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Agriculture and the emissions trading scheme

Labour gives first details of plan to bring agriculture into emissions trading scheme

By Pattrick Smellie

Sept. 8 (BusinessDesk) - A Labour-led government would bring agricultural greenhouse gas emissions into the emissions trading scheme by 2020, although 90 percent of emissions would attract no carbon price at first, Labour leader Jacinda Ardern announced this morning.

Officially launching Labour's climate change policy in Christchurch, Ardern also confirmed a target for New Zealand to achieve net zero carbon emissions by 2050 and the creation of an independent Climate Change Commission whose job would be to ensure carbon reduction targets are met.

To assist that process, those targets would also be placed in domestic law rather than, as at present, expressed as non-binding contributions under the 2015 Paris global climate change accord.

While both National and Labour have always committed to an "all sectors, all gases" ETS that would eventually include agriculture, National has resisted a timetable for including agriculture in the absence of technological solutions to, for example, methane emissions from cows and sheep. New Zealand has been in the forefront of research in this area, but commercially viable technologies may be as much as a decade or more away.

"It's more meat on the bone" of Labour's policy, said Nigel Brunel at OMF Financial, an active trader of New Zealand Units under the ETS. Labour had last talked in detail about the progressive inclusion of agricultural greenhouse gases in the ETS in 2008, shortly after introducing the scheme prior to losing office that year. At that stage, a 2012 start date for agricultural GHGs was contemplated.

"For people in the know, it's not a surprise" although detail to date had not been "to the same granular degree" as announced today.

NZUs have pushed through $18 per tonne in recent weeks, partly reflecting the increasing likelihood of a change of government at the general election on Sept. 23.

A Labour-Green party coalition, in particular, would be expected to take a more urgent approach to climate change policy, with Ardern describing it as "my generation's nuclear-free moment".

“For too long, we have set targets and not done what’s needed to achieve them, " she said in a statement. "That’s why Labour will set up an independent Climate Commission to examine what reductions can practically be achieved by each sector and recommend emissions reductions targets."

"We will also ensure that farmers operating at best practice are recognised and directly credited for the reductions they achieve," she said.

Brunel said agricultural GHGs were likely to be taxed at the processor, rather than the individual farm level as the latter would be a costly and inefficient way to administer the ETS.

Labour would also launch a Transitions National Science Challenge to help find solutions to New Zealand's climate change challenge. Because of its heavy reliance on pastoral agriculture and high levels of renewable electricity generation, New Zealand is unlike most other developed countries in that around half the country's carbon emissions come from the agricultural rather than the transport and industrial sectors.

Brunel said many farmers would be able to "grow their way out" of ETS obligations with small-scale plantation forestry, which can be used as a carbon sink that generates NZUs.



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