By Brendan Moyle 01/09/2017 9


Climate change is one of the NZ election issues of this year.  With that in mind, the Science Media Centre asked the parties the following question:

How will your party meet the goals of the Paris Agreement? How will agriculture be accounted for in climate change adaptation and mitigation? What are your plans for the Emissions Trading Scheme?

Introduction

Global climate change is a product of changes to the composition of our atmosphere, that have been ongoing since the industrial era began in the early 1800s. Greenhouse gases like CO2 amplify solar radiation by reflecting more of it back on to the surface, rather than letting it escape into space.

In terms of CO2 emissions NZ emits about 7.6 tonnes per person (World Bank: 2013 data), which is on par with China and a little less than the OECD (9.7 tonnes).  It’s less than Australia (16.3) and the USA (16.4). Given climate change is a global problem, international cooperation is needed to achieve reductions.  This was the goal of the Kyoto treaty which we ratified in 2005, and the recent Paris agreement.

Nonetheless, NZ is a very unusual country in terms of its GHG profile. The energy sector has a high percentage of renewables based on our endowments of hydro, wind and geothermal resources. Agriculture, however, generates a very high percentage of our GHG emissions, including methane.  This makes reductions in our GHG emissions challenging. There’s not much scope to reduce national emissions by shifting the energy sector to renewables, or by technological advances in the industrial sector (it’s too small a contributer).  These will help, but we won’t see big reductions that way.  Agriculture however has few technological fixes. The biology of a cow or sheep, can’t be changed rapidly to reduce GHG emissions. Since Kyoto the NZ strategy has been to argue that net emissions matter rather than gross, and the forestry sector soaks up much of the GHGs we emit.

The main policy we have enacted is the Emissions Trading Scheme (ETS). This was initiated by the previous Labour Government and maintained by the current National. The one exception is agriculture, which is not included in the scheme. Despite this, it is one of the most comprehensive ETS in the world, covering most sectors in the economy.  Carbon emitters are basically required to buy credits from sellers that store, or save, emissions. There are some other features. Given exporters are competing against sellers overseas that aren’t liable for their carbon, they get some relief. To sustain price-stability, the price of carbon has a ceiling of $25 per tonne. Thus if the market price for some reason suddenly soared to $30, the ETS would force it to stay at $25. To date this hasn’t happened. International sources of carbon were recently were banned from the system because of their dubious value.  Nonetheless, emissions from some sectors have shown declines of various magnitudes.

NZ Coal Production has been falling since the sector was included in the ETS in 2010. MBIE data.

The Parties

NATIONAL: Under the Paris Agreement, we have signed up to a fair and ambitious target of reducing emissions by 30% below 2005 levels by 2030. We will meet this target through a combination of reducing domestic emissions under the Emissions Trading Scheme (ETS), planting more trees and participating in international carbon markets.

National is basically on a steady-as-she-goes track.  It is sticking to the two main policies that have underpinned our climate-change policy since 2005. These are to use carbon markets to encourage the shift to a low-carbon economy, and more forests to absorb the GHG we produce. There’s nothing wrong with using forests for this. The most efficient machine we know of to remove and sequester carbon is a tree. The Afforestation Grant Scheme is one example of a policy enacted to plant more trees for carbon storage.

With more than 85% renewable electricity generation already, and a target of 90% by 2025, we are off to a good start. We are also looking at how we can reduce emissions in other sectors such as agriculture and transport, however we will not bring agriculture into the ETS until we have the viable technology to reduce emissions.

Renewable energy sources produce vastly less carbon emissions than coal.  Costs of producing electricity this way, especially after the price of carbon is accounted for, make this an attractive, economic option.  Nonetheless, the shifts to more renewables when you start with a base of 85% doesn’t give a lot of room for making sizable cuts in our GHG emissions.  The reluctance to put agriculture in the ETS is understandable (recessions make governments deeply unpopular), but will hamper reaching the Paris Agreement goals. It also tilts the playing field away from forestry (which is in the ETS) to agriculture (which isn’t). This is problematic as replanting rates of forests have fallen below harvest rates. Forests are storing more carbon largely because the trees planted in earlier years are older and larger. The area in plantation forests has shrunk. This is not a recent trend.

We’re spending a record $2 billion on public transport with a target of 64,000 electric vehicles by 2021, each year we invest $20 million in agricultural greenhouse gas research and are providing up to $200 million for international climate-related support.

Public transport and electric cars do tackle one area of the economy where fossil fuel use is concentrated. This is our transport sector. Electric cars will also tend to be recharged by renewable power plants rather than coal. The dilemma with electric cars is how to encourage their use without providing subsidies to the largely wealthier households that tend to buy them.

We are committed to making the ETS work and will not scrap it like other parties have proposed. The National Government recently announced a package of changes to the ETS to provide businesses with the clarity they need about the direction of the ETS. We are committed to ensuring New Zealand businesses whose emissions are a big part of their costs are not disadvantaged compared to their international competitors.

Again, reinforcing the point that the ETS is the main plank in National’s strategy for climate change.


LABOUR: Labour will ensure a just transition to a sustainable low-carbon economy with decent and secure jobs and, as a key to achieving ambitious emissions reduction targets, will establish an independent Climate Commission and carbon budgeting.

Alas this is just plain, political sloganeering. The only policy described here is an independent Climate Commission. Which to be honest, doesn’t seem to address any of the problems outlined in the introduction.

We’ll restore the Emissions Trading Scheme (ETS) to be an all sectors, all gases scheme, so that we move away from carbon-polluting goods and services towards low or zero-carbon options.

Ok. Good. Agriculture gets put into the ETS. Could we get some information on when that will be (even National above says Agriculture will be in, once the right technology is available), and what the predicted costs and savings are? Some back-of-the-envelope calculations show putting agriculture into the ETS isn’t straightforward. Supposing the price of carbon is say, $16 per tonne, and 1 kg of beef protein takes the FAO average (see below) of 342kg of CO2 emissions.  If a beef cattle yields 200-250 kg of meat (about 1/6th of which is protein), then that’s about 40kg of protein. That’s associated with about 13-14 tonnes of CO2. So that’s an additional cost of about $200 per beef steer. Any way you play with these numbers, the cost of sheep, beef and dairy farming in NZ is going to rise dramatically.

This encapsulates the problem in the introduction. Ruminant animals produce a lot of greenhouse gases.  They’re really big numbers.  Putting the agricultural sector into the ETS isn’t a simple policy change. It requires some very hard decisions. We need to know what these will be.

I note we’re given nothing here from Labour on transport, energy and forestry options either.


GREEN: We are committed to a net zero carbon economy by 2050. We must act to ensure a secure future according to science on Climate Change.

A clear goal stated, but with targets set well ahead in the future rather than the current election.

The Green Party will:

Work to strengthen the ineffective ETS, e.g. through a progressively rising price cap and a minimum price floor, and over time replace it with an effective levy;

I’m not sure why the ETS is adjudged ineffective. Flawed certainly, but there’s no doubting some sectors have responded well to it. Mostly it seems the Greens are going to try to manipulate the price of carbon, before replacing it with a tax. This is largely a switch from one pricing mechanism to another. It also seems problematic. Forestry owners who used to be able to add the value of carbon to the economic value of their, would lose part of the value of their trees. I’m unpersuaded making trees worth less to foresters, is a good strategy.

Use all the levers available to government: R&D, energy efficiency, transport changes, tree-planting etc. to make New Zealand a world leader in the race against climate change.

A little vague perhaps. I like at least, that the Greens are considering forestry and transport options. I just wish I knew what they were.

Prioritise investment in low-carbon transport options.

What does this mean? Electric cars? Public transport? Cycling?

Move towards 100% renewable electricity by 2030 with our Empowering NZ plan, and also help major industrial energy users wind down their use of coal.

Pretty much what seems to be happening anyway under the ineffective ETS?

On agriculture, although New Zealand has a unique emissions profile, primary industry has ways to cut carbon emissions that are already cost effective for farmers. There will be an early and measured phase-in of a levy on agriculture emissions for the agriculture sector. We will introduce incentives for on-farm mitigation measures and potentially on-farm sequestration. The Green Party is committed to assisting vulnerable sectors adapt to a low emission economy and will make this a priority.

Good. Recognition that NZ is an outlier for GHG emissions. Rather than putting agriculture into the ETS, the Greens plan on using a levy (let us call it what it is, a carbon tax). Potentially this could be a lower cost option than the ETS as the levy could be set below the current market price for carbon. Nonetheless, it would be useful to see what levy they do want imposed.  I don’t want to assume the tax will be less than the carbon-price without additional information. What isn’t really addressed here however, is how NZ farmers will receive any adjustment for exports.  One of the main reasons governments have eschewed carbon taxes as it puts their industries at a disadvantage in export markets. They compete against sellers from other countries that don’t have to pay a tax.


NZ FIRST: Responses not yet received.

Not really anything to go on here.


MĀORI: Climate change solutions:

Prioritise solutions that address the effects of Climate Change working across the political spectrum to tackle climate change

Enact emissions targets into law and support the setting of carbon budgets that would act as stepping stones towards the targets

Support the establishment of an independent  Climate Commission to advise on setting carbon budgets and to report on meeting those budgets

Set up government subsidies for electric vehicles for community groups

Establish whānau friendly cities encouraging young people to have a voice in the design and planning of their cities starting with green spaces in urban centres

Create more kura taiaō and enviro-school models of curriculum

Support a proposal that will see the planting of 100,000 hectares of new forests over the next 10 years

We also believe in the efficient use of water, energy conservation and the need for sustainable environmental management. We are concerned about water management, restoration of water quality; and environmentally sustainable land use that does not degrade our water system.

In this regard, the Māori Party looks to:

Expand the mandate of the Environmental Protection Authority to include crown minerals and freshwater

Transfer the role of kaitiaki back from the Department of Conservation to mana whenua

Subsidise organisations to undertake environmental impact assessments to support businesses becoming more environmentally friendly.

Not a lot here that really pertains to climate change.  I doubt that the number of community groups wanting to use electric cars will have a significant change in our transport sector emissions. The only climate change policy of substance here is the tree planting. It looks to be an expansion of the current Afforestation Grant Scheme. There’s nothing on agriculture or the ETS really.


ACT: ACT opposes blunt environmental regulation, but supports various initiatives that would reduce emissions, such as modernised ride-sharing rules, demand-based road pricing, and priced irrigation.

As for the ETS, ACT’s preference is for a carbon tax rather than a trading scheme.

Again, not a lot to really work with there. The focus in the first response is just on the transport sector.  The second is just a preference for a different pricing mechanism, but without any explanation of whether, or how, exporters will be accommodated.


TOP: TOP will ensure the Emissions Trading Scheme is restored to being a proper cap and trade scheme. It should remain closed to international units, phasing out the free allocations to energy intensive exporters and auctioning credits with the cap set at the 2030 target. We expect this will cause the price of carbon to rise significantly, sending a long term signal for investment. If international trade resumes, the government should purchase the units and auction them into the ETS.

Basically then, keep the ETS with the goal of increasing the price of carbon,

The revenue raised by the ETS should be used in the first instance to invest in improving energy efficiency in the nation’s homes and small businesses. That includes insulation, and the adoption of energy efficient heating systems. This will save money and reduce emissions at the same time. The other short term priorities are planting all our 1.1m hectares of erosion prone land and ensuring electricity pricing encourages a move to 100% renewable energy.

Prioritising household energy efficiency seems like an inefficient way to reduce emissions. Transport and industrial sectors contribute more. I note that TOP has the most ambitious afforestation scheme however.

In the short term we want to see agriculture managed through freshwater controls. When agriculture is brought into the ETS we need to ensure methane is accounted for correctly, which may mean a two basket approach (short lived gases treated differently to long lived).

Freshwater controls? We at least know that agriculture will be included in the ETS, but the response avoids saying when. Nor do we get any information on how the adjustment costs to this will be managed. Ruminant agriculture produces a lot of GHG emissions so once you start pricing these, the costs aren’t trivial.


Summary

Overall National and the Greens have supplied the most comprehensive plans for achieving the Paris targets. The main difference is how fast we would achieve (or exceed) them. Most parties are considering the standard policy options available. These include maintaining the ETS in some form, increasing forest cover and supporting renewable energy sources. Supporting renewable energy sources is though not difficult. We are moving strongly that way already. National and the Greens seem cognisant of the costs of reducing GHG emissions from the agricultural sector.  Others seem content to overlook them at the moment.

What is also interesting is the narrow policy-set the parties seem attached to.  There are some things, such as eating a plant-based diet, or living without a car, or having fewer children, that could reduce contributions to climate change.  While I appreciate that these may be difficult to encourage on the policy front, it might be worth considering them anyway. We tend to spend relatively little on cycling infrastructure for instance, while providing implicit subsidies to cars. An agricultural sector in NZ that grew more plants and less grass for ruminants would also cut into our GHG emissions.

This infographic shows climate choices. Credit: Seth Wynes/Kimberly Nicholas, Environmental Research Letters, 2017

Another of the major reasons our emissions have remained stubbornly high (despite reductions in emissions per $ of GDP) is population growth. Immigration into NZ is one driver for our high emissions.   Again, an issue that would be difficult and complex to address, but is still overlooked.

In the end, the dilemma remains. To get meaningful reductions in our GHG emissions means something does have to change in our agricultural sector. To achieve that without also generating large costs for the agricultural sector and the NZ economy is going to be hard to pull off.


9 Responses to “Where did we put all that CO2? Climate Change Policy for the Election”

  • TOP says, “The revenue raised by the ETS will be used…”. The ETS is a market mechanism and should raise no revenue for government, so how can a government direct what ETS revenue is used for?

    I agree with you about immigration and population growth.

    Our ETS fails because the carbon price is low and unstable, and sectors are treated differently. There is also a misunderstanding of the difference between carbon sequestration and carbon offsets (see http://euanmason.blogspot.co.nz/2017/03/wooly-thinking-about-greenhouse-gas.html) which makes sequestration with forests risky. In addition, our government manufactures credits out of thin air and gives them to people for “allowed pollution”, flooding the market with credits that have no environmental credibility. When we allowed imports of foreign credits at just a few cents per tonne, gifted free NZ credits were stored by the happy recipients in our carbon registry and they used cheap imports for their pollution instead, and so we now have several years worth of required credit surrenders stored in our registry. All these problems need to be addressed (see http://euanmason.blogspot.co.nz/2016/05/submission-on-review-of-new-zealand.html).

  • Should we be using FAO average emissions here? I don’t have any strong intuitions on whether ruminants put out more or less gas when on pasture as compared to feedlots, but wouldn’t pastures use fewer carbon-intensive inputs as compared to growing grain, corn or soy for beef feed? Growing grain in Canada took breaking the soil in spring, then a pass with the harrows, then seeding, then a few passes of spray, then either swathing and combining or (if conditions were right for some grains) a single pass with the straight-cut header on the combine, then fall cultivating. Zero-till would be closer to pasture emissions, but not sure how extensive that is yet.

    • Hi Eric- I wouldn’t use the FAO average in any serious academic work. It was just a back-of-the-envelope calculation to illustrate the issue that ruminants produce a lot of emissions. I think since this response Labour has suggested that farmers wouldn’t be fully exposed to carbon prices, but just be liable (initially) for a small fraction. However you do the numbers, putting the agriculture sector into the ETS at current carbon prices means a massive economic hit. This remains the dilemma for any Government. As much as we play around with electric cars and renewable energy, the hurdle to achieving deep cuts in our GHG emissions is reducing agricultural emissions without shattering the economy.

      I believe pasture-fed ruminants do produce less GHG than feedlot animals. Someone more informed may be able to comment on the physiological aspect. As you surmise, one of the important differences is that growing grain to feed ruminants, uses more carbon-intensive inputs. And the grains also have to be transported to the stock, rather than the stock browsing what’s growing under their hooves.

  • Second-best-worlds policy is a mess. First best has every sector paying the same GHG charge, either through an ETS or a carbon tax. But where lots of big important countries don’t have one and particularly don’t have one on agriculture, not hard to construct scenarios where a comprehensive ETS here diverts production to more GHG-intense places that don’t have carbon taxes/ ETS, and so increases net global emissions while reducing NZ’s share of emissions.

    • Yes, most countries I think that have them, limit to non-tradeable good sectors (like energy/electricity markets). We do have mechanisms for ‘relief’ for exporters who compete in international markets, but the ideal would be for countries to participate in it. Early ambitions were for it to integrate into the Australian ETS of course. In the meantime, I guess I’ll just have to keep biking and eating vegetarian food to do my bit… 😉

  • Unfortunately all the political parties and commentators ignore (or are unaware of) the fact that sequestering atmospheric CO2 into soil is what NZ’s pastoral farming can do remarkably well if it is managed properly. Conventional farming with high inputs of soluble P and N is resulting in losses of soil carbon on intensively farmed land, but better management to protect soils and swards and manage grazing can increase carbon sequestration dramatically. A small group of farmers using these methods has since 2008 been having soil samples down to 1m taken and analysed professionally each year and have recorded increases in soil carbon averaging 5% per year. It has been calculated that if every farmer in NZ were to increase soil carbon by just 0.2% p.a. that would offset the emissions of the whole of the rest of the country.

    There is little point in looking to forestry for carbon sequestration – most forests are harvested and most of the stored carbon eventually lost to the atmosphere. There is also little point in using the “rules of thumb” constructed by UN agencies and others, based on feedlot farming. NZ pastoral farming is different and can be improved by relying on legumes and soil organisms to provide plants with N. Chemical N from urea and similar fertilisers displaces these organisms and most ends up polluting the atmosphere and ground water either directly or via ruminants. Some people anguish over methane but little research has been done on the fate of methane (which is heavier than air) over grasslands where methanotrophs at the surface can mop up much methane.

    All around the world people are becoming aware that soils are the largest terrestrial carbon sink and have huge potential to sequester carbon – hence the meeting in France recently and the formation of the “4 pour 1000” initiative (http://4p1000.org/understand) . Judging from the report issued at the end, the NZ farmers who are actively practising soil carbon farming are well ahead of the rest. If handled correctly the lessons learned could reduce our GHG problems and make our farming much more sustainable. For another view of this have a read of https://www.stuff.co.nz/national/politics/96690066/green-party-to-set-up-a-climate-commission-and-instate-universal-dividend-from-climate-fund

    • Great link, Richard B.

      But I fear politicians want quick, simple solutions to ecosystem problems:
      Predator-Free NZ….. and all the birdies will live happily thereafter
      Zero-Carbon NZ…. and the seas will stop rising
      N- tax the farmers… and our rivers and lakes will be crystal clear.

      Hard to believe that C-farming techniques have been practised for millenia by some folks.

  • The climate change lobbyists must be stoked, with Labours proposal you a carbon /cow fart tax. What better way to extract money for the populace than making them feel guilty, for what the industrial revolution has done to the world.
    The smart country’s aren’t doing ETS they are changing they way they live with solutions, like electric transport.
    Should be taxing the oil barons and the banksters invested in petroleum. While we are at it lets tax the industrial military complex with a death tax for every person they kill.

Site Meter