globally, and a poorer New Zealand.”

Consumers are also like to face higher costs as a result, according to Gerard Hutching’s article, Farmers’ greenhouse gas emissions bill will lead to higher food prices. He also points out that the current prices being considered by the Government could rise quite significantly. Examining the prices, Hutching says that based on the current price of carbon ($25/tonne) the average dairy farmer would pay about $2000 a year, and the average beef and sheep farmer about $1000. But many think the price of carbon will rise as high as about $200, leading to about a $20,000 annual payment for the average dairy farm.

And although this is all based on the notion of farmers paying only five per cent of the costs of emissions, Mike Hosking suggests that this rate is likely to rise: “It’s like tax or tolls, once you get the sign off, they do nothing but increase or go up. And so it will be with farmers. Now that they have a sweetheart deal at 95 per cent, that number will only ever go down. Getting them to sign isn’t the end goal, making them pay like everyone else is” – see: Climate change – how can five per cent be a pass rate for farmers emissions deal?.

Criticisms from environmentalists

Although there’s been plenty of celebrations about the consensus, a number of environmentalists are unimpressed by what is being proposed by the Government, and even less impressed with the reaction of farming leaders.

In his article above, Thomas Coughlan reports that the pricing level for emissions by farmers is a “sweetheart deal” because Labour has agreed with New Zealand First to cap that pricing at only five per cent of the cost of those emissions – essentially providing farmers with a 95 per cent subsidy on those pollutants. In practice, “That would equate to a charge of just $0.01c per kilogram of milk solids and $0.01 cent per kg of beef at the current ETS price of $25 a tonne of carbon.”

Is that enough to push farmers to find ways to reduce emissions? Not according to Greenpeace’s Russel Norman: “It’s truly astounding that the strongest option put forward by the Government to deal with our biggest emitter is to delay action for another two years, after which agribusiness will pay a paltry 5 percent of their emissions” – see Zane Small’s Jacinda Ardern defends ‘laughable’ 5 percent tax proposed on farming emissions.

Norman also labels the proposed emission price as “laughable” and says Agriculture must be immediately brought fully into the ETS so that New Zealand’s biggest polluters are finally forced to start paying for their massive climate bill.

The same article quotes Victoria University of Wellington Professor of Climate Change, Dave Frame, agreeing with Norman, calling the level of pricing a “poor idea” and saying “The price implied by the ICCC’s recommended approach is too small a disincentive against further expansion of the dairy herd, because the price is simply too small to change behaviour.”

Similarly, blogger No Right Turn says that the Government’s pricing proposals allow for a continued free pass for fertiliser use, which is a big part of the problem, and should be discouraged through environmental pricing: “rather than subsidising farmers to produce this gas, we should instead be making them pay the full price of the emissions it causes – and removing the artificial cap on ETS prices so that the price can increase to its natural level. Farmers will no doubt complain that if they have to pay the full cost, they’ll have to stop using it” – see: We should not subsidise fertiliser emissions.

A proper market signal about the environmental costs of fertiliser would help ensure it is used wisely: “If there are high-value uses which justify the emissions cost, then they’ll be able to afford to keep using it (or they’ll make out like bandits by switching to alternatives). But for low-value uses, like fertilising marginal grass to grow cows and pollute rivers, we are all better off if people stop doing that.”

Farmers have therefore managed to win some big concessions in their negotiations with the Government, and economist Rod Oram is extremely unhappy, saying “The red meat and dairy sectors are holding New Zealand’s economy, climate, natural environment and international reputation hostage to the political power of the lowest common denominator in their ranks” – see: ‘Let true farming leaders lead’.

Oram argues that although farmers have expressed basic support for paying for emissions, they want only tiny reductions, plus lots of money from the government to pay for this. Therefore, he concludes: “If these are the only climate commitments dairy and meat leaders can come up with the Government and country can’t afford to leave farming’s future and ours in the hands of those leaders.”

Finally, for satire on climate change, see my blog post, Recent cartoons about the environment in New Zealand.