Climate chief refutes claim farmers must wait for new technology to cut emissions

The country’s top independent climate adviser says it is not true that farmers need to wait for new technology to lower global warming emissions, nor is it true that reducing agricultural production will not increase global emissions.

Both arguments have been used to justify delaying the collection of greenhouse gas charges from farmers.

The government says its plan will cut New Zealand’s agricultural emissions by about half and will “prioritize technology” as one of its initiatives.

The country is pinning its plans to meet agricultural climate targets on new technologies coming to market, such as vaccines or powders that reduce methane emissions, and says pricing agricultural gas now would only push production of exports such as milk solids to countries with higher emissions levels.

Speaking about the Climate Change Commission’s first review of New Zealand’s climate progress, committee chair Rod Carr said neither statement was correct.

“Current agricultural practices are known to reduce greenhouse gas emissions,” Carr said.

“The idea that farmers don’t have the tools and have to wait for something new to come along to reduce emissions is a mistake,” he said.

“We know that different feeding practices are associated with different emissions, and we know that different breeds — and breeds within breeds — are associated with different emissions.”

Different land types and protein types also change emissions profiles, he said.

“There’s a lot of variability.

“In some parts of New Zealand, every kilogram of milk solids produces 18 kilograms of greenhouse gases, while in other parts it might be just 8 kilograms.

“The fact that the differences in New Zealand are so much greater than the average differences between countries disproves the argument that if we don’t produce, higher-emitting herds will be produced elsewhere. That’s simply not true. Because if you replace New Zealand’s higher-emitting herds with average-emitting herds from other countries, global emissions per kilogram of milk protein will go down.”

Carr says report is not a scorecard for current government

New Zealand has a series of restrictive budgets to reduce greenhouse gas emissions, with both major political parties making commitments.

The ultimate goal is to achieve net zero carbon emissions, 24-47% Reducing methane emissions by 2050.

The report highlights that agriculture and transportation are the two sectors most affected Risk of missing climate targetsUnless further action is taken. The Government is developing a Emission reduction planand has issued a draft for consultation.

Carr said the committee’s progress report was not a scorecard for the current government, but an overall assessment of how well New Zealand was meeting its binding targets ahead of the next plan.

He said there were also some major positives, including that national greenhouse gas emissions had continued to fall since 2019 and that the current government had committed to meeting emissions budgets.

Carr said the report also showed New Zealand had reduced emissions without affecting gross domestic product, further demonstrating that reducing emissions was affordable and feasible.

“The industry is responding, admittedly with incentives in some cases, partly to meet the expectations of its customers but also in response to changes in the price of low-emission technologies,” he said.

“We do know New Zealanders want change and in many cases their ability to change is dependent on access to finance and the cost of living benefits of low emission options.”

Carr said one in three people rent and landlords have little incentive to invest in things like solar panels to lower tenants’ bills, which remains a problem.

Cars and trucks ‘less sensitive to emissions pricing’

The report notes that early indications are that road transport emissions may be rising again after a temporary decline, which, if confirmed, would make transport the only sector to see rising emissions.

Although official figures for 2024 have not yet been released, net emissions nationwide are likely to rise, in part because of Traffic emissions.

At present, the main government policy to deal with transportation emissions is to follow Emissions Trading SchemeThis means gasoline importers will have to pay for the emissions from the fuel they import, as will coal importers and natural gas producers.

What’s wrong with emissions trading schemes?

Since the election, the government has scrapped or weakened other policies targeting transport, e.g. Clean Car Discountstailpipe emission standards, and encourage more Walking and Cycling.

However, Carr said that while drivers were sensitive to large swings in global oil prices, they were less sensitive to the relatively small extra cost of petrol under the Emissions Trading Scheme (ETS). As part of its report, the committee analysed changes in emissions over the first year of the current emissions budget.

“We found that transport emissions are affected by oil prices and policy choices, but the impact of emissions pricing is not particularly large,” Carr said.

“High (global) oil prices are one of the factors affecting (petrol and diesel) vehicle mileage in 2022,” he said.

“There is no doubt that the rebate system has helped to increase the uptake of low emission cars on the road and contribute to lower emissions, but the slowdown in new imports of low emission cars (since then) means we are starting to roll back some of the faster-than-expected reductions.

“Maybe emissions are falling earlier than we expected, but they will remain higher for longer in the future.”

Can ETS solve all problems?

Because the government has set a cap on the number of tonnes of carbon dioxide that can be auctioned each year under the emissions trading system, some economists say it would be pointless to take any other measures to combat emissions from sectors such as transport and energy.

They say the only area where additional policies could have an impact is agriculture, which is not covered by the emissions trading system.

In this view, carbon emissions from anything covered by the ETS will remain the same regardless of policies like clean car rebates, because subsidies in one region mean more people buy electric cars, which simply release tons of pollution for other emitters to buy at a lower price.

Carr said the “utopian” view that carbon markets could solve emissions problems didn’t work in New Zealand’s market, at least as it was currently designed.

“They’re wrong,” he said. “If our ETS was a cap-and-trade program, they’d be right. But it’s not, and that’s fundamentally wrong.”

Carr said the ETS does not impose a tight cap on emissions because the country can plant new forests indefinitely, pollutants are allowed to grow, some of the country’s biggest emitters are given “substantial” free carbon allowances and there are political limits on how high governments can let carbon prices, which affect electricity bills, food and other costs, rise in the future.

“There are a number of ways that the plan does not limit emissions in any one year, or even any one budget period,” Carr said.

“If you’re going to rely on a cap-and-trade system and a market-determined price … you have to be prepared to accept a price that is significantly higher than the marginal cost of planting a tree.

“If you really constrain emissions over any budget period, the price may not be socially acceptable.”

He said carbon prices in overseas markets were high enough to drive emissions reductions without help from other policies, and those markets also used “targeted social assistance” to ease the financial burden on households.

Deforestation data is the missing piece

The commission’s report questioned whether the country’s first emissions budget, for 2022 to 2025, was on solid ground.

The government says projections show the target is achievable, but an independent assessment by the commission concluded it could be in jeopardy because of a host of uncertainties, including deforestation, transport emissions and the risk of rising electricity emissions if the country suffers a dry year, which would sap hydropower and increase demand for coal and gas.

Responding to the committee’s report on Tuesday, Climate Change Minister Simon Watts said the projections in the government’s draft emissions reduction plan “show that we can both meet our first and second emissions budgets and still deliver economic growth by adopting the least-cost approach to climate change”.

“We acknowledge that the committee used the data at their disposal. Their findings lag three months behind the government’s policy work and recent announcements, including the release of a draft emissions reduction plan,” he said.

Carr said there was “some truth” in the government’s data being more up-to-date than the committee’s, because the committee assesses the impact of policies as of April 1.

“But we need to be a little cautious. The latest data is not always the most reliable,” Carr said, citing the fact that Statistics New Zealand sometimes revised its faster estimates.

Carr said parliament asked the commission to use the most reliable data, which meant using the national greenhouse gas emissions inventory, which was last updated in December 2022. However, it also used more recent information.

Carr said the biggest missing data was on forestry, which the government also had no access to.

“The government receives a bit more data than the committee, but one of the biggest pieces of data that neither of us have that could make a difference is deforestation, how many trees have been cut down, and how many are likely to be cut down, in the first emissions budget period. The government has no control over that and the committee doesn’t know the exact figure, but a figure will be released later this year.”

The report urged the government to take further steps to ensure the budget is met if such data is not ideal.

“You have to build uncertainty into your plans because there are things you can’t control,” Carr said.

“For example, Tiwai Point chooses to remain open Increased emissions from aluminium smelting, and Marsden Point refinery shuts down emission reduction”.

“There will be other unforeseen changes over the next decade, so you really need to consider the uncertainty,” he said.

The commission’s report found that emissions fell by 3.4 million tonnes in 2022 (the last year for which reliable greenhouse gas data is available), of which 3.2 million tonnes (94%) was due to reasons beyond the control of any government.

“We generate a lot of hydroelectric power just because of the rain and so on,” Carr said.

“Fuel prices are high, which is out of our control, so New Zealanders are limiting the mileage they can drive in their high-emission cars,” he said.

“Extremely high fertilizer prices have limited New Zealand farmers’ interest in purchasing and applying nitrogen fertilizers.

“If you really want to have a high degree of confidence that you can achieve your emissions budget over the next decade, you need to deal with that uncertainty, and that means leaving some room for error.

“Errors in measurement, and uncertainty about things you can’t control.”