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Climate change policies a priority

Hon Jim Anderton
Minister of Agriculture
Minister of Forestry
Hon David Parker
Minister Responsible for Climate Change Issues

Monday 18 December 2006

Sustainable agriculture and forestry climate change policies a priority

A significant forestry-planting programme involving thousands of hectares is one of the options being put forward to reduce New Zealand's carbon footprint.

The Government is asking for consultation on proposals for agriculture and forestry, in its comprehensive approach to tackling the threat of climate change.

The Minister for Agriculture and Forestry, Jim Anderton, and Climate Change Minister David Parker today released the discussion document Sustainable Land Management and Climate Change, which outlines policy options to address the risks and opportunities of climate change in the land management sectors.

Mr Anderton says climate change has huge implications for the country and, in particular, for farmers and foresters, who make up the land management sectors.

"Our economy depends on agriculture and forestry. These sectors will bear the brunt of the economic and environmental impacts of climate change. Action needs to be taken on a number of fronts to address these issues and support economic growth.

"Climate change presents a very real threat not only to the way we use our land, but to our international markets. Already there is talk in Europe of border taxes on goods from countries that aren't taking effective action to address climate change. It's in our economic interest to be part of the global response to climate change. We need to take action to reduce the risks."

Climate Change Minister David Parker says that over time, all sectors of the economy would have to play their part in doing something about climate change. "We recognise that some sectors can take action more quickly to reduce emissions than others. But even those like farming, which are constrained by what they can do without affecting productivity, will be expected to take some actions to reduce emissions - starting now."

"We have been consulting with the land management sector and they are well aware of the broad range of possibilities available to us. We're putting all the options on the table through this discussion paper, and it's now a matter of getting further feedback, to create a package which achieves the best results for our economy and for climate change."

The discussion document identifies four key areas where options are presented for consultation: adapting to climate change; reducing emissions and creating carbon sinks; capitalising on business opportunities; and working together.

Some specific options are presented for feedback, especially in the area of reducing emissions, Mr Parker said. "In that area, some hard choices have to be made, and we are looking for specific guidance from farmers and foresters as to how to achieve tangible reductions in greenhouse gas emissions, while ensuring these vital sectors continue to thrive."

"For example, we are proposing an afforestation grant, to encourage the planting of Kyoto-compliant forests.

"Not only would this enhance our carbon sinks, it would give a boost to the forestry sector, and provide major co-benefits in relation to erosion control, flood protection, improved water quality and biodiversity.

"We are looking at a tradeable permits scheme to combat deforestation, and considering the devolution of carbon credits for new forests.

"In agriculture, we have a 'carrot and stick' approach - where we propose helping farmers do what they can to reduce emissions, through incentives and penalties.

"Nitrification inhibitors have been successfully developed by New Zealand researchers, and are now available for widespread use. We have set out proposals to encourage their uptake, which will both reduce nitrous oxide emissions and improve water quality while maintaining farm productivity.

"The proposed plan of action is also looking to make the most of business opportunities arising from the global focus on climate change."

The Government is proposing that the sectors and Government work together to develop a Plan of Action identifying goals and activities for dealing with climate change issues.

No decisions have yet been made on the final policy. The policy package will be discussed with the sector before decisions are taken next year.

Meetings and hui on the Sustainable Land Management and Climate Change discussion document will be held around the country in February and March next year. Submissions are due by 30 March 2007.

The discussion document is available online at www.maf.govt.nz/climatechange
Paper copies can be requested from the Ministry of Agriculture and Forestry.

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Summary of Options
Sustainable Land Management and Climate Change

The Government’s proposed Plan of Action would contain a set of goals for agriculture and forestry to guide action on climate change and identify actions that could be taken now and in the long term. The Plan of Action is supported by four policy ‘pillars’, with a range of possible policy options under each pillar. The government is seeking feedback on which mix of options might make up a balanced policy package that achieves tangible emission reductions, best positions the land based sectors to adapt to climate change and to ensure these vital sectors continue to thrive. No decisions have been made. The government will consider a preferred package of sustainable land management policies following widespread consultation closing on 30 March 2007.


Pillar 1 – Adapting to Climate Change
Actions that will help land managers adapt to the environmental and economic effects of climate change.
The land management sectors will bear the brunt of the increases in storms and droughts from climate change. We need to work with the sector to develop resilient land management practices. Ideas of what could be in a package of initiatives include: more research investment, better information and coordination, improved awareness and building on programmes already in place, like the Sustainable Water Programme of Action, Water Enhancement and Adverse Events Planning and Recovery, and flood risk.

Pillar 2 – Reducing emissions and creating carbon sinks
Measures to reduce greenhouse gas emissions from agriculture and deforestation, and to create new forests.
Agricultural emissions account for nearly half our greenhouse gas emissions and are increasing significantly. If deforestation continues at the current rate, increased emissions could reach the same level as the increases from agriculture. On the other hand, new forests can make a major contribution by removing carbon dioxide from the atmosphere. These policy options are aimed at ensuring that future land use takes into account the environmental and fiscal implications of greenhouse gas emissions.
There are 16 possible options listed in Pillar Two: ten in agriculture and six in forestry. The Government is looking for guidance on which to choose before deciding on a preferred policy package. The options are:

Agriculture options (10 options)
(a) Actions for the long term
1. Research:
Increased government-sector research into how to reduce agricultural greenhouse gas emissions and increase farm productivity.
2. Technology transfer:
Skills and technology to improve farmers’ knowledge about how to reduce emissions and adapt (eg demonstration farms, training, discussion groups and advisers).
3. Voluntary reporting:
Development of a system for the voluntary reporting of emissions by individual farmers.
Any or all of these three long-term options could run alongside any of the options numbered 4-10.

(b) Action for encouraging emissions reductions now
4. Incentive to use nitrification inhibitors
A government-funded incentive to encourage farmers to use nitrification inhibitors to significantly reduce nitrous oxide emissions from agricultural soils.
5. A charge on nitrogen fertiliser
A government imposed charge that reflects the environmental cost of nitrous oxide emissions from fertiliser use, calibrated to the international price for this greenhouse gas.

The government envisages these two measures would work hand in hand, and that any inhibitor incentive would be balanced with a nitrogen charge (and vice versa).

Options 6, 7, and 8 below are broader than Options 4 and 5. They could run alone, or as part of a package containing a mix of emissions reduction activities.

6. Tradeable permit regime to reduce agriculture emissions
The government allocates tradeable agriculture permits for greenhouse gas emissions (based on farmers’ current level of emissions) which farmers can buy or sell to reflect whether they are increasing or reducing their emissions.
7. Offset scheme for agricultural emissions
Farmers can offset growth in their emissions by other activities such as planting trees, using nitrification inhibitors or improving energy efficiency.
8. Resource Management Act Standards to control agricultural greenhouse gas emissions
A National Environmental Standard, prepared by the Minister for the Environment, would require local authorities to put limits on a farmer’s greenhouse gas emissions.

(c) Action focusing on changing land use from forestry to agriculture
9. RMA standards to control new agricultural land use after deforestation.
A National Environmental Standard would require local authorities to control increased greenhouse gas emissions (compared to emissions from previous forested land) and other environmental effects (such as water quality) when formerly forested land is converted to agriculture.
10. Charge when deforested land is used for agriculture
Land owners would pay a one-off government charge on expected agricultural emissions created when deforested land is used for agriculture. The charge would be set at a rate per tonne of carbon dioxide equivalent, for the additional emissions created from the new agricultural use.
Option 10 could be used in conjunction with Deforestation Option 1 (a simple flat charge for deforestation)

Forestry option (6 options)
(a) Afforestation options
Both these options apply to forests established from 2007 onwards.
1. Afforestation Grant Scheme (AGS)
People can tender for a grant to establish new Kyoto-compliant forests post 2007. (The Crown would retain all sink credits and associated liabilities. Preferred tenders could be weighted based on other environmental benefits.)
2. Choice between AGS and devolved Kyoto credits and associated liabilities
Land owners choose either the AGS or opt to receive forest sink credits plus their associated liabilities.

(b) Deforestation options
These options apply to pre 1990 non-Kyoto forests. Mature radiata pine forest is estimated to absorb and store around 800 tonnes of carbon dioxide. When land is deforested, the loss of stored carbon is estimated to create a liability to New Zealand of about $13,000 per hectare at current forecast prices for carbon.
1. Flat charge on land use change from forestry to another use for the loss of stored carbon
A charge, set at a rate per tonne of carbon dioxide equivalent, would be imposed for converting forests to another land use.
2. Tradeable permit regime
The government allocates tradeable deforestation permits to forest land owners. Those who deforest are liable for emissions above the level of permits they hold. There could be a threshold so that small areas of deforestation do not face a cost including deforestation for weed control.
3. Centrally determined deforestation levels
Pass legislation to make it illegal to deforest land unless government approval has been granted (to ensure total deforestation remains within a government established target.
4. RMA controls on deforestation.
A National Environmental Standard would require local authorities to prescribe limits for greenhouse gas emissions for the explicit purpose of controlling deforestation.

Pillar 3 – Capitalising on the business opportunities from climate change
Actions to help land-based businesses take advantage of new business opportunities.
A world focused on climate change creates many new business opportunities. Researching, developing, commercialising and marketing new ways to address climate change requires an integrated and managed approach. Options include identifying new business opportunities, overcoming barriers to development, identifying research needs and raising public awareness of the advantages and importance of adopting new technologies.

Pillar 4 – Working together
Ways that the land management sectors and the Government can work together, now and in the future, to respond to the challenges and opportunities of climate change.
Because climate change issues will be on the agenda for years to come, the Government wants to build a constructive and durable relationship with the land management sectors. This could include exploring collaborative arrangements in areas such as rolling out new practices and technologies, demonstration farms, and sector advice to government on industry and export issues.

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Key Facts – Climate change, agriculture and forestry

Climate Change
 Climate change means a change of climate due to global warming, which is attributed directly or indirectly to human activity, and which is in addition to natural climate variability.

 Greenhouse gases trap heat radiated from the ground (the greenhouse effect), causing the earth’s atmosphere to heat (global warming). The main greenhouse gases (covered by the Kyoto Protocol) are carbon dioxide, methane, nitrous oxide and some industrial gases.

 The Kyoto Protocol is an international agreement, which sets legally binding targets for emissions on countries that have ratified the agreement. New Zealand’s target is to return to its 1990 level of greenhouse gas emissions between 2008-2012 (the first Commitment Period) or take responsibility for excess emissions.

 In 1990, our total greenhouse gas emissions were equivalent to almost 61.5 million tonnes of carbon dioxide - enough to fill about 10 million hot air balloons every year. The most recent data indicate that total greenhouse gas emissions in New Zealand have risen by 21.3 percent since 1990 and we will be above our emissions target during 2008 to 2012 if we do nothing to reduce our emissions.

 The principal growth in New Zealand's emissions comes from increased carbon dioxide (CO2), primarily from the energy sector which has grown by almost 33.8 percent relative to its emissions in 1990. Most of this increase has come from transport and electricity generation. Agricultural emissions have grown by about 1 percent each year since 1990 but start from a larger base (currently 49 percent of total emissions). There has been a major increase in emissions from deforestation over the last three years.

 New Zealand is ranked 12th in the world for greenhouse gas emissions per head of population.

Climate Change - Agriculture
 In New Zealand, nearly 50 percent of greenhouse gas emissions come from agriculture, mostly from methane from farm animals (belching), and nitrous oxide from soils. Globally, 14 percent of greenhouse gas emissions come from agriculture. Agricultural emissions are higher as a proportion of our total emissions compared to other developed countries, which predominantly release carbon dioxide from energy production, transport and industry.

 Our emissions per unit of agricultural production are low compared to other agricultural producers, a reflection of our farmers’ efficiency in pastoral production.

 Even though we produce less than one percent (0.2 percent) of the world’s greenhouse gases, the physical impact of climate change will affect New Zealand’s productive base far more than non-agricultural countries through, for example, severe droughts and increasing floods. New Zealand wants the world to take action to reduce the worst effects of climate change. We can only influence others’ actions if we are seen to act ourselves.

 Greenhouse gases are rated according to their global warming effect. Methane is 21 times more powerful than carbon dioxide. (Over 100 years one kilogram of methane produces 21 times the global warming effect of one kilogram of carbon dioxide).

 Nitrous oxide is 310 times more powerful than carbon dioxide. In agriculture, nitrous oxide is produced when nitrogen from animal urine and nitrogen in the soil breaks down. It increases when more nitrogen is present in the soil, for example when nitrogen fertiliser is added. Nitrous oxide concentrations have risen considerably in the past two centuries with the expansion of pastoral farming and use of nitrogen fertilisers.

 More research is needed to find ways of reducing agricultural emissions. There is currently no viable way to reduce methane other than cutting stock numbers. However there are opportunities to reduce nitrous oxide.

Climate Change – Forestry
 Growing forests absorb carbon dioxide from the atmosphere and lock it up in plant material. These are known as “forest sinks”. Significant quantities of carbon dioxide are released when trees are cut down. In the first Commitment Period of the Kyoto Protocol, countries earn credits for each tonne of carbon dioxide absorbed by forests planted after 1990. This is offset by any future carbon emissions from that forest, for example from harvesting.

 New forests have many benefits other than for climate change. They control erosion, reduce the risk of storm and flood damage, improve water quality and enhance biodiversity. This contributes to sustainable land management.

 Deforestation is the conversion of forest land to another land use such as farm land. It is not simply the harvesting of forests provided they are replanted and kept as forest.

 Under current forecasts, deforestation is likely to result in as many emissions as is projected by the growth in agriculture. It doesn’t take much land to generate major emissions from deforestation. On average each hectare of mature pine forest that is deforested generates around 800 tonnes of carbon dioxide emissions. At an estimated carbon price of $15.92 per tonne, this would cost the country about $13,000 per hectare from 2008.

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Sustainable Land Management and Climate Change

Questions and Answers for Media

What is in the discussion document?
The government wants to put in place an enduring and broad Plan of Action to deal with the risks and opportunities of climate change for the agriculture and forestry sectors. A number of ideas are canvassed in the document to help the sectors adapt to the impacts of climate, reduce emissions and create carbon sinks, and capitalise on possible business opportunities. This includes opportunities for the government and sectors to work together to address climate change.

What is the government’s overall intention?
The government wants a balanced set of policies that manages the huge risks of climate change, supports economic growth and outlines actions to take now and in the future. It wants to achieve tangible reductions in agricultural and deforestation emissions, and increases in forest sinks. It wants to help the sectors prepare for a more demanding future in which there will be a cost on greenhouse gas emissions.

What are the additional benefits of taking action to reduce greenhouse gases?
There are many broader environmental benefits arising from actions to reduce greenhouse gases such as improved air and water quality, reduced erosion and flood risk and the protection of flora and fauna. These are sustainability benefits.

Are specific policies put forward in the discussion document?
Yes, particularly in Pillar 2 where actions and policy options to reduce emissions and create carbon sinks are well developed and quite specific. The government is seeking feedback on these before deciding on a preferred policy. Specific feedback on 16 options for agriculture, afforestation and deforestation is sought. Sections on adapting to climate change, making the most of business opportunities and working together are less specific and the government is hoping to provoke some original and creative thinking on policy options.

The only way to reduce agricultural methane emissions is to reduce stock numbers – so what can farmers do?
The government accepts that the agriculture sector faces particular challenges in reducing methane emissions. That’s why the discussion document focuses on reducing nitrous oxide emissions as an option, because it could achieve some immediate gains. Every sector of the New Zealand economy is expected to do its bit to reduce emissions and the land management sectors are no exception. Other actions farmers can take to reduce emissions longer term, are also canvassed in the document (Pillar 2). They include investing more with the government in research on methane emissions, offsetting emissions with more tree planting, and developing crops like biofuels.

Is there already a government view on what actions it would like to see in final policy?
No decisions have been made. The options are being discussed with the sector before decisions are made.

Why is climate change an important issue for New Zealand?
New Zealand’s climate is already changing as a result of global warming. Research from NIWA forecasts a range of environmental effects of climate change including more severe droughts and heavy rainfall events, temperature and sea level rises and increased risk of forest fires. Economically, a recent report for the UK Treasury by Sir Nicholas Stern said climate change risks were “as great as those associated with the great wars and the economic depression of the first half of the 20th century”. This would have huge implications for New Zealand’s agriculture and forestry.

What is the importance of building a strong partnership with the sector?
Climate change will be on the agenda for decades to come. The government wants to build a strong and enduring working relationship with the agriculture and forestry industries so that the issues are addressed in the long term.

What is the government hoping to get from the sector during consultation?
The government is looking for free and frank discussions on the various policy options available. It’s encouraging farmers and foresters to help develop a balanced package of policies that will help the land management sectors adapt to the impacts of climate change and reduce emissions. It’s about getting ready for a future that will be more demanding and include some price-based measures.

Where to from here?
Ministry of Agriculture and Forestry staff will be holding consultation meetings and hui around the country early next year. The closing date for submissions is 30 March 2007. Submissions can be completed in the tear-out forms at the back of the document or online from January.

For more information on land management and climate change see:
www.maf.govt.nz/climatechange

For more general climate change information including the government’s various policy consultations, see
www.climatechange.govt.nz

ENDS

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