Proposal includes funding for R&D to lower on-farm emissions. Farmers fear it will drive up costs, force people off the land.
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Operations At A Fonterra Cooperative Group Ltd. Supplying Dairy Farm Ahead Of Half-Year Results
Dairy cows graze at a farm in Hamilton, New Zealand.Photographer: Brendon O'Hagan/Bloomberg

New Zealand farmers will start to pay a levy on agricultural emissions by 2025 — a move Prime Minister Jacinda Ardern said would be a world first.

The government will adopt the main recommendation from the He Waka Eke Noa primary sector climate action partnership to price the emissions at the farm level rather than including them in the nation’s emissions trading scheme, Ardern said Tuesday in Wellington. The system will be in place by 2025, requiring farmers to start paying a regulated price for their methane, carbon dioxide and nitrous oxide emissions.

“The proposal would see New Zealand farmers lead the world in reducing emissions, delivering a competitive advantage and enhancing our export brand,” she said. “No other country in the world has yet developed a system for pricing and reducing agricultural emissions, so our farmers are set to benefit from being first movers.”

New Zealand is the world’s biggest dairy exporter, with agriculture playing a major role in the economy. Farming accounts for around half of the country’s total greenhouse gas emissions. Ardern said the proposals will allow the South Pacific nation to meet its legislated target of reducing methane emissions to 10% below 2017 levels by 2030.

But farmers are upset that the government isn’t accepting all of their recommendations, according to lobby group Federated Farmers. They fear some will walk off the land as their costs become overwhelming.

“Federated Farmers is deeply unimpressed with the government’s take on the He Waka Eke Noa proposal and is concerned for our members’ futures,” said National President Andrew Hoggard. The plan “will rip the guts out of small town New Zealand, putting trees where farms used to be.”

The government acknowledges in the consultation document that emissions reductions are expected to come from land-use changes, as well as increased farm efficiency and emissions mitigation.

Split-gas Approach

The government is backing a split-gas approach where long-lived gases such as carbon dioxide have a separate price to methane.

The price to be levied on farmers will be set by ministers based on advice from the Climate Commission. That’s a departure from the partnership’s idea of a sector advisory group providing guidance. Prices will be set annually although there is scope for less frequent fixing of the methane price, according to government documents.

Revenue from the levy will be recycled via incentive payments designed to encourage the uptake of approved mitigation technologies such as methane inhibitors, which will reduce a farmer’s total bill. Money will also be directed to research into new ways to limit greenhouse gas emissions.

In another departure from the partnership’s proposals, the government will not allow carbon sequestration from on-farm vegetation to offset a farmer’s emissions. Instead it wants the emissions trading scheme to be the sole mechanism to recognize such planting.

Farmer groups who participated in the He Waka Eke Noa partnership, including DairyNZ and the Meat Industry Association, said further discussion is required on areas where the government has not adopted their recommendations.

“He Waka Eke Noa’s recommendations were designed as a carefully balanced package that was as equitable as possible across all parts of the primary sector,” Program Director Kelly Forster said. “The government has proposed alternative approaches in some areas which may fundamentally alter the balance and could have significant implications for sheep, beef and deer farmers.”

A consultation on the proposal will run from now until Nov. 18.

The quality rating of domestic dairy products has remained above 99 percent for six consecutive years, experts said at a webinar.

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