Government report on progress towards pricing agricultural emissions

21 December 2022

The Government has released its report on progress towards pricing agricultural emissions. This comes after public consultation on a draft plan, developed by the Government after considering advice from the Commission and the He Waka Eke Noa partnership. 

The report can be found: https://environment.govt.nz/pricing-agricultural-emissions-report-under-section-215-of-the-climate-change-response-act-2002/

We have been clear that having a system to price agricultural emissions is what’s important. Our advice earlier this year recommended that it was better to get a basic system for pricing emissions at the farm-level in place, rather than waiting for the perfect system to be developed.  

Having a system in place will provide a critical foundation, which would then need to be rapidly developed into a more responsive and effective policy to support the sector’s strategic transition to lower-emissions and climate-resilient production. 

The Government’s proposed system should come into effect by the deadline set by Parliament: 1 January 2025.  

The Government’s proposed plan is another step towards pricing agricultural emissions, but emissions pricing systems alone are not enough to take us to a low emissions future. Targeted policies that complement these schemes will be critical to secure equitable outcomes, overcome barriers to change that are not about price, and to coordinate research and investment. 

The Government’s proposed plan includes an explicit role for the Commission in providing advice on price setting. We look forward to discussing the implications of this with the Minister, and we will work with those in the sector and others as we develop our advice. 

Part of the Commission’s remit is to monitor the Government’s progress on taking action on climate change. We will report in 2024 (and every year after) on how effective Government policies and emissions pricing systems are towards meeting Aotearoa New Zealand’s emissions targets. This reporting will provide more transparency for businesses, communities and Iwi/Māori about the progress being made towards a climate resilient, low emissions Aotearoa. 

The Commission’s role to date 

Directed by the Climate Change Response Act, the Commission provided two pieces of independent, evidence-based advice in 2022, about financial assistance and sector readiness, to help the Government to make its decisions on pricing agricultural emissions. Our remit did not include providing advice on what an agricultural emissions pricing scheme should look like. 

• Agricultural assistance – what financial assistance, if any, should be provided to farmers participating in an emissions pricing scheme
• Agricultural Progress Assessment – assessing farmers’ readiness for a farm-level system for pricing agricultural emissions

In our 2021 advice Ināia Tonu Nei, we highlighted the need to prioritise emissions reductions, and made several recommendations relevant to agriculture, relating to removing barriers to change and investing in unlocking innovation. This included: 

• Increased support for systems and infrastructure for alternative, lower emissions land uses
• Government investment in research and development to deliver new technologies that would enable bigger emissions reductions
• That the Government prioritise work on developing methods to account for carbon sequestration in vegetation on farms and other land that are not yet included in the country's domestic or international target accounting.

We also highlighted (and continue to highlight) the importance of upholding Te Titiri o Waitangi/Treaty of Waitangi and avoiding compounding historical grievances and further disadvantaging Iwi/Māori through climate policy.