Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

What If Kiwi Farmers Were In The ETS ?

What would be the cost to a dairy farmer if they were in the emissions trading scheme (ETS)?

It is estimated that to produce one tonne of milk solids dairy cows emit about ten tonnes of carbon dioxide equivalent (CO2e) largely in the form of methane.

The current value of milk solids is estimated by Fonterra to earn a dairy farmer about $8 a kilo this season, about $8000 a tonne.

If dairy was in the ETS, which it is not, at $50 a tonne for CO2e, of the $8000 gross revenue the farmer earned, they would contribute $500 towards Aotearoa’s likely payment to the world for offshore mitigation.

Matching foreign earnings from emissions with New Zealand’s likely foreign payments for emissions seems reasonable.

Currently the proposal is, at least initially, to provide dairy farmers with a 95 percent subsidy, meaning that a farmer would pay only $25 of their $500 emissions charge for which they had earned gross income of $8000 as their contribution, the rest of New Zealand would effectively pay the other $475.

To avoid all dairy farmers paying the average of all dairy farmer emissions, dairy farmers, along with all farmers, pleaded for and were granted a further five year exemption from emissions pricing to develop a scheme for farm by farm measurement of emissions.

The NZ ETS was launched in 2008 when it was intended that the phasing into the ETS of agricultural emissions over 10 years would have meant full inclusion by 2018.

Let’s assume the worst dairy herds emit three times as much methane as the best to produce the same milk solids and that the best emit 25 percent less than the average, so 7.5 tonnes v. 10 tonnes per tonne of milk solids.

That means the worst emit say 22.5 tonnes of CO2e per tonne of milk solids. So, the best pay an emissions charge of $18.75 (save $6.25) per $8000 of gross revenue and the worst pay $56.25 per $8000 gross revenue.

To get the benefit of being a low emission dairy farmer, every dairy farmer will need to measure, report and have the ability to verify their unique on farm emissions.

The plan for measurement of emissions at the farm level was in response to farmer demands. On this occasion they cannot blame politicians for bureaucratic overhead.

On a 1000 cow dairy herd, producing 400 kilos of milk solids per cow per annum (400,000 kilos of milk solids in total and $3.2 million gross revenue), with 95 percent emissions subsidy, at average efficiency, the ETS would cost that farmer $10,000.

The efficient, low emitting farmer would pay $7500 (save $2500 compared with the average) that year and the inefficient, high emitting farmer would pay $22,500 (an extra $12,500) compared to the average.

If the difference between the best and the worst is only $15,000 on $3.2 million of gross revenue, will such a price signal make a difference?

Of course, what matters over time is:

What happens to the milk pay out per kilo of milk solids?

What happens to the emissions price both domestically and globally, including any border adjustments to sell in foreign markets to offset any domestic subsidy?

What happens to the 95 percent subsidy?

What happens to average emissions per kilo of milk solids?

What happens to the gap between the most and the least efficient dairy producers?

Likely trends: emission prices rise, the subsidy reduces, average emissions per kilo of milk solids produced decline, the gap between the best and the worst converges on the average level of emissions.

One can only assume the higher the emissions price, the faster we reduce the subsidy, the bigger the reward for low emissions innovation and farm management practices and the sooner emissions will reduce and converge on the average lower level.

The higher the subsidy and the longer it lasts, the slower will be the reduction in emissions to the lower level which reflects better, low emissions herd and farm management practices.

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Geo-political Posturing Over China’s Cyber Hacks, Plus The Weekly Playlist

The timing was one of the weirder aspects of this week’s cyber condemnation of China by the West. Why was this piece of political theatre being staged now? China (and Russia’s) sponsoring and/or condoning of semi-state and criminal hacker groups has been known about for nigh on a decade. More particularly, Microsoft had been alerted to the flaws in its Microsoft Exchange... More>>




 
 


Government: Quarantine Free Travel With Australia Suspended

Quarantine Free Travel from all Australian states and territories to New Zealand is being suspended as the Covid situation there worsens, Prime Minister Jacinda Ardern and COVID-19 Response Minister Chris Hipkins announced today... More>>

ALSO:


Government: New Zealand Condemns Malicious Cyber Activity By Chinese State-sponsored Actors

New Zealand has established links between Chinese state-sponsored actors known as Advanced Persistent Threat 40 (APT40) and malicious cyber activity in New Zealand. “The GCSB has worked through a robust technical attribution process in relation to this activity. New Zealand is today joining other countries in strongly condemning this malicious activity... More>>

ALSO:

Government: Commits $600,000 To Flood Recovery

The Government is contributing $600,000 to help residents affected by the weekend’s violent weather with recovery efforts. Acting Minister for Emergency Management Kris Faafoi and Agriculture Minister Damien O’Connor have been in the Buller district this afternoon to assess flood damage and support the local response effort... More>>

ALSO:



NZUS Council: Welcomes Nomination Of Senator Tom Udall As US Ambassador To NZ

The NZUS Council welcomes the nomination of Senator Tom Udall to the role of US Ambassador to New Zealand and Samoa, NZUS Council executive director Jordan Small said... More>>

BusinessNZ: Visa Extensions Welcomed
BusinessNZ has welcomed the extension of some critical skill visa durations and changes to immigration systems to speed processing. Chief Executive Kirk Hope says move acknowledges advocacy by the hospitality sector, the BusinessNZ Network and others, and comes not a moment too soon.... More>>



Social Development: Government Initiatives Contribute To Fall In Benefit Numbers

Minister for Social Development Carmel Sepuloni has welcomed the release of the June quarter Benefit Statistics which show a continuing fall in the number of people receiving a Main Benefit... More>>


 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels