By Federated Farmers President Andrew Hoggard and Beef + Lamb NZ Chair Andrew Morrison
Beef + Lamb New Zealand (B+LNZ) and Federated Farmers cannot understand why the Government is backflipping on making a decision on proposals to prevent exotic forests from registering in the permanent forest category of the NZ Emissions Trading Scheme (ETS) by 2023, a measure that was intended to address the issue of planting for carbon farming only (with no intention of harvesting).
The proposals to amend the ETS were not going to solve the problem of out-of-control, whole-farm conversions to carbon forestry but B+LNZ and Federated Farmers believe they were a step in the right direction and welcomed the Government finally promising to offer long-term clarity by a set date.
In their March discussion document, the Government finally acknowledged it needed to slow down carbon farming. While our two organisations think the measures they’ve proposed to date are just tinkering around the edges, at least there were some proposals on the table and at least our farmers would have known more by the year’s end.
Feds and B+LNZ acknowledge that unpicking the web of blanket forestry incentives demands complex analysis, and that the implications for Māori landowners require particular attention, but we both supported the Government’s proposed option of putting in place a moratorium while the details were worked out. Instead, the Government has decided to do nothing, rolling out the red carpet for speculators interested in fence-to-fence monocultural pine conversions across New Zealand.
On July 28 Ministers Nash and Shaw sent a letter essentially advising submitters that it has kicked the critical carbon-only forestry issue to touch, informing stakeholders that it won’t be sticking to its 2023 deadline.
This letter came just one day after the Climate Change Commission released advice calling for an increased carbon price ceiling ($171 by 2023) and for the Government to do something to dull incentives for blanket forestry offsets. This Commission’s advice report is clear and states:
“The current structure of the NZ ETS steers toward a pathway that would achieve the 2050 target primarily through exotic afforestation, with little reduction in gross emissions beyond business as usual. Such a pathway would require high ongoing levels of new planting to maintain net zero emissions, and push the work of decarbonising onto future generations. It would also leave us out of step with much of the world.”
The Commission’s advice aligns with what our farmers are seeing in their communities, and with analysis by B+LNZ’s Economic Service. This analysis demonstrates the escalating carbon price means that all forestry in the ETS is now effectively carbon forestry, with profit being primarily driven by carbon units and not timber. This is illustrated in the two graphics below; one graphic assumes $75 carbon (which is close to the current price) and the other assumes a $171 carbon price advised by the Commission.
It seems that the Government is ignoring the advice from the very Commission that it established only a couple of years ago. The carbon price has already jumped on the back of the Government’s decision to not make a decision on forestry and the ETS.
Political dithering is sending a signal to speculators that, in an attempt to meet a self-imposed target, the Government will continue incentivising blanket pine conversions. Frustratingly, New Zealand’s emissions reduction task is being made even more difficult because of another baffling decision by the Government – the decision to not follow the science and set split gas international targets last year.
Under current settings, a rising carbon price will have catastrophic consequences for the red meat sector. The increasing price of carbon credits is already distorting what land is worth and this will only get worse unless change is made. Current forestry incentives are socially, economically and environmentally hollowing out rural communities and the red meat sector’s $12 billion income per year and more than 90,000 jobs for New Zealand is at risk.
The solution is clear. One, we urgently need limits on the number of forestry offsets available in the ETS to fossil fuel emitters, in line with what happens in other countries. This has been recommended by the Commission and urgency is needed.
Two, while the ETS is the main artificial incentive driving blanket pine afforestation, it is not alone, with policies such as the Special Forestry Test and carve-outs under the RMA giving blanket afforestation a significant leg up over other land uses. These distorting incentives need to be removed.
In February a Green Paper by former Hastings Mayor and MP Lawrence Yule (which was funded by B+LNZ along with Local Government New Zealand and 16 individual councils) was released, outlining a range of policy areas for urgent investigation to address this issue. And in March the Federated Farmers National Council proactively provided eight solutions needed to restore balance. We again encourage Ministers and the Government to revisit these ideas.
And three, the Government also needs to step back and rethink its current haphazard approach to emissions targets. It followed best scientific practice when it set split gas targets in the 2019 Zero Carbon Act, but then has bizarrely not set split gas targets internationally.
As both Federated Farmers and B+LNZ warned years ago, the Government is setting itself up to fail and is setting all New Zealanders up for unnecessary price spikes by choosing to set international emissions reduction targets that lump all gases together. New Zealand needs science-based international targets – that means taking a split gas approach, as outlined in the latest IPCC assessment report, and as done in the Zero Carbon Act.
New Zealand wouldn’t even be the first to do so. Uruguay has a split gas international target and as the name suggests (Nationally Determined Contribution) each nation is free to determine its own contribution towards the global effort to fight climate change.
The NZ Government should show international leadership and choose a science-based split gas international target. The Government should also show domestic leadership and place a limit on the amount of forestry offsetting polluters can carry out, as advised by the very Commission it established. Our farmers fear that currently, the only plan by the Government to meet its ‘all gas’ targets is to blanket plant out communities with fence-to-fence monocultural pines.
This isn’t about being ‘anti forestry’. Trees absolutely have a place in addressing climate change, but we need to take a more considered approach – an approach that integrates trees on farms instead of the wholesale conversion the Government is currently enabling.