Cap and Trade is gas emissions solution
Who thinks about acid rain these days? My guess is not many of us, because the acid rain problem has largely been solved. But at one stage it was considered an even more urgent threat than climate change for those living under its cloud. How it was solved is instructive as we consider the widespread anger evoked by the government-level response to the He Waka Eke Noa report.
The issue of industrial air pollutants reacting with water and oxygen to form noxious sulphuric and nitric acid droplets was solved by imposing a Cap and Trade system on polluting industries.
What’s more, this solution came at a fraction of the fearsome cost originally envisaged, simply because the structure of the system encouraged tremendous market behavioural response and innovation.
Now, carbon emissions are agriculture’s acid rain — an urgent and addressable problem if the solution incentivises the right behaviour.
The response through He
Waka Eke Noa (HWEN), is based on the praiseworthy concept we are all in the same boat.
But the solution it proposes for agriculture’s contribution to national emissions, was effectively torpedoed by the Climate Change Commission’s proposed changes. They are changes which at first glance may appear mild, but they will add up to material and livelihood threatening costs for many in the sector.
The Emissions Trading Scheme (ETS), threatened as the alternative by the Government, is akin to a speeding ticket. It will do little to meaningfully modify behaviour and may only achieve its objective by driving farmers out of the industry, which will in itself cause harm to the country’s wellbeing.
Cap and Trade, as an alternative to both the ETS and to the HWEN proposals, has been staring us in the face since the days of acid rain. A Cap and Trade on carbon would see government set a sinking emissions cap. Farmers under it would get credits while farmers above the cap would have to buy credits from farmers who had them.
This is a particularly appealing solution because it promotes continuous virtuous behavioural change from farmers to actively farm in a way that captures carbon and reduces emissions.
Industry will have incentives to invest in technologies that reduce emissions that farmers will want to pay for if it generates credits for them or makes their farms more productive. Government, apart from its role in setting a sinking cap, can get out of the way.
On our own farms, for example, we have a massive programme of work underway to reduce our greenhouse gas emissions through soil management and carbon sequestration, using deep-rooted crops, low tillage, dung beetles, earthworms and other readily available farming techniques and trialling new ones.
We’re doing this work because we know soil can potentially hold three times more carbon than the atmosphere and plants combined, and we think a strongly proactive approach to preserving and sequestering additional carbon in our soils is potentially an important part of the answer to mitigating climate change.
We’re also retiring more land to native plantings to both sequester carbon and increase long-term biodiversity.
Incorporating natives on our farms has the dual benefit of aiding indigenous biodiversity
without locking up food producing land in exotic monoculture forests.
So we are disappointed to see the HWEN response has rejected the proposal to give credit for carbon sequestration undertaken on farms. And it has retained the right to re-price methane gas emissions every 1- 3 years.
This is akin to single entry accounting. Surely, we as a nation want to encourage behaviour that improves the land rather than just punishing and taxing those sectors which are, after all, irreplaceable contributors to
GDP.
To reject on-farm sequestration simply on the basis of the cost of measurement is to take a short term view. Satellite and drone technologies for example are advancing rapidly and such measurements will become much more viable.
Furthermore, to allow an uncertain methane pricing mechanism to be set at the whim of politicians undermines the long-term certainty that farmers need for planning.
We should remember that we have a three-year electoral cycle and policies can gyrate wildly. It will make it very difficult to inspire confidence in farm values or the next generation into farming.
There is also the possibility a fertiliser levy could be imposed at the processor level. Again, this works against the objective to promote behavioural change at the farm level, which can only come about if the calculations, levies and rewards are enacted at the farm level.
Half of our own 20 farms are already certified Carbonreduce™ by Toitū and we are having the balance of the farms audited. Meanwhile, Manaaki Whenua/ Landcare Research is setting a baseline for soil carbon on our farms.
This means we have a certified programme underway to accurately measure our carbon footprint and to allow us to pursue true carbon neutrality, rather than relying on the purchase of carbon credits as offsets.
As the science and soil measurement capability improves, these are things premium consumers are increasingly willing to pay for. They want to eat food produced by genuine climate change mitigation practices, not just through purchased offsets, and they are smart enough to discern the difference.
Fonterra recently gave a heads-up to its farmers that some of its bigger customers will soon demand compliance with ‘‘Scope 3’’ requirements that will force it to require its supplier farmer shareholders to reduce their greenhouse gasses.
Biodiversity loss is potentially a more urgent threat to life on this planet. If we are to successfully confront the climate crisis in the long term, we need to encourage native planting wherever it can be accommodated for the dual purpose of carbon sequestration and biodiversity promotion – even if there is a cost to be recognised in the short term and even if such planting sequesters carbon initially at a slower rate than exotic forests.
He Waka Eke Noa and the Emissions Trading Scheme should be replaced with a system that encourages and rewards sustainable, climate-resilient farming that promotes native ecosystems where possible and is properly focused on reducing greenhouse gas emissions. That system is Cap and Trade.
We applaud that HWEN was formed as a collective enterprise, bringing together all the players in this hugely important sector, to work out how pastoral farmers can help meet our commitment to the Paris Agreement on Climate Change.
Farmers can provide more than one ‘‘good’’. We don’t exist just to prop up GDP. Many of us are positive contributors to our environment too.
Pastoral farmers only get paid for the products we sell to processors. A Cap and Trade system would allow for double entry accounting. It would measure greenhouse gas emissions as a cost against revenue for other social goods provided, including carbon sequestration, ecological preservation and biodiversity promotion. Such a system would encourage farmers to reduce costs and increase goods provided – there will be farmers below the cap setting great examples, and a gently sinking cap to incentivise continuous and innovative improvements.
I know some people do not believe climate change is caused by human activity. Some even tell me a cooling age will dawn upon us as early as 2025. However, I have never met a New Zealand farmer who does not love the land that she or he farms.
Every farmer will be happy to be incentivised to improve the land for ecological preservation and biodiversity promotion. A properly designed Cap and Trade system will truly bring all farmers into the same waka regardless of their political views, or their views on climate change.
Just as farmers’ children today may wonder about the meaning of acid rain, I hope their children will be equally mystified by the way in which trying to solve the greenhouse gas emissions problem has aroused so much confrontation and division: when the right, non-confrontational answer was staring us in the face all along.