Climate – To reduce emissions, farmers need a well-designed pricing policy

Aotearoa New Zealand must reduce its agricultural emissions and this needs to be supported by a well-designed pricing policy, He Pou a Rangi Climate Change Commission Chair Rod Carr says.

“Our emissions are changing the climate and damaging the planet, and the primary sector is where we are already feeling some of these impacts. We need to reduce emissions to net zero for long-lived gases by 2050 and deliver a 24% to 47% reduction in biogenic methane by 2050,” Dr Carr says.

By the end of this year, the Government will need to decide how emissions from agriculture will be priced.

The Commission is providing two pieces of independent, evidence-based advice to feed into Ministers’ decision making. This is alongside advice being given to Ministers by the He Waka Eke Noa partnership.

“Agriculture is a major part of the economy and landscape of this country. A smart, well-designed pricing policy will help Aotearoa New Zealand maintain access to high-value markets, while reducing emissions from agriculture.

“Our first piece of advice, on what financial assistance – if any – should be provided to farmers participating in an emissions pricing system, was tabled in Parliament by the Minister of Climate Change today.”

By 30 June, the Commission will provide the Government with a report on farmers’ readiness for agricultural emissions pricing, including an assessment of the progress the He Waka Eke Noa partnership has made to prepare farmers and the sector for a pricing system.

The Commission’s advice is just part of what the Government will need to consider when making its decision on agricultural emissions pricing. Under the Climate Change Response Act, a system for pricing agricultural emissions needs to be in place by 1 January 2025.

“The pricing policy the Government puts in place – and the price it sets – will determine how effective pricing will be at reducing agricultural emissions,” says Dr Carr.

“Agricultural emissions pricing needs to achieve emissions reductions – but if implemented poorly it also has the potential to create financial hardship for farmers as they transition to low emissions.

“Our advice is that financial assistance can be used to encourage investments in low emissions practices and deliver the emissions reductions needed to meet our targets, while limiting disruptive changes for farmers.

“The Government should be aiming to minimise negative knock-on impacts for Aotearoa New Zealand – such as a decline in employment and less money going into local economies, through to reduced exports to international markets.

“We advise that giving financial assistance to farmers based on their output would send a signal to invest in low emissions processes and products, but also to maintain or improve productivity.

“We are also clear that any pricing policy implemented must not disproportionately disadvantage or compound historical grievances for Iwi/Māori and must factor in the unique characteristics of Māori collectively-owned land and Māori-collectives.

“A well-designed pricing policy will help Aotearoa meet its emissions budgets, targets, and play its part in the global effort to address climate change.”

One of the Commission’s roles is to provide independent and evidence-based advice that can be considered by Government, and that can help inform the public.

By December 2023, the Commission will provide advice for the emissions reduction plan spanning the second emissions budget period (2026 – 2030).

We have a role in reviewing the climate targets set by the Government. In 2024 we will review legislated targets for Aotearoa for both long-lived gases and biogenic methane, and provide advice on whether these 2050 targets should be changed. This will include advice on whether the 2050 target should be amended to include emissions from international shipping and aviation. At the same time, we will advise on the emissions budget for 2036 to 2040.

We will also be monitoring the Government’s progress towards creating a thriving, climate-resilient, and low emissions Aotearoa. Every year from 2024 onwards, we will be reporting on the Government’s progress in reducing emissions.

This means assessing the adequacy of the Government’s emissions reduction plan, including its agriculture policies, and monitoring progress to address the impacts of climate change. This process will provide more transparency for businesses, communities and Iwi/Māori about the progress being made towards a low emissions Aotearoa.

We will be looking to see if Aotearoa New Zealand is making progress on achieving the first emissions budget (2022 – 2025), and assessing whether it is on track for meeting the 2050 target. We can also suggest ideas for emissions reductions that respond to new opportunities.

We’re committed to engaging with people on our work so it is grounded in the most up-to-date information and reflects the knowledge and experience of New Zealanders.