In a world-first, New Zealand appears set to introduce a scheme that will require farmers to pay for their agricultural greenhouse gas emissions, including the methane belched out by cows and nitrous oxide emitted through livestock urine.
The prime minister, Jacinda Ardern, and three of her ministers, stood behind a podium of hay bales at a North Island dairy farm on Tuesday morning to unveil the government’s plan for putting a price on the climate cost of farming.
The emissions created by the digestive systems of New Zealand’s 6.3m cows are among the country’s biggest environmental problems. The plan includes taxing both methane emitted by livestock and nitrous oxide emitted mostly from fertiliser-rich urine – which together contributes to around half of New Zealand’s overall emissions output.
“The proposal, as it stands, means New Zealand’s farmers are set to be the first in the world to reduce agricultural emissions,” said Ardern, adding that it would give the country’s biggest export market (worth $46.4bn a year) a competitive advantage globally, while putting the country on track to meet its 2030 methane reduction target.
“No other country in the world has yet developed a system for pricing and reducing agricultural emissions, so our farmers are set to benefit from being first movers,” Ardern said. “Cutting emissions will help New Zealand farmers to not only be the best in the world but the best for the world.”
The plan arose out of the He Waka Eke Noa scheme – a partnership between farming leaders, Māori and government. The scheme was created in 2019 following calls from the farming sector to price greenhouse gas emissions at farm level, rather than forcing farmers into the separate Emissions Trading Scheme, which they criticised as being a blunt tool to calculate agricultural emissions.
The government has accepted most of the recommendations from the partnership and incorporated feedback from the Climate Change Commission, but rejected a proposal from farmers that they play a significant role in setting their own emissions prices.
Under the proposed plan, by 2025, farmers who meet the threshold for herd size and fertiliser use, will be required to pay a levy the government will set every one to three years, on advice from the Climate Change Commission and farmers. The price will be influenced by the country’s progress towards meeting its international promise to cut methane by 10% by 2030, down from 2017 levels. It comes alongside a net-zero emissions target for 2050.
All revenue from the levy will go towards new technology, research and incentive payments to farmers who adopt climate-friendly practices.
The consultation document is set to be signed by cabinet in early 2023. Should the plan succeed, it could spell the end of a long-running battle between farmers and policy-makers that emerged in 2003 under the former Labour government. The then-prime minister, Helen Clark, proposed a tax on all livestock for their methane emissions, known as the “fart tax”, that sparked vehement opposition from farmers and was eventually abandoned.
“It has been a very long journey and it is well past time we got going,” said James Shaw, the climate change minister and Green party co-leader, adding that working with farmers to reduce emissions was a priority, rather than relying on offsetting emissions through forestry.
“It is better than the ‘backstop’ of bringing agriculture into the Emissions Trading Scheme, which could see agribusiness simply offsetting farm emissions without making any actual changes to reduce emissions on farms,” Shaw said.
Industry groups that participated in the partnership will have until mid-November to consider the government’s plan, with some already expressing concerns that on-farm planting (sequestration) will be recognised by the Emissions Trading Scheme, rather than being included within the agricultural pricing scheme.
“If farmers are to face a price for their agricultural emissions from 2025, it is vital they get proper recognition for the genuine sequestration happening on their farms,” said Andrew Morrison, the chairman of Beef+Lamb New Zealand.
“New Zealand sheep and beef farmers have more than 1.4m hectares of native forest on their land which is absorbing carbon and it’s only fair this is appropriately recognised in any framework from day one.”
