The Wrap: He Waka Eke Noa lays down emissions challenge to government

by | Jun 9, 2022 | News, Opinion

The long-awaited report regarding primary sector emissions was announced this week and is already on the desks of ministers James Shaw and Damien O’Connor for review. What happens next dictates how primary sector emissions, the largest of New Zealand’s GHGs, will be managed: either by the Emissions Trading Scheme (ETS) or under He Waka Eke Noa (HWEN), the details of which were announced this week. 

Reactions to HWEN’s recommendations have been swift and polarised. On the one hand, farmer groups, ranging from deer and dairy to arable and iwi, have swung in behind, declaring HWEN a triumph of collaboration.

On the other, climate campaigners such as Greenpeace have dismissed HWN as ‘an absolute lemon’ and say it should be replaced by the ETS.

Climate experts are more nuanced, suqeezed by the reality of climate science and the realpolitik of primary sector power.

The recommendations now sit with Ministers Shaw and O’Connor and the government is expected to respond in December with a decision to either adopt the scheme or fold the primary sector into the ETS.

To save you the hassle of drinking from the hosepipe of opinion, The Feed presents another handy wrap, giving an overview of the main takes.

What it is

First, what is it? Here’s what He Waka Eke Noa recommends:

  • A levy on two types of gas (long-lived gases, like CO2 and NO2, and short-lived, like methane)
  • Farm-based calculations, in which individual farmers use a standardised tool to calculate their emissions
  • Reductions in the levy for offsetting with trees and low emissions practices, such as nitrogen fertilser inhibitors
  • The levy goes into paying for the scheme itself and research into methane-reduction technology
  • Starts 2025
  • The price for the gases is yet to be set, but commences with a 95% discount, reducing thereafter
  • It’s estimated to reduce methane emissions by 4.4% by 2030 (compared to 2017 levels). This is in addition to the 4-5.5% reduction already locked in through current farming practices
  • Combined with other methane savings this will deliver the government’s target of 10% reduction by 2030.

Here’s the same thing but in moving pictures:

 

And as an infographic (we serve all learning styles):

 

 

What industry thinks

It’s a hard-fought win

By the far the majority of primary sector lobby groups are supportive. It helps that 11 of them co-wrote it. Even the usual grumpy Federated Farmers are in, with Andrew Hoggard taking the stage at the launch event to say they had ‘swallow some rats, and there’s more to do, but we’re supportive.’  Dairy NZ’s Jim van der Poel pretty much sums up the mood.

“It’s a win-win that will achieve the best outcomes for farmers and New Zealand,” says DairyNZ chairman Jim van der Poel.  “As a sector we fought really hard for this opportunity to develop a better solution after the Government passed legislation to say it would put agriculture into the NZ ETS.

“Unlike the ETS, the HWEN system will actually reduce emissions, and will recognise and incentivise on-farm actions. It will invest in R&D to find new solutions, building on the already significant primary sector investment – including by dairy farmers, via DairyNZ.”

A first in the world …

The primary sector claims this is a world first:

“No other country has gone as far as New Zealand in the development of a pricing mechanism for greenhouse gases from agriculture. It’s a massive challenge, especially for an economy that’s largely reliant on farming and forestry for its living,” says the Deer Industry Association.

And from the Meat Industry Association:

“This emissions pricing system will demonstrate to New Zealanders and to our global customers that we’re committed to producing environmentally sustainable red meat and that our story is backed by science and modern farm management practices.

“We believe this option is the only way to ensure the New Zealand sheep and beef sector can continue to be a global leader in climate action while remaining profitable and viable.”

There is no alternative

Another claim is that there’s no viable alternative since there’s no tech to stop ruminants from belching methane. Reducing herd numbers is inconceivable, apparently. So is changing land use to horticulture or something less belchy, like trees.

“… there are no cost-effective mitigation technologies available for our farmers to adopt. A holistic, whole-farm approach is needed that will encourage and incentivise farmers to adopt new technologies when these become available,” says DINZ.

The costs could cripple

A constant refrain from farmers has been the perceived cost burden of accounting for GHG emissions. Profitability and livelihoods are at stake.

“Make no mistake, there is a lot at stake for our sector. The red meat sector collectively generates almost $10 billion in export revenue every year and supports around 90,000 jobs across New Zealand, mainly in rural communities,” says Beef & Lamb NZ.

Of course this ignores the true cost of pollution born without complaint by the atmosphere and ecosystems. Well, that is until Gaia rises like a vengeful harpie into a storm of fire and flood. Taken in isolation though, the cost of mitigation could be crippling to farmers. Beef & Lamb again:

“Our analysis over a wider range of farming systems indicates that the He Waka Eke Noa analysis underestimated the impacts on many sheep and beef farm systems’ profitability and underestimated the emission reductions likely to occur at the modelled prices,” says B+L’s Morrison.

“Without this additional context, the original analysis could imply that a far higher price per kilogram for methane is needed to meet the 2030 emissions targets – but this higher price would be crippling to many sheep and beef farmers and would likely see an overshoot in the targets.

In the end, we’re doing our part

“New Zealand dairy already has the world’s lowest carbon footprint for on-farm milk production. We want to maintain that competitive advantage to meet changing consumer demand, community expectations and farmers’ own environmental aspirations,” says Mr Van der Poel. 

 

Māori: it’s a new partnership

Māori opinions are favaourable, or at last those invited to the table have been, notably the Federation of Māori Authorities. It’s chair, Traci Houpapa:

“These wins have been hard-fought. We have held our space in this kaupapa and we believe that the resulting recommendations will have significant, immediate impacts for our whānau and whenua throughout Aotearoa.”

The report recommends major governance roles for Māori and recognises not only the unique land ownership structures of Ahu Whenua (land under shared ownership), but the historic limitations that have been forced on this land by the Crown for generations. The recommendations represent sizeable compromises from dominant industry players in the industry for the benefit of Māori.

“Our focus has been about partnership and acknowledging the importance of relationships between Māori, Government, and industry. This is a work in progress for the primary sector and we have succeeded in having our voices respected and our considerations heard,” says Houpapa.

“Our preferred stance has always been centred on taiao (the environment). The current profit-driven focus of the primary industry carries a significant environmental cost. It is not sustainable, and we have pushed for a ‘values over value’ approach.

According to FOMA, since the signing of Te Tiriti, Māori have lost 95 percent of their land. Today only 1.4 million hectares remains as Whenua Māori. Almost 60 percent is hard hill country, with just 340,000 hectares of the best most productive lands retained in Māori ownership. Much of the farming land is owned by large trusts and incorporations. This means that despite being larger than the average industry farms, they have less influence in producer groups such as DairyNZ in comparison to the predominant single owner/operator model common in the farming sector.

 

NGOs hate it

It’s less sanguine in the land of the NGOs. Greenpeace is maintaining its stance from previous months:

“This proposal by agribusiness is a ham-fisted attempt to cook the books with unproven technofixes which don’t stack up, and emissions reductions from freshwater reforms that some HWEN members – such as Federated Farmers – actively oppose,” says Rose.

“There are no actual policies that will cut agricultural climate pollution in this proposal, and that’s not surprising given it’s the polluters themselves that have proposed it. The Government should biff this sham plan in the bin.”

Oxfam Aotearoa climate expert Alex Johnston told Stuff the scheme, as proposed, didn’t have enough bite to achieve its purpose of cutting emissions.

“It doesn’t do what it says on the tin.” The partnership proposed farms pay a capped rate for methane for the first three years. Agricultural nitrous oxide and carbon emissions would start with a 95% discount, compared to the carbon price under the Emissions Trading Scheme (or ETS)…. If implemented, the sector would receive special treatment, Johnston said. “It would take 98 years for agribusiness to be paying the same price for its emissions pollution that everyone else is currently paying at the petrol pump.”

The experts: cautiously supportive

Experts interviewed by media expressed concern at the detail, especially the uncertainty for calculating the actual farm emissions. Writing in the NZ Herald Thomas Coughlan said unspecified parties had ‘concerns’ that the IT can’t handle it:

[HWEN] uses a “centralised calculator” but there are fears that the Government might not be able to build an IT system that can manage individual calculations for over 20,000 farms.

However, He Waka Eke Noa said that already “over 60 per cent of farms know their on-farm emissions numbers” and the sector will be ready by 2025.

The system will be phased in and some exceptionally small farms would be left out altogether.

Initially, a “simplified sequestration” calculation will work out sequestration numbers.

Massey University’s Emeritus Professor Ralph Sims told RNZ’s Moaning Report that the scheme is dependent on farmer honesty and the system’s ability to capture on-farm practices. “How would anyone know for sure that a farmer has fed seaweed to his cows twice a day over the last year or so?”

AUT’s climate supremo David Hall is cautiously optimistic. According to Stuff:

[he] thought the scheme – essentially a system of taxes and rebate – had the potential to work at the right price. Ideally, the levies and discounts would be set solely on what was needed to achieve the 2030 and 2050 targets in the Zero Carbon Act, he added.

However, the revenue raised could be a powerful force, he added. “If we invest in innovation and technology, it may well develop and mature more quickly than we anticipated.”

By the way, that Stuff piece by Olivia Wannan is very good. So is her report on the report. 

 

Roar of the Dinosaur

And finally a voice from the past – actually it was published yesterday but could just as well be 1996, – a rant from the former Fed Farmers head Owen Jennings.

Farmers will pay. They do so more out of political necessity than scientific proof. If the Government persists in damaging farming with unreasonable levels they can expect a backlash.

Rural folk feel betrayed and ignored. Their anger and frustration is palpable and real.

Sounds like more tractors at Parliament. Perhaps he could join the Groundswill.

The Feed’s view

Our view of HWEN hasn’t changed. As we wrote a few weeks ago, HWEN for all its faults is a massive step forward for an industry that was dominated by the likes of Owen Jennings. Good riddance to that. We reckon that:

..in the end, this political push-and-shove will play second-fiddle to a much bigger force for change: the market. Consumer expectations for sustainably sourced produce are now so strong that being carbon-positive will eventually be the only way New Zealand can play in the premium end of the market.

How do I know this? The evidence has been collected by the Agribusiness Economic Research Unit, one of the oldest research units in New Zealand. It’s housed in an old wooden building at Lincoln University but you don’t have to go there – much of it is free online. AERU has studied so-called credence attributes – the qualities that consumers use to judge a product beyond freshness, taste and texture. The AERU has discovered that New Zealand’s credence attributes align well with consumers’ expectations in our main markets and are key to driving premium prices. Environmental management ranks as high as any other measure in these studies. In the lastet survey (2021), UK consumers ranked GHGs at  76%, up from 70% in 2015. In China it was the same.

New Zealand gains a premium based of its reputation – but that reputation is hard won and continuously improved. When considering New Zealand’s trade advantage economist David Teece proposed three pillars: sensing (understanding consumers), seizing (mobilising resources) and transforming (continued renewal).

Reducing emissions is an example of transforming. Without a credible and continuously improving emissions reduction scheme New Zealand’s primary sector will slip and lose its premium place in consumers’ hearts and minds.

For the planet, and if not for that then for business, the message is clear: get on with it.

Thanks to Sarah Heeringa for helping prepare The Wrap

Photo by Celine Lityo on Unsplash

 

About the Author

Vincent Heeringa

Vincent Heeringa is a communications strategist, writer, marketer and PR expert specialising in tech, investment, and sustainability. He was co-founder of Idealog, Stoppress and Good magazines and helped establish the Science Media Centre. He is the host of a podcast ‘This Climate Business’, co-founder of The Feed.co.nz, and a trustee of the Adventure Specialties Trust. And there's nothing he loves more than a good story. vincentheeringa.com

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