He Waka Eke Noa is a world-first partnership comprising of primary sector organisations, Māori and Government. It was developed to respond to the Government's proposal to price agricultural greenhouse gas emissions through the New Zealand Emissions Trading Scheme (NZ ETS).
Aren't New Zealand Dairy farmers proven to have the lowest carbon footprint in the world?
Yes, we acknowledge that Kiwi dairy farmers have the lowest carbon footprint in the world. However, it is also in our best interests to hold this competitive position, as the value of our products in international markets is built on our environmental credentials.
History of the Partnership
In 2018, the Government legislated agricultural emissions to be priced by 2025 and proposed that this be done at a processor-level through the New Zealand Emissions Trading Scheme (NZ ETS). This would mean processors would pay for emissions based on the emissions charge applied to products supplied, or bought (i.e., fertiliser), by farmers or growers. This charge would be passed onto farmers via a reduced pay out.
Dairy NZ and agricultural sector leaders and organisations did not accept this and proposed that an alternative pricing framework could be developed and implemented in 2025.
In 2019 the Primary Sector Climate Action Partnership – He Waka Eke Noa, was established to develop an alternative approach that allowed a fair and equitable outcome for the agriculture sector.
Why design an alternative pricing system?
Through the NZETS farmers face a broad-based tax designed to reduce carbon to net-zero and will have no practical or sustainable levers to reduce emissions in the short and long term.
- Methane is not recognised as a short-lived gas, and the priced would be the same as the carbon price using GWP100.
- The national average emissions factors would not reflect farm systems that are able to produce less emissions per kg of product.
- Recognition of carbon capture through forestry can be recognised if the NZ ETS eligibility rules are meet. However most on-farm vegetation is not currently recognised in the NZ ETS e.g., riparian areas, shelter belts, and small woodlots.
- Currently any revenue raised would be invested into the national Emissions Reductions Plan, not directly back into agriculture. However, the Government has indicated that any revenue generated could be reinvested back in agriculture.
- The agriculture sector would have no control over the carbon price because it will be linked to demand for NZU’s from other sectors of the economy. This means costs for farmers would continue to increase each year despite progress made towards agriculture reduction targets. Farmers would face a 5% charge on their emissions in the first year, then an incremental increase around 1% every year, on top of an increasing carbon price in the NZ ETS.
What agricultural greenhouse gas emissions are included?
- Methane (CH4) – generated by ruminants as a by-product of digestion. Less than 5% comes from dung and effluent systems
- Nitrous Oxide (N2O) – released into the atmosphere from dung and urine patches, and nitrogen (N) fertilisers
- Carbon Dioxide (CO2) – urea N fertilisers contribute to farm CO2 emissions
For more information on greenhouse gases and where they come from see climate change basics.
What has happened so far
1. ETS legislated backstop
Within the NZ ETS, farm would have the cost of emissions passed on to them from processors, based on the amount of product processed from livestock or fertiliser bought.
Short-lived gases, like methane, and long-lived gases such as carbon dioxide and nitrous oxide, would be treated the same using a carbon equivalence metric (CO2e), GWP100.
2. What has the partnership designed?
The partnership/He Waka Eke Noa has designed two draft alternative pricing options for agricultural emissions, starting in 2025.
a) Farm-level levy
- In this option, farms would face the cost of emissions from livestock and fertiliser, based on their farms reported emissions and offsets,
- Different levy rates would apply to short and long-lived gases.
b) Processor-level hybrid levy.
- In this option, farms would likely have the cost of emissions passed on to them from processors based on the amount of product processed from livestock or fertiliser bought.
- Farms could enter into a Emissions Management Contract (EMC) with the processors to reduce or offset their emissions and receive a rebate.
For more details and how you can have your say to make sure the partnership is developing the best possible framework for the agricultural industry see the Alternative agriculture emissions pricing options.
As well as developing an emissions pricing system, the Partnership needs to reach several milestones along the way to ensure farmers are ready to participate from 2025.
These milestones are important, as they determine the partnership’s progress and have been included in the climate change legislation.
Together our sector must use this opportunity to align and drive a more sustainable future for agriculture and the environment. If the partnership is unable to achieve these milestones, the Government reserves the right to price agricultural emissions in the NZ ETS earlier than 2025.
Guidance issued on how to measure and manage greenhouse gas emissions through farm planning
1 January 2021
25% of all farms must know their annual total on-farm greenhouse gas emissions
31 December 2021
25% of all farms must have a written plan in place to measure and manage their greenhouse gas emissions
1 January 2022
100% of farms must know their annual total on-farm greenhouse gas emissions
31 December 2022
A pilot of a farm-level emissions accounting and reporting system has been completed across a range of farm types
1 January 2024
100% of farms have a written plan in place to measure and manage their greenhouse gas emissions
31 December 2024
100% of farms are using the accounting and reporting system to report their 2024 emissions
1 January 2025
Together with Beef + Lamb / New Zealand and Federated Farmers, we will be running be running a nationwide engagement roadshow in February 2022 to get feedback from farmers on the partnership options, alternatively you can submit your feedback online. For more details on how to register for a roadshow event, or submit your feedback online see have your say page.
Farmer feedback will form part of the advice the partnership delivers to the Climate Change and Agriculture Ministers in April 2022. This advice will include recommendations for an alternative on-farm pricing and sequestration system.
Government has a period to consider the advice. During this time, the Climate Change Commission will also review progress being made by the partnership, including against the legislated milestones, and will make a separate report to Government.
By the end of 2022, the Climate Change and Agriculture Ministers must put forward a report outlining the system that will price agricultural emissions as an alternative to the NZ ETS.
If the partnership fails to provide a viable alternative or if progress towards these milestones is insufficient, then the Ministers may still choose to place agricultural emission in the NZ ETS.
Industry partners advocating for you
In parallel with the partnership work, DairyNZ, Beef + Lamb New Zealand and Federated Farmers continue to advocate on farmers’ behalf for more realistic methane targets and improved reporting on the warming contribution of agricultural emissions. There will be a review of the methane targets in 2024, which our organisations are working towards.
What can you do right now?
Know your numbers
By now you should of received an emissions report from your dairy processor or consultant with your farm's emissions numbers. It is important that you know and understand where your farm sits.
Have your say
There will be an opportunity for you to have your say on the partnership pricing emission options at our nationwide roadshows, or online, in February 2022.
He waka eke noa partners
For further information on He Waka Eke Noa visit hewakaekenoa.nz.