Section 215 Emissions Pricing Report Shows Progress

A section 215 report, released by the Government shortly before Christmas, outlines several changes to the proposed emissions pricing system that give greater certainty for farmers, and better recognises on-farm sequestration.

According to Beef + Lamb New Zealand (B+LNZ), “The Section 215 agricultural emissions pricing report and accompanying commentary released by the Government today is a step forward, but there is still significant work to be done on critical details before sheep and beef farmers can feel confident in the final agricultural emissions pricing system.”

It confirms that the Government has agreed to a farm-level split gas levy rather than agriculture entering the NZ Emissions Trading Scheme (ETS).

Then Prime Minister, Jacinda Ardern said, “The most important thing is getting an emission reduction system set up that lasts. We are working hard alongside the agriculture sector to strike the balance between building good levels of sector buy in, while also ensuring the system is robust and meets our emissions reductions goals. With or without the Government’s proposals the world is changing and New Zealand needs to be at the front of the queue to stay competitive in a market that is increasingly demanding sustainably produced products.”

B+LNZ chief executive Sam McIvor says the report is a significant improvement on what the Government proposed in October and follows the He Waka Eke Noa partners’ consultation submission (see the earlier article on Climate Change in the Beef & Lamb February 2022 newsletter which discusses He Waka Eke Noa) and ongoing work to address a range of issues. “The Government has committed to designing a system that is practical to implement while ensuring that a viable and productive agricultural sector continues – we’ll hold them to account on that.”, says Sam McIvor and adds, “In this regard the Government has committed that methane and nitrous oxide prices should be as low as possible and be fixed for a five-year period to provide certainty. Given that New Zealand is the first country in the world to price agricultural emissions, it’s essential a cautious approach is taken and that we ensure what farmers are asked to do is fair and equitable, doesn’t threaten farm viability or result in emissions leakage.”

The sector will be given greater input into pricing decisions and widen the criteria of factors to be considered to include social, cultural and economic impacts. Agriculture Minister Damien O’Connor has said, however, that oversight of this levy setting system will rest with the Climate Change Commission, but that they are establishing a board with representatives from the agriculture sector and Māori to provide advice and act as an avenue for sector input. B+LNZ disagrees with the proposal that the Climate Change Commission advice should have priority: “The Government has recognised the disproportionate impact on sheep beef and deer farmers of its earlier proposal and committed to ensure that the impacts are equitable across sectors – we’re working with them on potential provisions to ensure sheep and beef farmers do not face an unfair burden of emissions management. The viability of sheep and beef farming cannot be threatened through this pricing scheme.”

Sequestration remains a key area of focus for B+LNZ. It believes that, though the report commits in principle, to recognising all categories of sequestration and transitioning to the ETS, there is more clarity required on this.

B+LNZ’s message is consistent on this – if farmers are to pay for their emissions, they must be recognised for their sequestration at a fair value and it needs to be from 2025.

Sam McIvor also notes B+LNZ is heartened that the Government has acknowledged and committed to act on two issues that B+LNZ has long advocated for. 

The first is the consideration of different ways to track warming impacts, such as global warming potential, on the related issue of emissions reduction targets.

The second is noting the impact of offsetting rules within the ETS on sheep and beef farming and rural communities, and the admission of the need for urgent efforts. McIvor asserts that “We won’t stop pushing for them to turn concern into action.”

McIvor says the Government has listened to feedback to date. “I want to acknowledge the willingness of Ministers and officials to make changes, and their commitment to work with He Waka Eke Noa partners including B+LNZ to find the right solutions. We now need to nail down the detail to ensure equity, fairness and a viable pathway for our sheep and beef farmers.”

Final decisions on agricultural emissions pricing will be made by Cabinet in early 2023 with the aim to introduce legislation by the middle of the year.