Friday, March 29, 2024

Sectors differ on ETS inclusion

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Two primary sectors have offered starkly contrasting views on how they should be treated in emissions trading as the Productivity Commission mulls over submissions to its low emissions economy inquiry.
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The inquiry aims to identify options for how New Zealand could reduce its domestic greenhouse gas emissions and move to a lower emissions future while retaining economic wellbeing.

As the Government pushes for a zero-carbon economy by 2050, Fonterra’s submission highlighted issues it said challenged any transition into the Emissions Trading Scheme (ETS) for dairy.

The Government had indicated it wanted farming to contribute to greenhouse gas emissions costs, possibly incurring 5% of those costs initially.

In its submission Fonterra highlighted NZ’s relative carbon efficiency for dairy production.

It said there was no global benefit in shifting milk production out of NZ, given Fonterra’s suppliers’ ability to produce milk at half the emissions rate of the world average and a quarter of the world’s most inefficient producers.

“The significant opportunity is to help less efficient countries become more efficient,” it said.

The submission sought more clarity from the Government on climate change policy and supported a climate act recommendation made by the last Parliamentary Commissioner for the Environment, Dr Jan Wright.

It supported the ETS for fossil fuel emissions but said the scheme was insufficient to address market failures and incentivise onfarm mitigation action.

To do so would require a carbon price so high it would have significant and disruptive costs for all New Zealanders.

Until alignment with competitors was achieved and significant mitigation was available it supported agriculture’s exclusion from the ETS, instead reducing emissions through the Dairy Climate Change Action plan launched in June.

In contrast, forestry interests including the Forest Owners Association, Ngai Tahu Forest, NZ Farm Forestry and Carbon Forest Services said pastoral agriculture should be made directly liable for its environmental footprint to reduce GHG harm levels and phase agriculture into the ETS.

The foresters said the ETS would remain flawed unless land use change was forced on the sector and that would come only if the tax-free environmental and carbon subsidies farmers enjoyed were removed.

“Farmers themselves have little economic incentive to plant trees and, in places, an economic incentive not to,” they said.

Removal of that subsidy would come in the form of pushing agriculture into an ETS scheme and being required to pay for carbon emissions.

The foresters also wanted reforestation of Government grasslands through active management of new plantings and wilding pines.

The core of the foresters call for greater pressure on land use change was also being driven by the cost of acquiring grassland for forestry and the fact agricultural land use generally offered the highest-returning opportunity, further inflated by GHG costs agriculture could  pass on to other parts of the economy.

Introducing emission charges through the ETS would send market signals to encourage farmers to plant woodlots, by land for afforestation and find ways to reduce emissions.

The depression in agricultural land prices would allow forestry to become relatively more attractive as an investment.

“It is pointless to even expect the forestry sector to plan new forests without addressing the issue of land pricesm,” they said.

Forest Owners Association Peter Clark said the sector simply did not own enough non-forested land to meet the Government’s new target of a billion trees over 10 years and that target could be met only by farmers turning pasture to trees.

The irony of the Government trying to deforest areas with wilding pines was also not lost on submitters.

They said the wilding pines in areas of low conservation value offered a chance for cheap carbon capture and suitably managed would be shelter for natural forest regeneration and wild life habitats.

They said the Crown should determine tradeoffs between getting rid of or keeping wilding pines on its estate, including DoC land.

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