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In New Zealand, farmers will pay for harmful emissions from sheep and cattle.

New Zealand is to become the first country in the world where farmers will pay for emissions from sheep and cattle.

New Zealand’s Ministers of Agriculture, Climate Change and Environment yesterday unveiled a draft plan to put a price on agricultural emissions, aimed at reducing emissions from sheep and cattle burping.

Under the draft plan, drawn up by the government and representatives of the farming community, farmers would have to pay for gas emissions from 2025.

The cost of short- and long-term agricultural gas would be assessed separately, although a single figure would be used to calculate them.

Almost half of New Zealand’s greenhouse gas emissions come from agriculture, mostly in the form of methane.

There are about 10 million cattle and 26 million sheep in New Zealand, but emissions from these sources have so far not been covered by the country’s emissions trading scheme.

The proposal includes incentives for farmers to reduce emissions through feed additives, while on-farm forestry can also be used to offset emissions.

Revenues from the scheme would be invested in research, development and advisory services for farmers.

“There is no doubt that we need to reduce the amount of methane we emit into the atmosphere and an effective emissions pricing system for agriculture will play a key role in how we achieve this,” climate change minister James Shaw told a Reuters report.

“A better outcome than inclusion in the ETS”.

A joint statement from Beef + Lamb NZ and the New Zealand Meat Industry Association says all partners have agreed to a farm-level levy system and that it is a better outcome than including agriculture in New Zealand’s emissions trading system.

“The proposal, while not ideal, is significantly better than the ETS and gives farmers the opportunity to influence their future,” the industry said in a joint statement.

“Farmers’ comments have played a crucial role in refining the recommendations and the system can be improved and refined over time as the science advances.”

However, the farming sector remains concerned about the level of prices that will be applied.

Government underestimates impact on farm profitability

Beef +Lamb NZ has published a model of the financial impact of the recommendations based on more than 400 individual farms.

It says the work shows that government modelling to date has underestimated the impact on the profitability of sheep and beef farms, making it likely that emissions reductions will result from the price modelling programme.

Beef + Lamb NZ says the results confirm the need for a cautious approach to farm emissions pricing under the proposed scheme.

Currently available data suggests that farmers calculate their methane and nitrous oxide emissions based on what they do on farm rather than the national average.

A single tariff for methane and nitrous oxide has also been recommended, recognising that these are distinct gases with their own targets and achievements. This would also decouple them from the carbon price in the fossil fuel-driven ETS.

It is recommended that the initial maximum methane price be set at 11 cents per kilogram and maintained for three years.

Farmers can receive credits for sequestration and also receive incentive payments deducted from their costs for using technologies and practices that reduce emissions.

GWP* protection.
Beef + Lamb NZ says it, along with DairyNZ, Federated Farmers and others, continues to advocate the use of GWP* as the most appropriate metric for setting emissions reduction targets.

“There will be a review of the targets in 2024 and we will demand that the targets are revised using the latest science.”

The proposal could represent “the biggest break in agricultural regulation since the abolition of farm subsidies in the 1980s,” Susan Kilsby, an agricultural economist at ANZ Bank, told Reuters.

A final decision on the plan is expected in December.