Emissions pricing NZ.


23rd July, 2019

Emissions pricing: Not a bad start to balance environment and agriculture

A 20-year standoff with farmers over-charging for emissions is about to end, with sector leaders this week signalling support for a new system as soon as 2025. It’s not a bad start, writes Paul Buchanan.

It was either a momentous or laughable day, depending on what you read.

Last week, the government and farming leaders announced agriculture will pay for a share of its greenhouse gas emissions with an interim processor tax being replaced down the line by a farm-specific tax.

The industry is on board with the farm-level monitoring, but is balking at the processor tax. And that’s fair enough; good farmers paying the same amount as bad ones won’t do a lot to change behaviour overall.

But it’s a small amount – about $1500 a farm – and it’s only for a few years.

Comments such as: “Farmers will just buy more palm kernel to boost production to pay the tax” don’t help, though. If that’s really the mindset of New Zealand’s farmers (who profess to be the most sustainable in the world), then we’re in trouble.

Greenpeace called it pathetic and some in the farming sector say it’s too onerous. That suggests it’s probably hit the right note overall.

It’s important that agriculture addresses the cloud hanging over our farms.

While New Zealand’s emissions profile is skewed by our abundance of renewable power generation, the optics – at a glance – don’t look good for farming. And the level of scrutiny is only going to increase.

According to our latest Business Monitor Snapshot – which polled 300 SME employers nationwide – exactly half say they support the government’s recently passed Zero Carbon Bill, while only 21 percent oppose it.

And just the other week the European Union appointed a new leader who campaigned on, among other things, introducing a carbon border tax that would add cost to those wanting to sell products into that bloc.

Of course, it’s not all optics.

We’re beginning to see the effects of the changing climate now and keeping that change as negligible as possible is vital to preserving our farming legacy. But it needs to be practicable. It’s no good to anyone if we reach a destination having left half an industry broken down at the side of the road while getting there.

There’s a real need in rural New Zealand for better support for farmers to meet their obligations under the Emissions Trading Scheme.

For instance, farming has a 95 percent discount on its emissions now, but will that survive the next election or the one after that? What happens if the price of carbon skyrockets? There’s a lot to think about but there are opportunities here as well, particularly for the accounting industry.

Agribusiness advisors have an important role to play.

This transition has been a long time coming and it could be far worse for farmers. We now have the primary industry and Government working together to make this shift in a way that will, hopefully, address the problem and maintain productivity.

Every farmer should be working out how they can get a rebate or at least minimise their loss come 2025.

All farmers need is a framework that is fair and transparent. This is not a bad start.