Who needs daytime soaps when you have farmers and climate policy to watch? The swing of emotions, the cut and thrust of the arguments, the sudden outbursts of nasty verbal abuse aimed at the Prime Minister. All set against a backdrop of climate Armageddon. Bring your popcorn.
To make it easy to fathom, here’s a handy guide to this week’s episode of He Waka Eke Noa.
What’s the cave in? At Fieldays this week, the Prime Minister, along with ministers Damien O’Connor and James Shaw, announced a backtrack on the way farmers can count the sequestration potential of vegetation on their land. Previously, the government said all such offsetting must operate inside the Emissions Trading Scheme (ETS) and remain separate from the He Waka Eke Noa (HWEN) regime. The farm lobbyists, especially Fed Farmers, threw their toys, warning it signaled the end of rural New Zealand.
What’s changed? Politics for one thing. The lobbyists’ reaction threatened to derail the slim consensus established by HWEN and unite a rural population against the government. Think tractors, steps of Parliament, fart tax, all over again.
What’s the new proposal? The government is now proposing to alter the ETS to be more generous in the way it counts vegetation on farmland, such as riparian plantings and restored stands on non-productive land. Says James Shaw: “It means farmers will get full recognition for scientifically proven sequestration on their farms … This should unlock a wave of research, science and innovation into forms of emissions removal that also enhance biodiversity and other important values that aren’t always achieved through exotic forestry plantations.”
Sounds good, what’s the catch? There are several. First, note the words scientifically proven. Introducing a science-based calculation will allow the government a modicum of control over what farmers can claim as sequestration on each farm. This matters, because what gets claimed as sequestration must get paid by the government through the ETS. Last week, Newsroom revealed that Treasury warned the government will face a ballooning debt to farmers if farmers can claim sequestration on their own terms, as was proposed by the HWEN. The government refused to support this part of HWEN, triggering the reaction.
A second catch is fairness. Even without changes to the ETS, farmers are being more generously treated than other sectors. Count the ways:
- Agri has not paid for emissions in the 15 years the ETS has been operating
- When HWEN commences in 2025 emissions costs start at a 95% discount
- The levies paid for farm emissions are not taxes but will be kept by the industry for agri-business research
- Farmers who manage their emissions well stand to be rewarded handsomely (hence the Treasury’s warning)
That’s only two catches. You said several. We could go on. For example, it’s not clear what the baseline will be for calculating additional vegetation. HWEN said it should be 1990, in line with the Kyoto Protocol of 2005 and in line with forestry, which has been operating inside the ETS since the start. If farmers were serious about managing emissions, they would set the baseline at 2025 when HWEN commences, because it should reward new or additional planting. Set at 1990 means farmers could claim ETS credits for work done 25 years ago. No other sector gets treated this generously. And it’s no way to incentivise change.
A fourth catch is that rewarding farmers so well reinforces the status quo. The urgent drive is to reduce gross emissions, globally and locally. Agriculture is New Zealand’s largest emitter of GHGs and fast becoming the world’s largest, displacing energy. Paying farmers for business-as-usual will not incentivise lowering emissions. It really underscores the climate denial that still exists in the agribusiness community. And it robs New Zealand of the leadership it so desperately needs to stay competitive in the world.
What’s next? This latest response to HWEN by the government has been met with silence so far. Politically, it might work for the government to butter up the sector. But we’ll see. The whole thing is a moving feast of burnt carbon and high stakes. Stay tuned.