Good reason to be nervous about the ETS
As consultation by He Waka Eke Noa (HWEN, the primary sector climate action partnership) has rounded up, farmers are nervous, confused and angry about what the future for managing agricultural emissions in New Zealand might look like.
The fast pace of law-making in recent years is unsettling, the rural community and a range of sectors, including participants in New Zealand’s Emissions Trading Scheme.
Farmers are grappling with HWEN’s two options for managing agricultural emissions – an on-farm levy or a processor levy. But the alternative of a blanket inclusion of agriculture in the ETS – the option if HWENcannot convince the Government to adopt its suggested approach – is particularly frightening.
The ETS isn’t working well, particularly for foresters. Adding complexity and workload for officials by including agriculture would be a disaster.
There are already huge delays in every part of the process, such as the time it takes for the administrator, Te Uru Rākau (the New Zealand Forestry Service), to deal with registrations, emissions returns and amendments to returns.
New Zealand has had the ETS for 13 years, yet many of the rules surrounding forestry remain untested and the recent reforms have done little to clarify problem areas.
If agriculture was to enter the ETS, farmers are worried that the carbon price could be inflated by institutional investors wanting a slice of the action. The result of this is that even substantial improvements made on farms to reduce emissions may not benefit those farmers if the carbon price keeps climbing.
Farmers feel like the goal posts are constantly shifting and as they deal with the day-to-day running of their businesses, unravelling what a range of new regulations will mean for them is an overwhelming prospect they pay for on two fronts.
They pay to become compliant with whatever the eventual outcome is, and the complexity of the regulatory framework means they’ll pay for advice to navigate its many ambiguities. These costs are significant.
The anomalies within the ETS have been destructive. We have seen clients make simple administrative errors, like doing something out of order. The regulator can see that there are no environmental consequences of the error but believe the rules leave no room for discretion. Others have planted an ‘‘offsetting forest’’ before the offsetting application has been approved. The planting is deemed ineligible as offsetting forest land because the offsetting trees are already in the ground.
In another case a large area of offsetting planting was not accepted because a tiny area (around 1.5ha) was not planted by the contractor because of power lines.
Practitioners have also discovered that once filed, a voluntary emissions return can’t be amended or corrected, only Te Uru Rākau can do that.
A participant realised they’d made a mistake moments after submitting their return and tried to withdraw it. They were not allowed to do so, and they were fined tens of thousands of dollars for filing an incorrect return.
Forestry consultants and lawyers have battled to have cutover land, or land that is unstocked but earmarked for forestry, recognised as forest land, based on the plain words in the Climate Change Response Act.
They have also been bogged down with paperwork trying to transfer participation in the scheme following death or change of a land-owning trustee.
Te Uru Rākau seems to be struggling to appropriately resource for their substantial workload, and with steady competition from the private sector, experienced staff are hard to retain. Participants still regularly experience delays of more than 18 months to have their matters progressed.
Recent moves like proposing further amendments to overseas investment criteria for forestry and seeking consultation around excluding permanent planting of exotic forests from the ETS are further evidence of the ‘‘legislate first, consider consequences later’’ approach we seem to be taking. It’s no wonder farmers are nervous, confused, and angry.