Ckm Submission – Agricultural Emissions Pricing

Introduction
Climate Karanga Marlborough (CKM) is a citizens group of over 85 members, with the mission of bringing the realities of climate breakdown to the people of Marlborough and educate how best to respond. We do this through a number of initiatives:

• by working with the Marlborough District Council on strategies to limit emissions and help adaptation to the effects of climate change
• by publishing articles promoting climate change awareness and preparedness in local newspapers and by sponsoring community and school events
• by providing a social support network for Marlburians and other New Zealanders anxious about, and looking to better understand the implications of the climate change crisis we are now facing.

Preamble
In addition to submitting within the framework of the “15 set questions” of the Ministry for the Environment (MfE), we have extracted our answer to question 15 (other priority issues), embedding it within this explanatory supporting preamble statement.
Central to CKM’s common concern for our environments, local, national and global, is the belief that all of humanity that relies on industrial technology must seek a new way of thinking about and acting in our relationship with our planet. Although most people acknowledge that we can no longer continue to regard our environment as separate from us, as simply a source of goods from which we can extract what we want without return, the fact is that we continue not only to abuse the environment on which our wellbeing relies but to poison it with our waste. CKM takes the warnings of the environmental sciences with regard to global warming and biodiversity loss as both serious and critically urgent.
CKM sees no evidence of new ways of thinking in the document on “pricing agricultural emissions” on which we are submitting. Therefore, we are not willing to relegate our priorities to the last box of what appears to us to be a box-ticking exercise. We have responded to the “set questions”, as requested, worrying that if we don’t answer the questions, our thoughts, and our priorities, will simply be relegated to the box ticked “Other”.

But we have also herewith brought forward our priorities:

• What do we mean by “new ways of thinking”? Simply, by putting the environment, ecosystems, te taiao, whatever our point of reference in the natural world, front and centre of all our thinking and acting. So far, in the face of acknowledged “climate crisis”, all government and ministry thinking, both central and local, including the document on which we are submitting, has remained unchanged, anthropocentric and focussed on profit for individuals and corporates. As long as we continue to think and act in the ways that got us into this “crisis”, we will not escape from it.
  
  
• All members of CKM are sceptical of the ETS scheme, by which the natural, living world has been reduced and monetised into “carbon” to be bought and sold in an imaginary market. “Carbon credits” are traded to achieve imagined “net” reductions in carbon emissions, whilst the world continues to heat up without any reductions in gross carbon emissions, other than wrought on human beings by pandemic and poverty.
  
  
• At the same time, CKM wishes to acknowledge the efforts of the participants in the He Waka Eke Noa (HWEN) process and the willingness of the Government to adopt most of the partnership’s recommendations. Reducing agricultural emissions is a contentious issue, affecting the independent living of most if not all the HWEN partners in the current “economic environment”. CKM members are convinced that there needs to be a rapid transition of animal agriculture away from the centre of modern farming, but we recognise that about half the voting public surveyed oppose even a simple levy system on animal farming. We understand that taking too hard an approach will divide people and entrench opposition and, with that, resistance to necessary change.

 

• CKM acknowledges that a “softly, softly” approach may help frightened, angry and vulnerable people dealing with threatening change, but we feel it incumbent upon us to warn of the pressing dangers of a moderate and incremental approach to the climate crisis.
  In that regard, CKM urges that governments, central and local, put resource, effort and skilled personnel into supporting farmers both facing change and dealing with the oppressive (and depressing) mountain of mounting digital data entry or paperwork entailed by the HWEN agreement.

Consultation Document Questions

Question 1: Do you think modifications are required to the proposed farm-level levy system to ensure it delivers sufficient reductions in gross emissions from the agriculture sector? Please explain.
We are in general support of the farm-level levy system that He Waka Eke Noa (HWEN) has come up with and on which the government system is based. The system may not achieve the 2030 10% methane reduction target, however, because no cap on emissions is set. Emissions reductions will be via trial and error and dependent upon other policies, such as the value of forestry conversions. It will be a challenge to manage so that it brings about the necessary emissions reductions. It is necessary that the setting of levy prices be flexible enough to insure course corrections can be implemented quickly. Annual price setting seems a good balance between this flexibility and certainty for farmers.
There is a risk of the levy system deviating too far from the Partnership’s recommendations, through a submission process such as this. This could cause the farming community to disavow the program (which some groups already appear to be doing). In that HWEN was a major and broad consultation, it behoves the government to honour the results of the consultation as best they can.

Question 2: Are tradeable methane quotas an option the Government should consider further in the future? Why?

Tradeable methane quotes would probably be a better system. We are surprised that the HWEN partnership did not decide on this system and opted for a levy system instead, since a tradeable quota system would have likely have cost farmers less. A drawback of the quota system is that it would not generate government revenue, which should have been attractive to the farming industry, but a drawback from the government’s perspective.
We understand that the major issue with a tradeable quote system was disagreement on the level of initial allocation. We can appreciate that dairy and meat farmers might not be able to agree on an equitable allocation formula, since a per-head-of-stock formula would benefit dairy farmers over beef & sheep farmers.
Perhaps a tradeable quota system can be brought in at some time in the future. It has the advantage of accommodating an emissions cap and can bring emissions down at a predictable rate, which the levy system cannot.

Question 3: Which option do you prefer for pricing agricultural emissions by 2025 and why?
(a) A farm-level levy system including fertiliser?
(b) A farm-level levy system and fertiliser in the New Zealand Emissions Trading Scheme (NZ ETS)
(c) A processor-level NZ ETS?
We support option (b) A farm-level levy system and fertiliser in the New Zealand Emissions Trading Scheme (NZ ETS). This is the system recommended by the Climate Change Commission and would simplify farm emissions reporting by putting fertiliser emissions into the ETS at the manufacturer – importer level. The farm-level levy for methane will be enough of a challenge to introduce and manage, without adding the complexity of nitrous oxide and carbon dioxide emissions from fertiliser.
There is also an equity issue here. The rest of NZ pays for long-lived GHGs through the ETS. It would be unfair to let the farming sector treat these gases differently. Fertiliser is also the main source of GHG in the arable and horticulture sectors, which would likely escape a levy unless brought into the ETS at the processor level.

Question 4: Do you support the proposed approach for reporting of emissions? Why, and what improvements should be considered?
We support the annual reporting of basic farm information for the estimation of emissions. It is best to start out simple, since the system to include over 20,000 farms will be challenging to initiate and manage. Complexity needed to better estimate emissions can be added later, once the reporting system is up and running.

Question 5: Do you support the proposed approach to setting levy prices? Why, and what improvements should be considered?
We support the proposed system for pricing emissions. The Climate Commission is best suited to advise on the price of levy necessary to achieve the mandated emissions reductions. In order to maintain flexibility to respond to trends in emissions reduction, the price should be set annually.

Question 6: Do you support the proposed approach to revenue recycling? Why, and what improvements should be considered?
We support the proposed approach to revenue recycling, with administration costs recovered, research funded and farming assistance provided where needed, with Maori & industry input. We feel it is important to “ring-fence” the revenue from the levy scheme so that it supports farmers in reducing emissions and does not go into general government revenue.
We do not support revenue being used to pay for on-farm sequestration. This should be handled by forestry credits in the ETS. Sequestration should be uniform across all sectors of NZ society and industry, without special treatment for farmers.
The forestry credits might be extended to smaller land parcels, to benefit farmers with claiming riparian planting, but we acknowledge this would create a greater workload for MPI.

Question 7: Do you support the proposed approach for incentive payments to encourage additional emissions reductions? Why, and what improvements should be considered?
We support incentive payments to encourage additional emissions reduction, although we acknowledge that there are few options for this available to farmers at this time. The only options available, it appears, are through low-protein & low-methane forage crops and effluent handling. The Climate Commission has “high confidence” that feed additives and vaccines to reduce emissions will not be widely available by 2025. We note that inhibitors such as 3NOP and bromoform are not yet approved and the market for asparagopsis seaweed as a feed additive is in its infancy.
We recommend the government consider “no-till” farming, regenerative and organic farming practices be eligible for incentive payments, since they are known to increase soil carbon, even though soil carbon is not yet counted as sequestration. They also promote lower density farming, which, in the absence of emissions mitigation technologies, is the likely end point of farms using traditional farming methods. Stock reduction is the principal way that farmers will achieve emissions reductions in the levy system, at least until additives, vaccines and genetics are available. Regenerative and organic farms already have lower stock densities.

Question 8: Do you support the proposed approach for recognising carbon sequestration from riparian plantings and management of indigenous vegetation, both in the short and long term? Why, and what improvements should be considered?
Carbon sequestration from planting is already available for compensation through the ETS. Farming should not receive special treatment for sequestration versus other sectors of society. We support research which might allow the inclusion of new types of sequestration, such as pre-1990 forest management and riparian planting, along with other types of sequestration, such as in wetlands and soils.
Farmer interest in being paid for on-farm environmental improvements might also be addressed by a “biodiversity credit” for their work managing on-farm indigenous forests and/or riparian planting.
We acknowledge, though, that riparian planting is mainly done to prevent fertiliser and effluent runoff into waterways – a different environmental problem. It also generally involves vegetation that is low in carbon sequestration potential and is too narrow to host much biodiversity. A credit for riparian planting needs to be carefully considered to make sure it is fair to other sectors of society working to improve biodiversity and sequester carbon.
One further point: The split –gas approach to agricultural emissions acknowledges an inequality between biologic methane and CO2. From a fairness point of view, that inequality should not then be breached to allow on-farm sequestration to offset a levy on methane. Sequestration credits should be through the forestry ETS.

Question 9: Do you support the introduction of an interim processor-level levy in 2025 if the farm-level system is not ready? If not, what alternative would you propose to ensure agricultural emissions pricing starts in 2025?
Yes. By 2025 there will be only 5 years remaining to achieve the 10% reduction in methane specified in the Zero Carbon Act. We need to get started on methane emissions reductions right away.

Question 10: Do you think the proposed systems for pricing agricultural emissions is equitable, both within the agriculture sector, and across other sectors, and across New Zealand generally? Why and what changes to the system would be required to make it equitable?
Yes. It appears equitable as described. The system may not be perfect, however, but we shouldn’t let “perfect” be the enemy of “good”. Equitability issues will arise with time and these can be addressed by revisions and targeted support, as needed.

Question 11: In principle, do you think the agricultural sector should pay for any shortfall in its emissions reductions? If so, do you think using levy revenue would be an appropriate mechanism for this?
Yes, through levy revenue.

Question 12: What impacts or implications do you foresee as a result of each of the Government’s proposals in the short and long term?
Short term impacts will likely include higher domestic prices for milk, meat (beef/lamb/venison) and wool, as the levy cost gets passed on to consumers. Even without the levy, however, animal products are expected to lose market share to cultured and plant based protein in the near term, as the price of these products decline with increasing production scale. Likewise for wool, which is being replaced by more environmentally friendly plant-based products. The levy will act to accelerate this otherwise natural transition. New Zealand farmers will need to take note of these trends and adapt.
There will be more farm conversions to forestry, depending on the price of ETS credits for permanent forestry and the emergence of biodiversity credits for indigenous forestry. We hope that this transition can be managed so the nation doesn’t end up a sea of carbon-farmed pine. The multiple environmental and social benefits of native forest need to be prioritised in this transition.
Long term impacts will likely include a move away from animal farming to horticulture and arable farming. These will be needed both for market domestic supply and as industrial feedstocks for lab cultured foods and other plant-based products. Our exports will shift from animal-based products to specialty foods and fibres to which New Zealand is particularly well suited to grow.

Question 13: What steps should the Crown be taking to protect relevant iwi and Māori interests, in line with Te Tiriti o Waitangi? How should the Crown support Māori land owners, farmers and growers in a pricing system?
Support will be needed for Maori farms. Maori need to be an active part of consultation on these issues. What steps should the Crown be taking...? The Crown needs to acknowledge openly that monetary pricing systems do not fit well within Te Tiriti o Waitangi. The idea of buying and selling land and the living beings living in and on it, particularly when reduced to the notion of "carbon", remains a point of contention between 2 very different world views. It also lies at the centre of how we have got to the present state of the climate: the whenua has been seen in terms of saleable resource rather than as treasure to be cared for and as 'being' to be respected. Historically. the  result of this difference in world views led to confiscations by the Crown of good land and the marginalisation of Māori onto marginal farmland. The persistence of pricing land in the agricultural emissions plan simply perpetuates disadvantage for Māori. The Crown needs to take concrete and bold steps to reverse this ongoing process.
How should the Crown support Māori ... ? There appears to be little reward for Māori or concrete incentive for change in the present pricing arrangements. Much of the land "owned" by Māori remains of marginal value under present pricing systems. Support for Māori farmers and growers needs to be in the terms of the Second Article of Te Tiriti (Māori version), recognising in law the notion of collective land "ownership" The Crown must accept the guidance of Māori in this and resist the lobbying of private landowners and those ignorant about the nature of tino rangatiratanga. Support for Māori is in terms of respect, learning and promotional reward for initiative, past and present, rather than only monetary compensation, simply carrying on in the same old way. 

Question 14: Do you support the proposed approach for verification, compliance and enforcement? Why, and what improvements should be considered?
Yes. The plan seems reasonable and comprehensive.

Question 15: Do you have any other priority issues that you would like to share on the Government’s proposals for addressing agricultural emissions?
We applaud the government for the He Waka Eke Noa process and willingness to adopt most of the partnership’s recommendations. Reducing agricultural emissions is a contentious issue, which required thoughtfulness and engagement. We only hope that the farm-level levy system will survive a change of government and go on to help the country achieve its emissions reduction targets.