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Significant risks highlighted in ETS reform bill

Federated Farmers, Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA) today warned the Government’s proposed reforms to the Emissions Trading Scheme risk accelerating the conversion of productive pasture land into forestry.

The lack of any restriction on how much carbon dioxide can be offset using forestry carbon credits and the lack of any robust analysis of socio-economic impacts of the Climate Change Response (Emissions Trading Reform) Amendment Bill will have major unintended consequences for farmers and regional New Zealand.

All three organisations have expressed concerns about the Bill in submissions to the Environment select committee.

"With no cap on how much carbon dioxide can be offset through the Emissions Trading Scheme and the removal of the $25 carbon price cap, all this legislation will achieve is incentivising the planting out of productive pasture land with pine trees and allowing fossil fuel emitters to get away with none of the emissions reductions that are required to combat climate change," says Beef + Lamb New Zealand’s General Manager Policy & Advocacy Dave Harrison.

"Restrictions must be placed on the amount of carbon dioxide that can be offset through the ETS in order to achieve New Zealand’s long-term climate change objectives and commitments and to ensure the social, economic, and environmental wellbeing of our rural communities."

Issues around the potential blanket afforestation of sheep and beef farms were highlighted in a report by rural consultancy firm BakerAg. The study, commissioned by B+LNZ, modelled the likely impacts on Wairoa and showed that blanket forestry would see one in five jobs lost in the town with a significant reduction in economic activity.

The ETS has been in place now for over a decade and has been unsuccessful at reducing gross emissions from fossil fuels, says Mr Harrison.

The Meat Industry Association, which represents New Zealand’s largest manufacturing sector, says the proposals will have a significant impact on the economies of rural communities across New Zealand.

"Even a relatively small reductions in the amount of livestock being sent to processing sites of between 10-15 percent will likely lead to a number of plant closures and significant job losses, particularly for small towns who are often solely reliant on the local processing plant for jobs," says Tim Ritchie, chief executive of the Meat Industry Association.

"It’s concerning that the Government hasn’t carried out the type of economic, social, and land-use change analysis, consistent with what’s required of the new Climate Change Commission under the Climate Change Response (Zero Carbon) Act, so that it’s able to make a fully informed decision about what it’s proposing.

"The unintended consequences of poorly designed legislation like this could have devastating impacts on rural New Zealand. The lack of modelling on likely carbon credit prices over time will also constrain the ability of meat processing companies to plan the type of investment needed to ensure New Zealand’s red meat sector remains competitive on the global stage."

Federated Farmers, B+LNZ, and MIA all welcome the use of the ETS reform bill to introduce the Primary Sector Climate Change Commitment - He Waka Eke Noa - into law.

"We are pleased the Government is legislating for He Waka Eke Noa The Primary Sector Climate Change Commitment, recognising the unique nature of biological agricultural emissions and the unsuitability of the ETS for agriculture," says Federated Farmers Vice President and climate change spokesperson Andrew Hoggard.

"This sector-driven commitment aims to further lower the world-leading low emissions footprint of New Zealand farmers and to begin recognising the large amount of carbon sequestration already underway on farms throughout the country.

"The ETS is currently set up to simply reward large scale blanket afforestation and there needs to be adjustments to the scheme to better recognise the integration of trees and other forms of carbon storage underway on farms."

Farmers are supportive of forestry, especially native forests, being integrated as part of their diverse farming systems, he says.

"However, we are concerned about policies that are effectively promoting blanket plantation forestry that would threaten regional New Zealand and have significant flow on effects for the wider New Zealand economy.

"As noted by the independent Parliamentary Commissioner for the Environment (PCE), to achieve meaningful action on climate change, the focus must be on gross reductions of fossil fuel emissions, and that even if New Zealand met a target of net zero emissions by 2050, gross emissions would only reduce by about 40 percent, with the remainder being offset through tree planting requiring 5.4 million hectares of land to be switched to forest cover in New Zealand.

"We are also disappointed the Government felt the need to include a fall-back provision to tax agriculture via the ETS at a processor level in 2025, despite receiving advice that this will do little to lower emissions."

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