Changes in New Zealand Approach to Zero Carbon

In a controversial move, the New Zealand government has announced a significant change to the country’s emissions trading policy.

As signalled in its manifesto before the October 2023 General Election, the centre-right government, led by the National Party, has announced that it will be excluding agricultural businesses, including animal processing and fertiliser production, from the Emissions Trading Scheme [1]. The previous Labour government had planned to include these businesses from 2025. The government has also announced the scrapping of He Waka Eke Noa [1], the industry consultative group which has been developing possible solutions and will instead be founding a new 'Pastoral Sector Group’ to constructively tackle the issues around biogenic methane. These issues are certainly complex, with no simple solutions.

Environmental groups argue that agriculture is New Zealand’s largest emitter of greenhouse gases, being responsible for around 50% of all emissions, mainly because of methane and nitrous oxide. However, it is contended, New Zealand accounts for less than 0.2% of the world’s emissions and its pasture led, less intensive production systems are recognised as having reduced carbon footprints. And agriculture is a very significant part of the New Zealand economy. Will reducing production in New Zealand lead to substitution of production from less carbon efficient countries? Will these pending changes have any impact on market access for New Zealand producers? Many purchasers of agricultural products are looking for significant evidence of greenhouse gas reduction as a condition of supply.

The National Party led government remains committed to a 2050 net zero solution and has announced a significant investment in technology, saying it would invest NZ$400 million (US$245m) in the commercialisation of emissions-reduction technology and increase funding for the New Zealand Agricultural Greenhouse Gas Research Centre by NZ$50.5 million (US$31m) [2]. But it appears that there are no easy solutions for reducing methane output from agricultural sources. While research initiatives develop new technologies, including feed additives and vaccines, the scientific debate continues to question the focus on biogenic methane, when fossil fuel sources have been responsible for the rapid rise of CO2 over the last 300 years; there is also confusion on the best methodology to measure methane, and the exact impact of on-farm carbon sequestration and offsetting by planting and increasing the biodiversity of marginal land.

The government has made clear its intent to soon change the Climate Change Response (Zero Carbon) Amendment Act 2019 [1], which first identified separate targets for biogenic versus fossil fuel sourced carbon. While many sources from rural New Zealand recognise this as a pragmatic response to a complex problem, others view it as just kicking the methane can further down the road [2].

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References

[1] Smith, A., 2024, Coalition exempts farmers from ETS, sets up fresh working group. Radio New Zealand [Online]. Available from: https://www.rnz.co.nz/news/political/519248/coalition-exempts-farmers-from-ets-sets-up-fresh-working-group [Accessed 27th June 2024]

[2] Al Jazeera and News Agencies, 2024, New Zealand scraps ‘burp tax’ on livestock after backlash from farmers. Al Jazeera and News Agencies [Online]. Available from https://www.aljazeera.com/economy/2024/6/11/new-zealand-scraps-burp-tax-on-livestock-after-backlash-from-farmers [Accessed 27th June 2024]