Law removing future ETS agriculture obligations passes first reading

The government's proposed law change to keep agriculture out of the Emissions Trading Scheme (ETS) has passed its first reading.

The current law would have required agricultural processors to begin paying for fertiliser and livestock processing from the beginning of next year. It would also require animal farmers to report on-farm emissions from 2026, and begin paying for them the following year.

But the government's Climate Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Bill removes reference to agricultural activities from the Act, so that only industrial activities are subject to the ETS.

The move follows the National Party campaign policy and coalition agreements.

"It actually supports farmers," Climate Minister Simon Watts said in his speech. "Agriculture is the backbone of the New Zealand economy, it contributes 81 percent of goods exported and New Zealand-grown produce feeds over 40 million people worldwide."

He said the government was committed to supporting farmers and the sector to reduce emissions "in a way that does not put farmers out of business and shifts production offshore".

The obligations in the current law could have required up to 100,000 animal farmers registering, reporting and paying for their emissions, Watts said.

"This would be overly burdensome for small farmers and would significantly increase the number of participants in that scheme, which would disrupt the operation of the scheme."

He pointed to a $400m investment over four years to "accelerate commercialisation of tools and technology to reduce on-farm emissions", and said the government's review of methane science would consider the science and targets for consistency with no additional warming.

"These are only some of the actions that this government is taking. More will be set out in the second emissions reduction plan which we will begin consultation on soon."

He said the government was still committed to a "fair and sustainable pricing system for on-farm emissions by 2030".

Labour's Megan Woods said the legislation was "making a poor choice" and "taking New Zealand backwards".

"If ever there was a can in New Zealand politics in the last 20th and early 21st century that has been continuously kicked down the road, Mr Speaker, it is that of agricultural emissions and where it fits in our emissions trading schemes and indeed emissions pricing schemes," she said.

She said the bill was "clear evidence that there is no plan, the only plan is to further kick that can down the road and delay the inevitable".

She noted farm-related emissions made up 49 percent of New Zealand's greenhouse gas emissions, and the government pointing to the Emissions Reduction Plan due in December was "not good enough".

Woods pointed to New Zealand's international trade agreements that require both parties to fulfull climate obligations, and "time and time and time again we are seeing from this government a walking back of what action is being taken to fulfil these obligations".

"We're seeing it in transport, we're seeing it in industrial and process heat, we're seeing it in every part of the New Zealand economy, a walking back of the actions that we were taking to get us there."

Green Party co-leader Chlöe Swarbrick said the new path from the government of "yet another working group" may lead "Eke Waka Nowhere".

She said agriculture accounted for 5 percent of New Zealand's GDP and was the only part of the economy that does not pay into the ETS, a matter that had been debated for 20 years.

This meant all other parts of the economy carried the burden for agriculture.

"We have not yet found any meaningful conclusion where farmers across the board or the peak bodies that represent them will say 'hey, guess what, we actually want to be priced', because, Mr Speaker, that would happen to be the role of government, to make those necessary bold decisions," she said.

The bill would mean having no pathway for achieving the legally required 30 percent reduction in methane emissions in the next six years.

"This Bill also takes us back to the future on reporting requirements on processors' emissions," she said, in reversing requirements for processors to report their emissions since 2011.

She pointed to reports from the Climate Change Commission which found shifting to the "no additional warming" approach would mean a far higher burden on every other sector.

The targets committed to were the scientific reality for life on earth that would support "actually, the food growing-capacity that this government says that they care about".

ACT's Andrew Hoggard said the ETS backstop had been "hanging like the sword of Damocles over the farming sector for the last six years".

He said possibly the only good thing to come out of He Waka Eke Noa had been the cost to rural New Zealand: "milk production will be down by 8 percent ... lamb by 19 percent, beef 44 percent, wool 18 percent, venison 37 percent".

All up it amounted to a reduction of about $5.3b from regional New Zealand, he said.

"These are costs rural New Zealand, regional New Zealand, New Zealand cannot afford ... methane is a short-lived gas. No additional warming makes sense. That is what the basis of the Paris accord is."

In a short speech, NZ First's Jamie Arbuckle said New Zealand's farmers were probably the most efficient in the world, but they were facing some "unique challenges".

"And this bill here actually provides some support to them. So New Zealand First supports this bill because it aligns with the party's principle of safeguarding the interests of farmers and ensuring that climate policies are pragmatic and effective."

He said it would remove unnecessary compliance costs and administrative burdens, and support the split-gas approach "that is more suitable to the New Zealand agricultural context".

Te Pāti Māori's Hana Rawhiti Maipi Clarke did away with the He Waka Eke Noa partnership between government, industry and iwi, and the party was concerned the words iwi and Māori did not appear in the bill.

"We oppose this bill in the name of Mana Motuhake. These changes are being proposed without consultation or input from iwi Māori, whereas He Waka Eke Noa was at least particularly developed in consultation with Māori. We are not included at all in the pastoral sector group that will replace He Waka Eke Noa."

She said the Bill would ensure polluters would be let off the hook.

"The polluters should pay, instead it will be our mokopuna."

The bill passed its first reading 68 votes to 55, and was referred for scrutiny and public consultation at the Primary Production Select Committee, to report back by November.