Gain and pain in move to carbon pricing

However, he says they are as good as they can be and describes the upcoming consultations on them as one of the most important issues for farmers in 2022.

“It’s a complicated topic and we’re strongly urging farmers to come along to a roadshow event to find out more and to have their say,” Morrison told Rural News.

He believes that farming leaders made a significant gain by collectively getting a split gas outcome in the Zero Carbon Bill.

“However, we don’t agree with the methane reduction targets themselves. We also got the Government to agree to not bringing agriculture into the ETS, but to work with the sector on a better alternative.”

He says in an ideal world they would try to get the methane targets reduced before introducing a pricing system but adds that this is not a political possibility.

“The Government already has legislation in place to bring agriculture into the ETS in 2023 if we are unable to come up with a viable alternative,” Morrison explains. “If we say the targets have to be fixed first, they will just put us in the ETS.”

He warns that if agriculture goes into the ETS, then there will effectively be no ‘split gas’ outcome.

“The price of methane will be simply linked to the carbon price. The price of carbon is seeking to drive carbon emissions to zero, so we will effectively be driven to a net zero outcome for methane,” Morrison explains.

“Worse still, the price of methane will continue to go up exponentially even if our emissions are going down. Under current accounting, a tonne of methane is deemed the equivalent of 28 tonnes of carbon dioxide, so buying credits to offset a tonne of methane will involve paying 28 times the ETS price of a tonne of carbon dioxide.”

He says the main focus of those involved with HWEN has been trying to find something that is consistent with the latest science, including GWP*, and is practical for farmers.

“The two alternative options to the ETS that the He Waka Eke Noa partnership has developed are not perfect and they never will be. It’s about making sure we get the alternative options as good as they can be,” Morrison concedes.

“We looked at a range of options and tried to come up with ones that were fair across the range of sectors, different farming systems and different stages of development.”

He says that while all the HWEN partners have agreed the content of the consultation document, they have our own views on some of the specifics.

“Our objective is to set up a framework that can be improved over time.”

More Choice

Andrew Morrison says, in terms of the advantages of the two alternative options proposed by HWEN, it’s about offering farmers more choice and control.

“They both have a separate price for methane,” he explains.

“Levy prices will be advised by an advisory board which will include agriculture sector representatives. It’s proposed that a ceiling be put on the potential levy rates so they don’t exceed what farmers would have paid if the sector went into the ETS.”

Morrison believes both options recognise a wider range of sequestration than in the ETS.

“They both recognise actions farmers may take on their farms to reduce their emissions, either through paying a lower price through the farm levy or getting a rebate through the Emissions Management Contract,” he adds. “They’ll both recycle money raised back into research to lower emissions.”

Morrison admits that the main disadvantage of either of the alternative options is the likely cost of administering the farm-level levy, and the complexity of this option may not match the requirements of many farms.

“However, we expect this option will become increasingly relevant over time as farms adapt and the science and technology evolves to create more solutions. Again though, we need to hear from farmers on these points to inform our advice to Government.”

Morrison says B+LNZ is a very strong supporter of GWP*, as shown by its numerous media releases since 2019.

“The alternative options reflect this science by having a separate price for methane that is not linked to the carbon price, and both options measure methane based on weight with no conversion using GWP100 into a CO2 equivalent.”

However, he says that advice from some of the leading scientists on GWP* was that it was too complicated, at this stage, to apply at the farm level.

“You would need 20 years of data and applying at the farm level could create very lumpy payments.

If you had a drought one year but then had to restock the next you would face a really high payment because under a GWP* approach farmers would face a very high price for any increases in methane.”

He says B+LNZ continues to advocate for the Government to start reporting on warming as well as emissions.

“Our focus is also on the 2024 review of the methane reduction targets and getting the latest science applied to these – we’re talking about changing the conversation to warming and better accounting for the warming impact of methane through the use of the more appropriate GWP* metric.”

All Feedback Considered

Morrison says farmers can provide feedback at the roadshow meetings farmers electronically or via hard copy on the feedback forms provided.

He says they w ill also be able to provide feedback in an online form at any time during February.

“We’ll be asking a mix of open-ended, direct questions,” Morrison told Rural News. “We’ll be asking what’s most important to them, their views on the separation of methane from other gases and the sequestration options put forward; what they like and dislike about the two alternative options and what their preferred option is.”

He says all feedback received at roadshow events via online form will be collated and analysed by all signatory partners and, in B+LNZ’s case, used to support its position at the HWEN partnership negotiating table.

Morrison says a summary of the feedback will also be released.