Pricing on-farm climate pollution is one of New Zealand's longest-running policy debates, but it could come to a head during the next term of government
When Cyclone Gabrielle hit Hawkes Bay in February, Patrick Crawshaw's sheep and beef farm found itself cut off from the rest of the country for six weeks.
For the first two weeks, they had no power. But even after the power came back on, it took another month for bridges taken out by the cyclone to be rebuilt. Large parts of his 280 hectare farm in Pātoka were cut off from one another as well – more than two thirds of his paddocks were unusable.
Though the cyclone's devastation on prime agricultural land firmly put the focus on climate impacts on agriculture at the start of the year, some of the biggest climate questions for the sector have to do with mitigation. That is, reducing emissions from livestock.
READ MORE: * Defining Issues: Three major climate questions for next govt * Defining Issues: On the frontline of the climate crisis in Westport
This is one of New Zealand's longest-running political debates. The original deadline for a price on agricultural climate pollution was 2004, nearly two decades ago. Now, the soonest the sector may pay for its emissions is 2025, under Labour or the Greens. National says it would price emissions no later than 2030, and Act wants to see more research done into the climate impacts of farming before agriculture is put into its own emissions trading scheme.
Regardless of which combination of parties forms a government after October 14, agricultural emissions will be one of the key climate policy issues they will face.
Why farming?
First, a bit of context.
There are three reasons agriculture has been put under the microscope in New Zealand.
First, it's the only sector that doesn't already pay a price for its emissions.
Electricity, transport, construction, waste and forestry are all covered by the Emissions Trading Scheme. Entities at the top of the production chain (petrol importers, power generators or foresters) must surrender a carbon unit for each tonne of carbon dioxide or its equivalent they emit in any given year.
That price is usually then passed on to consumers. In the final week of September, for example, about 15 cents in the average litre of petrol was an ETS cost passed on by importers.
Agriculture isn't included in the ETS. It was originally granted delayed entry when the scheme was created in the final months of Helen Clark's Labour government. When John Key won the 2008 election, the deadline was extended indefinitely. In 2017, the Labour and New Zealand First coalition agreement included a pledge to introduce agriculture to the ETS by 2025, at a 95 percent discount rate.
Then, in 2019, farming sector groups brought a new offer to the Government. They had just recently agreed, publicly, for the first time, that the sector's emissions should be priced. Would the Government now work with them to develop a pricing scheme separate from the Emissions Trading Scheme?
That partnership, He Waka Eke Noa, produced a plan in mid-2022. In October, the Government put out its own iteration of that proposal, which was not significantly different. Nonetheless, the political winds had by then shifted, and Federated Farmers and other lobby groups came out against the Government's plan.
By the time it came to campaign season, each party and group had retreated back into its own corner. The brief period of consensus was over – and there's still no clear path to a price on emissions.
The second reason agriculture is the focus of so much angst is its outsized role in New Zealand's emissions profile. In a carbon equivalent calculation, which considers the warming impacts of each greenhouse gas over a 100-year time horizon, the agricultural sector is responsible for about half of our emissions. That's 50 percent of the greenhouse pollution from a sector which contributes 5.5 percent of GDP and makes up 1.16 percent of the population.
Though carbon equivalency is a fraught issue, evaluating the actual warming impact from different gases isn't more reassuring. More than 70 percent of New Zealand's contribution to global warming above preindustrial levels can be traced to agriculture.
That's because of the third reason for the emphasis on agriculture: methane. The primary greenhouse gas emitted by ruminant livestock is methane, which has an enormous but short-lived heating effect. That means reductions or increases in herd sizes (and therefore methane emissions) has an outsized cooling or warming impact, but steady emissions don't make the atmosphere any warmer.
These dynamics have led the sector to call for new methane targets which focus only on halting additional contributions to warming. Flat (or very slightly declining) methane emissions have the same marginal warming impact as net zero carbon dioxide emissions – that is, no additional warming. Why should farmers reduce methane by more that the minimal amount needed to halt additional warming when the rest of the country is still heating the atmosphere through our CO2 emissions, the sector asks.
The flip side, less readily acknowledged, is that adopting a "no additional warming" approach locks in the heating already caused by the dairy and sheep and beef herds to date. Such metrics would halve our ambition on methane and mean that the world will always be a fraction warmer than it otherwise would be, indefinitely. The carbon fraction of the economy, meanwhile, expects to begin contributing to a cooling effect once we reach net zero.
In fact, under the Climate Change Commission's demonstration pathway, New Zealand's CO2 emissions will reach net zero in 2038 and begin cooling the atmosphere from then on.
Lowering emissions
Given those three factors, policymakers have spent decades searching for ways to reduce agricultural emissions.
The good news is that there are ways to farm with lower emissions already available, which not all farmers in New Zealand have adopted.
Take Kaiwaiwai Dairies just outside of Featherston. There, a handful of environmentally minded shareholders have worked to reduce their farm's impact on local waterways and the climate over several decades.
It was at this farm where Jacinda Ardern announced the Government's approach to agricultural emissions pricing in October last year, so Newsroom visited a year later to see whether attitudes had changed.
"We're not perfect, we're on a journey," Vern Brasell, one of Kaiwaiwai's directors says.
"To lower our greenhouse gas intensity of what we do, we probably won't reduce our cow numbers but we want to keep them longer, we want them to produce consistently. As opposed to rearing 10 percent more [cows] and milking some of them for one year. That's the low-hanging fruit for everybody."
Kaiwaiwai is doing this in a range of ways. They manage the diet of their animals, they monitor their health, they're working to improve soil carbon, they've got solar panels to offset electricity costs, they've purchased an electric side-by-side, and more.
But they're also grappling with the impacts of a warming world.
"The prediction for the Wairarapa is the number of heat stress days that we're heading towards will increase," Aidan Birchan, another Kaiwaiwai director, says. "We are getting hotter, we will have more heat stress-inducing days."
Shade for their cows will be critical, then. Not just for animal welfare, but because a cow that's overheating produces less milk while still emitting greenhouse gases.
The impacts aren't just limited to the animals, either.
"The other interest that we have in rising heat is pasture composition. Once you get 25 degrees, you're impacting significantly on ryegrass growth and it doesn't take much more until clover is under threat. Whilst we have chicory and plantain in all our mixes now, the driver of New Zealand dairy is ryegrass clover," Bichan says.
Introducing more heat-resistant pasture species lowers the energy in the planting and therefore the efficiency of the cows too.
A bit farther down the road, Paul Crick leases 850 hectares to farm sheep, beef and deer a ways outside of Masterton. He sees avenues for reducing on-farm emissions through low-emissions breeding. He's got a methane trailer on his farm, which measures the emissions from animals and creates a breeding value for them.
"Since 1990, [sheep and beef farmers] have reduced our stock numbers by 30 percent and maintained our production," he says. "Through good genetics, or better understanding of genetics, indexes, etcetera, we're still able to find those good animals. There are some tools in our toolbox already."
It's also not just about methane. His view is similar to that of Kaiwaiwai – getting the most out of each animal means the emissions intensity of the product falls. That allows herds (and therefore emissions) to reduce or flatline while still earning the same or greater profit.
Compared with last year, Crick is running 200 fewer sheep this year. Emissions weren't the primary consideration in that decision, but they were on the list, and other productivity improvements meant he could do that while keeping revenue up.
Of course, some of these changes take time. Completely turning over the sheep on a farm with lower-emissions animals takes years, Crawshaw says – and that's completely out of their control.
Incentives
Many of these options are available to all farmers, but not all of them are taking advantage of these tools.
Kaiwaiwai's emissions per kilogramme of milk solids are 11.1kg of carbon equivalent. That's very much on the lower end of farms in their benchmark group, according to a Fonterra insights report provided to Newsroom. The mean is somewhere around 12kg with a handful going up to 16, 17 or even in one instance 21kg.
Plenty of sheep and beef farmers aren't considering genetics in their animals either, Crick says.
That's where a price comes in, in the view of policymakers. Pricing provides an incentive to adopt technologies or practice changes to reduce emissions, when they would otherwise be uneconomic.
"The sooner you start, the sooner you start having an impact," Bichan says. "I get quite frustrated with thinking policies that kick the can down the road and say, 'Well, we'll wait for a better solution in five years' or 10 years' time.'"
Brasell agrees.
"We need something now. Ten years ago would have been better and it would have been more easy to adjust. The step of knowing your [emissions] numbers for a start, because actually just knowing them, people will then start planning," he says.
"Everyone's got some low-hanging fruit. Maybe you pay the lowest price possible to help get the gains from whoever can still do it."
Crick and Crawshaw are less certain about the necessity of a price to incentivise action.
"My biggest concern is just around whether it's a fair way to go given the time horizons that we can work with," Crawshaw says. "It's a timing thing but it's also a fairness thing in whether it's the right incentive. This isn't the only regulatory change that farmers have to come to terms with."
For Crick, he worries the obsession with pricing ignores other tools for incentivising uptake of lower-emissions farming technologies and practices.
"If you're a hammer, all you see is nails. It possibly has a place, however, I think of all the good work and the advances that have been done through catchment groups as an example," he says.
"These folks do everything from flood control through to removing willows and poplars and stuff off the creeks. All of a sudden you've got everyone coming together with this goal of improving the whenua and our local community. That can be really powerful."
Getting farmers on board is easier said than done. Crawshaw, Crick, Bichan and Brasell all say they're hearing more and more farmers speak about climate impacts and reducing emissions. But the relationship between government and rural communities is frayed at the moment.
Part of that is concern about over-regulation.
"We've got so many of these external pressures and add to that poor commodity prices and really high on-farm costs, farmer wellbeing is really being tested and challenged. We know it's already a massive issue for the industry," Crawshaw says. "To just keep adding fuel on top of that fire is probably not all that fair."
For Bichan, one of his biggest frustrations is being asked to provide the same information to multiple different organisations.
"It's badly linked-up policy. Development and implementation without actually having some gumboots at the table talking about the practicality of some of that," he says.
Crick agrees.
"I've got no problem that we do the right thing and there's a certain process that we have to follow. But it's not about putting us out of business or sucking the total enjoyment out of what we do, so how do we find that balance?"
Then there's the market. Increasingly, overseas consumers are becoming more discerning about the climate impacts of their purchases – and a vast amount of our agricultural production is exported.
"Nestlé is pointing out that Fonterra is a scope three emission for them and they've got a zero target by 2050, then Fonterra points out that we're a scope three emission for them," Bichan says.
"There's quite a consistent message coming back from the market. My belief is the market is going to drive this probably more than government policy and regulation. That will set targets and bits and pieces but the market drives the change."
Crick doesn't see this as necessarily a negative.
"I certainly think that there's opportunities there. It's not a negative space. Always in adversity, there's opportunity," he says.
"That's probably a mindset change. Farmers probably feel they're in a corner, backed up, all that sort of stuff. And then you narrow your focus. And it's a natural human reaction, right? But how do we hold each other's hand and try and actually walk through this, because we don't want to kick the can down the road."
