Brian Fallow: Cutting farm emissions – without cutting farm output

OPINION:

The Climate Change Commission’s plan for reducing methane emissions from agriculture might be called the Ninotchka strategy.

Ninotchka is the title of a movie from the late 1930s in which Greta Garbo plays an earnest Soviet official dispatched to Paris to recover some Romanov jewels which have surfaced there.

Before she finally succumbs to the charms of leading man Melvyn Douglas and the City of Lights, there is a memorable scene where she is discussing with a couple of colleagues the purges going on back home. Picture Garbo at her most impassive as she sums up Stalinism in a phrase: “There are going to be fewer but better Russians”.

Fewer but better cattle and sheep is the commission’s plan.

It is relying on the trend of increasing productivity per animal evident over the past 30 years, and the associated trend decline in emissions intensity (methane emitted per kilogram of meat or milk solids), to continue out to 2035, the end of its third carbon budget period.

That would allow production of meat and dairy products to continue at current levels, even as stock numbers and emissions decline.

At first glance the commission’s call for a 15 per cent fall in the national headcount of dairy and beef cattle and sheepby 2030, and another 5 per cent by 2035, is arresting.

It is liable to induce gulping or rolling of eyes. Last year pastoral farming contributed more than 40 per cent of the country’s export income.

But on the other hand methane, the vast majority of it belched by cattle and sheep, accounted for 44 per cent of national greenhouse gas emissions in 2018, only fractionally less than carbon dioxide’s share of 45 per cent.

New Zealand is internationally accountable for those emissions and if those who profit from them continue to escape any cost, and therefore receive no price signal to reduce them, then that is a subsidy from the rest of us.

The subsidy’s days are numbered. He Waka Eke Noa, a collaborative process between farmer bodies and the Government, is developing a farm-level emissions pricing mechanism to come into effect in 2025.

The Climate Change Commission is charged with reporting next year on whether sufficient progress is being made to meet that target date.

Its chairman, Rod Carr, says that at this stage the commission is assuming He Waka Eke Noa will be successful even though a lot of work needs to be done.

“They know what the default will be if they don’t.”

That would be an emissions price imposed at processor level, a one-size-fits-all outcome which would be unfair to progressive farmers and also inefficient as it is behaviour at the farm level that pricing needs to affect.

The prospect of emissions pricing is expected to encourage the diffusion of best practice in breeding and feeding livestock — or as Carr prefers to call it, better practice widely adopted.

That is seen as fundamental to continuing the trend improvements in productivity and emissions intensity over the next 15 years.

Those two trends are connected. In general, the more of what the animal eats that gets converted into what we eat, the less is left to be fermented into methane and emitted as a waste stream.

But the widespread adoption of existing options for lifting productivity and reducing emissions intensity will only get us so far. Beyond 2035, the end date of the three carbon budget periods the commission’s current draft advice relates to, reachingthe Zero Carbon Act’s target of a 24-47 per cent reduction in methane emissions from 2017 levels by 2050 will require new and as-yet-unproven technology like a methane vaccine, or significant change in land use,out of pastoral farming.

The target is less stringent than the net zero target for carbon dioxide, to reflect the fact that methane is a potent but relatively short-lived greenhouse gas. Stabilising its level in the atmosphere requires net emissions to decline but not go to zero, as Mother Nature cleans up after us, oxidising the methane to carbon dioxide and water vapour. We cannot, however, ignore the damage done before she does.

In the meantime, the commission’s preferred pathway would see a 16 per cent reduction in biogenic methane from agriculture by 2035, split almost equally between the dairy and sheep-and-beef sectors.

Essentially, it envisages the dairy industry over the next 14 years looking like the sheep and beef sector over the past 30, with improving productivity per head offsetting declining stock numbers to deliver steady output of its product, accompanied by declining methane emissions in unit and aggregate terms.

How the primary sector as a whole feels about that prospect remains to be seen. It would not be surprising to see some pushback against what is at this stagedraft advice to the Government.

After all, thereis a reason we have seen so much conversion from drystock to dairy farming. Accepting that this is as good as it gets in volume terms is a big call, and ultimately a political one.

Another politically sensitive decision would be what proportion of agriculture’s gas emissions would be subject to a carbon price and how much exempted by a free allocation of units.

Free allocation is the mechanism used to shelter theemissions-intensive but trade-exposed sectors from a carbon price which would be commercially lethal if applied to all their emissions.

Pastoral farming, the vast majority of whose output is exported, is clearly an emissions-intensive, trade-exposed sector.

The commission’s view is that free allocations generally need to be reviewed, Carr said. “Some of them are historical and may no longer be appropriate at the levels they are.”
Some free allocation is justified to prevent what is known as “leakage”, he said.

Leakage is jargon for the cases where carbon pricing, if applied to their total emissions, would put a New Zealand producer out of business, only to have their marketssupplied instead by equally or more carbon intensive producers elsewhere which are not subject to a carbon price. That would do nothing for the planet.

“Some of it is justified on the basis that we can’t afford to take the shock to make the transition, so we will use free allocation abating over time to smooth the path,” Carr said.

“And some of it is just an outright subsidy; we are going to allow these people not to face the full price of emissions because for social or cultural reasons we are happy to absorb the cost somewhere else.”

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