The Government’s emissions pricing consultation – update

// Climate Change

The following was emailed to farmers on 20 October 2022.

native plantings on farm

Beef + Lamb New Zealand is undertaking further analysis of the Government’s proposals for the pricing of agricultural emissions.

We’ve heard from lots of farmers and we understand the high level of concern and frustration out there, as we all saw today. We share these concerns and frustrations. 

We want to make our position clear and reiterate our commitment to getting a result that is fair and does not threaten the viability of our farms and rural communities. We’re also committed to ensuring farmers’ voices are heard.

We’re developing guidance to help you make a submission on the Government’s proposals – something we strongly encourage all farmers to do. We’re aiming to send you this guidance within the next week or so.

The bottom line

  • While we recognise everyone has a role in reducing emissions we will not accept a system that disproportionately puts our farmers and communities at risk.
  • B+LNZ would prefer farmers didn’t face a price for their emissions, however the Government has been very clear that pricing will begin by 2025 and it already has legislation in place to price emissions through the ETS.
  • New Zealand is the first country in the world looking to put a price on agricultural emissions.  It’s critical that we get this right and it makes no sense to put the most carbon efficient producers of red meat out of business. This will not save the planet – in fact Government modelling shows it will lead to an increase in global agricultural emissions. 

What’s on the table and where it came from

  • We’ve been working hard for the last couple of years as part of He Waka Eke Noa, with Government, iwi and agricultural groups, to try and find a better alternative to agriculture going into the ETS – the ETS option would have been crippling for our farmers. 
  • The Government has made significant changes to what the agricultural sector proposed through He Waka Eke Noa. Those changes fundamentally alter the balance of the agriculture sector’s proposals and are not acceptable to B+LNZ and our farmers.
  • This is deeply frustrating because the Government was one of the partners working on He Waka Eke Noa from the outset and gave sector partners no indication of these substantial changes.
  • The Government’s proposal is not supported by B+LNZ. While we support the original He Waka Eke Noa recommendations we do not support the proposals currently being consulted on by the Government.

Why we don’t support the Government’s proposal

  • While it’s positive that the Government is not proposing to put agriculture into the ETS, the proposals include several unacceptable aspects.
  • The proposed changes to sequestration are extremely concerning. Sequestration is massively important to many farmers (especially sheep and beef farmers and Māori) and it’s only fair that farmers paying for emissions are at the same time recognised and rewarded for their sequestration.
  • Sequestration was a critical part of the proposed pricing system that provided balance and equity across the sectors, particularly to our extensive farmers who are more likely to have sequestration and less likely to have access to new technologies in the future. The gutting of the sequestration proposal is a major factor in the disproportionate impact on our sector now. 
  • Two other key changes we don’t agree with are the emissions price setting process (including governance and criteria) and the linking of the nitrous oxide price to the ETS price. There are also proposed changes to revenue recycling and incentive payments that further undermine the whole programme. 
  • The He Waka Eke Noa proposal was designed as a carefully balanced package that achieved equity across all parts of the sector and where price was not the primary driver – the Government has fundamentally undermined this balance. 
  • The Government’s own modelling shows that sheep and beef farmers would be unfairly disadvantaged through the Government’s proposal. Their modelling validates our calls for a cautious approach to pricing and shows that much lower prices can achieve the government’s legislated emissions reductions.
  • Given the Government’s own modelling shows how affected our sector will be, we can’t understand why they pulled back on the well-founded recommendations on sequestration.
  • We will not allow the sheep and beef sector to be disproportionately affected and will be relooking at how all the parts of the proposal relate to each other to prevent this from happening.   
  • The Government’s modelling also reinforces the need to adjust the methane targets – the higher the target, the higher the price that potentially needs to be applied in order to achieve the target. B+LNZ doesn’t agree with current legislated targets and is working with other industry groups in parallel to get the targets adjusted.
  • We also have to address the pace and scale of sheep and beef farms being sold into forestry (particularly carbon farms) being driven by the carbon price. This effect exacerbates the impact of a price on emissions on our sector.

Have your say

  • We’re calling on the Government to listen to our concerns. As part of supporting farmers to lodge their own submissions and make their voices heard, we’re developing submission guidance. We’ll be in touch with this soon. Submissions will need to be made before 18 November.

Key links

We will continue to keep you updated – keep an eye on future emails, your weekly e-diary and our website.

iimage of Sam McIvor and Andrew Morrison