pale green stripes with logos of a penguin, a tree, a car, and a cow looking like a cursor on a computer screen to drag into a folder
Transport, conservation, agriculture and forestry all matter for New Zealand’s climate commitments. (Image: The Spinoff)

PoliticsJune 17, 2024

Agriculture is staying out of the ETS. What does it mean for our climate commitments?

pale green stripes with logos of a penguin, a tree, a car, and a cow looking like a cursor on a computer screen to drag into a folder
Transport, conservation, agriculture and forestry all matter for New Zealand’s climate commitments. (Image: The Spinoff)

The exemption of agricultural emissions from the Emissions Trading Scheme has been called an ‘abrogation of New Zealand’s international responsibilities’. But what have we signed up to – and are we anywhere near meeting these goals? 

On Tuesday, the government fulfilled an election promise, confirming that agriculture will remain exempt from the Emissions Trading Scheme – one of Aotearoa’s primary mechanisms for reducing the fossil fuels causing the global climate catastrophe. Agriculture emissions have never been included in New Zealand’s emissions trading, but were due to be incorporated from 2025 if an alternative pricing scheme couldn’t be agreed on. Instead, the Climate Change Response Act will be amended so the agriculture industry (including fertiliser companies and animal processors) will remain exempt from the scheme. The good news? There’s a new working group – this one will be named Pastoral Sector Group instead of He Waka Eke Noa. 

Opposition parties weren’t impressed. “The government has now put half of our emissions which come from agriculture into the industry-led too-hard basket,” said Green Party co-leader Chlöe Swarbrick. 

blue blobs and smoke stacks and dollar bills
Different parties have different ideas about how the Emissions Trading Scheme should work (Image: Tina Tiller)

“The longer we wait to decarbonise our economy, the more expensive it becomes and the bigger the damage to our industries and farming sectors in the long run,” agreed Labour agriculture spokesperson Jo Luxton.

Greenpeace Aotearoa’s Niamh O’Flynn said He Waka Eke Noa “was designed by the dairy industry to delay climate action, and it succeeded”, and that New Zealand’s climate commitments would be harder to meet because of the announcement. “New Zealand has signed up to the Paris Agreement, so emissions have to come down. Allowing dairy and agribusiness to continue avoiding responsibility for their emissions via the ETS just means that the rest of us, including other industries, will pay the price through increased costs and increasing pollution from climate disasters and fresh water.”

In comments to the Science Media Centre, researchers noted how continuing to exclude agriculture from the ETS would impact New Zealand’s climate commitments – especially those under the United Nations Framework Convention on Climate Change. “The exclusion of major polluters like agribusiness, responsible for 49% of New Zealand’s emissions, is an abrogation of New Zealand’s international responsibilities and commitment to reducing emissions,” said Shaun Awatere, kaihautū research impact leader at Manaaki Whenua Landcare Research. 

With this in mind, The Spinoff has put together a brief guide to the most significant of New Zealand’s many domestic and international climate commitments – and noted, where appropriate, how close we are or aren’t to meeting them. 

trees agains the sky, bright blue and green with sunlight
Absorbing carbon in trees is one of the central mechanisms of getting to net-zero emissions (Photo: Getty Images)

By 2025

Emissions Reduction Plan: 2022-2025

Released by the previous Labour government in May 2022, this sets the government’s emissions budget, outlining “how we intend to play our part in global efforts to limit warming to 1.5 degrees about pre-industrial levels”. Under the Climate Change Response Act, the plan requires the government to support emissions reductions across the economy. Actions include increasing access to electric vehicles and enabling more people to take low-carbon transport, reducing the amount of waste going to landfills, banning new coal boilers and phasing out existing ones, introducing an emissions pricing mechanism for agriculture – oops – and creating a Centre of Climate Action on Agricultural Emissions to improve the access to tools to help agriculture decarbonise. The climate change minister also has to set and notify the emissions budget for 2036 to 2040 by the end of December 2025. 

The National-led government has said it’s committed to meeting emissions reductions targets, and when the budget was released on May 30, a press release from climate change minister Simon Watts read: “New Zealand remains on track to meet our emissions reduction goals in Emission Reduction Plan period one.” In opposition at the time it was released, National said it was committed to the targets in the plan, but wanted more investment in “blue carbon” – ocean systems like mangroves storing carbon – and native forestry. “A lot of [the funding] is going to be spent on is subsidising big corporates who frankly can already afford it,” said National’s then climate spokesperson Scott Simpson. 

The coalition hasn’t reversed the previous government’s ban on new coal boilers and agriculture minister Todd McClay has announced $400 million to commercialise technology to reduce agricultural emissions. However, some of these other actions, including reversing public transport subsidies for many and removing the Clean Car Discount, have made the Emissions Reduction Plan look increasingly unrealistic. Despite Watts’ assertion above, even before the new coalition took power, the government was not on track to meet the plan, according to a paper taken to cabinet by then climate change minister James Shaw in July 2023. Then prime minister Chris Hipkins putting a raft of climate policies on the “policy bonfire” had already all but guaranteed that New Zealand would be more than one megatonne of carbon dioxide equivalents over the budget.  

By 2030

Speaking of Emissions Reductions Plans, the next one, describing New Zealand’s projected climate actions until 2030, is expected to be released for public consultation in the middle of this year – so, soon. This will lay out more detailed actions and targets. Agricultural emissions will be priced no later than 2030, according to comments prime minister Chris Luxon made at Fieldays last week – but this will be under an alternative scheme, not the ETS. At least the working group has the better part of a decade to think about it. 

In the meantime, other goals that New Zealand has signed up to might (or might not) give a sense of what will be in the plan. 

Under the Paris Agreement (signed in 2015), New Zealand is committed to reducing net emissions to 50% below gross 2005 levels by 2030 – this would count carbon offsetting like tree planting. Projections show that New Zealand could be as much as 81 megatonnes over the budget of 571 megatonnes from 2021 to 2030. A megatonne is one billion kilograms – roughly equivalent to burning 432 million litres of petrol. Our next Paris Agreement NDC (nationally determined contribution) plan will need to be set by 2025. 

At the Cop28 meeting in the UAE last year, New Zealand also committed to global goals to triple renewable energy capacity and double energy efficiency improvements by 2030. However, there haven’t been any specific legislative commitments about what New Zealand will do to fulfil this agreement. 

James shaw, a man with a green tie, dark suit, short grey-dark hair and a slight smile, stands in a Parliament corridor
Former climate change minister James Shaw was the driving force behind the Zero Carbon Act (Photo: Hagen Hopkins/Getty Images)

The Climate Change Response (Zero Carbon) Act, which passed into New Zealand law in 2019, also has stipulations for methane emissions particularly. Methane mostly comes from the agriculture industry, but is also generated by organic waste rotting in landfills, and creates more heating than carbon dioxide (although it doesn’t last as long in the atmosphere). The legislation specifies that New Zealand’s methane emissions need to reduce to 10% below 2017 levels by 2030. However, methane has only reduced marginally since 2019. 

By 2050

More ambitious than the 2030 methane target in the Zero Carbon Act is the 2050 goal of reducing New Zealand’s biogenic methane emissions by 24-47% below 2017 levels by 2050. Methane is split from other greenhouse gases because it produces 28 times as much heating as carbon dioxide over a century. Yes, 24-47% is a big range. 

Overall, however, the Zero Carbon Act mandates that New Zealand gets to net zero carbon dioxide and nitrous oxide emissions by 2050. This will require the Emissions Reduction Plans to get progressively more ambitious. Various mechanisms in the Emissions Trading Schemes are supposed to help, too – the cap on emissions traded will drop each year, and the floor price of “New Zealand Units”, which represent a metric tonne of carbon dioxide being absorbed by trees, will slowly increase each year. This will also require carbon-intensive industries, like New Zealand Steel and Fonterra, to decarbonise, which the government has been giving them millions of dollars to do – as well as deals that provide free carbon credits. The Climate Action Tracker rates New Zealand’s progress towards net zero emissions by 2050 as “poor”. We’ll have more of an idea of how we’re doing soon, with the Climate Change Commission’s first annual monitoring report, which assesses how we’re doing against our 2050 targets, due in the middle of this year.

Beyond 2050 

After 2050, the goals remain in place – emissions will need to be kept to net zero. In the 26 years until then, New Zealand will almost certainly gather more climate goals, but if the progress so far is anything to go by, whether we stick to them remains to be seen.

Keep going!