The ICCC was tasked with providing advice on how surrender obligations could best be arranged if agricultural methane and nitrous oxide emissions enter the New Zealand Emissions Trading Scheme.
What did the Committee recommend?
The Committee concluded that the best way to reduce livestock emissions is to price them through a farm-level levy/rebate scheme, i.e. NOT through the Emissions Trading Scheme (ETS).
They have recommended that a levy/rebate scheme is a simpler and less costly approach than including the 20,000 to 30,000 small farm businesses in the NZ ETS as it would avoid the need for farmers to trade emissions units.
However, they realised that a farm-level levy/rebate scheme could not be fully implemented until 2025, as it will take some time to build the systems to support it.
For the agriculture sector to play its part in reducing emissions in the interim, the ICCC recommended that agricultural emissions be priced through the NZ ETS at processor level as soon as practicable, ideally from 2020.
It’s estimated the average dairy farm, with a 95 per cent discount on emissions, at the current NZ ETS price of $25/tonne would incur $0.01c per kg of milk solids. This works out to be approximately $2000 p/a.
The ICCC’s full report can be found here.
A summary of the ICCC’s recommendations can be found here.
What is DairyNZ's view?
We and the ICCC both agree that a farm-based levy/rebate mechanism is the best way to address biological emissions, however, our views diverge when it comes to how we get there.
We are firm in our view that bringing agriculture into the ETS at the processor level is a blunt instrument that amounts to little more than a broad-based tax on farmers before we have the knowledge, support and tools to drive the practice change that will reduce emissions.
We believe that a price at the processor level as an interim option will not drive the behaviour change to reduce agricultural emissions in the interim, before the tools and systems have been developed to support farmers.
What is DairyNZ doing about it?
Introducing the Primary Sector Climate Change Commitment
As an alternative to the interim plan we have joined with 10 other farming groups, such as Federated Farmers, the Dairy Companies Association of New Zealand (DCANZ) ,Federation of Maori Authorities, and Beef + Lamb, to launch a five year work plan to manage agricultural emissions: He Waka Eke Noa - our future in our hands. We are asking the Government to partner with us to develop and deliver the plan of action. We don’t want to duplicate activity or funding, therefore working in partnership is the best approach to deliver real change.
This Commitment is an unprecedented sector-wide proposal to work constructively and collaboratively with Government, Maori and Iwi to make real and meaningful changes at the farm-level to reduce emissions.
What’s really positive about this proposal is it doesn’t just identify a problem – it provides a clear pathway forward and a way for the primary sector to work with the government rather than just impose regulations.
There is a real and tangible five-year work programme to build an enduring farm-level emission reduction framework and help farmers and the wider rural sector to provide real options to reduce their footprint.
You can read our alternative proposal here.
You can read the DairyNZ Press Release here.