Climate chief rubbishes claims farmers must wait for new technology to reduce emissions

The country's chief independent climate adviser says it is not true to say farmers need to wait for new technology before they can lower their planet-heating emissions - and it is also not true reducing agricultural production here would increase global emissions.

Both arguments have been used to justify delaying charging farmers for their greenhouse gases.

The government describes its plan for shrinking the roughly half of New Zealand's emissions which come from agriculture as "technology first".

It is pinning its plan to meet climate targets in farming on new technology coming to market, such as a methane-cutting vaccines or powders, and says pricing farming gases now would only push production of exports such as milk solids into higher-emitting countries.

Speaking about the Climate Change Commission's first scrutiny report on New Zealand's climate progress, commission chairperson Rod Carr said neither belief was true.

"There are already known practices in agriculture that can reduce greenhouse gas emissions," Carr said.

"The idea that farmers have no tools and must wait for new things before they can reduce emissions is simply not true," he said.

"We know different feeding practices are associated with different emissions, we know different breeds - and breeds within breeds - are associated with different emissions."

Different land types and types of protein also changed the emissions profile, he said.

"There's a lot of variability.

"In some parts of New Zealand, there can be 18 kilograms of greenhouse gases per kilogram of milk solids and in others there can be 8 kilos.

"The differences [between herds] in New Zealand are much greater than the differences in average [emissions] between countries, which makes a lie of the claim that if we don't produce it, someone elsewhere will produce it with higher emissions. It's simply not true. Because if you displace New Zealand's higher-emitting herds with herds that have average emissions in another country, globally there are less emissions per kilo of milk protein."

Report not a scorecard on the current government, Carr says

New Zealand has a series of binding budgets for lowering greenhouse gases, which both major parties have committed to.

The end goal is getting to net zero carbon emissions and 24-47 percent lower methane emissions by 2050.

The report highlights agriculture and transport as the two areas with the highest risk of missing climate targets, unless further action is taken. The government is formulating an Emissions Reduction Plan, with a draft out for consultation.

Carr said the commission's progress report was not a scorecard on the current government, but an assessment of where New Zealand as a whole hasd got to with meeting its binding targets, ahead of the next plan.

There were some big positives, including a sustained drop in greenhouse gases from the whole country since 2019 and the fact that the current government had committed to meeting emissions budgets, he said.

The report also showed New Zealand had lowered emissions without affecting GDP, reinforcing evidence from overseas that cutting emissions was affordable as well as feasible, Carr said.

"Industry is responding, admittedly in some cases with incentives, in part in response to their own customers' expectations and in response to the changing price of low emissions technology," he said.

"We do know New Zealanders want to change, and in many cases their ability to change is a function of access to finance as well as the cost of living benefits from lower-emissions choices."

Carr said the fact a third of people rented their homes - and landlords had no incentive to invest in items like solar panels to make tenants' bills cheaper - remained a problem.

Cars and trucks 'not particularly responsive to emissions pricing'

The report noted the early indications that road transport emissions could be rising again after a temporary dip, which, if confirmed, would make transport the only sector where emissions were rising.

Although official figures for 2024 are not in, net emissions for the whole country might be up, partly because of those higher transport emissions.

Currently, the government's main policy for tackling transport emissions is having a price on carbon pollution under the Emissions Trading Scheme. This means petrol importers pay for the emissions of the fuel they import, as do coal importers and gas producers.

What's wrong with the Emissions Trading Scheme?

Since the election, the government has scrapped or weakened additional policies aimed at transport, such as the Clean Car Discount, tailpipe emissions standards, and encouraging more walking and cycling.

However, Carr said while drivers were responsive to big shifts in global oil prices, they were not very sensitive to the comparatively small extra cost on petrol from the Emissions Trading Scheme (ETS). The commission analysed emissions shifts in the first year of the current emissions budget as part of its report.

"We see that transport emissions are responsive to oil prices and policy choices, but not particularly responsive to emissions pricing," Carr said.

"In 2022, the high [global] oil price was one of the things that contained vehicle kilometres travelled in [petrol and diesel] cars," he said.

"There's also no doubt the feebate system brought forward the uptake of low emissions vehicles, and those vehicles are on the road and contributing to lower emissions, but the slow-down in newly imported low emissions vehicles [since then] means we're beginning to give back some of that [faster-than-expected] reduction.

"Maybe emissions were lower sooner than we expected but in the future they'll be higher for longer."

Will ETS solve it all?

Because the government caps how many tonnes of carbon dioxide can be auctioned every year under the ETS, some economists say there is no point doing anything else to try to combat emissions from sectors such as transport and energy.

They say the only area where extra policies make a difference is in agriculture, which is not under the ETS.

According to this view, carbon emissions from anything covered by the ETS will remain the same regardless of policies like the Clean Car Discount, because subsidies in one area meaning more people buy EVs, for example, only free up tonnes of pollutants for other emitters to buy more cheaply.

Carr said this "utopian" view that the carbon market would solve emissions did not work in New Zealand's market, at least not with the current design.

"They are wrong," he said. "They would be right if our ETS was a cap and trade scheme. It is not, and that's the fundamental error."

Carr said the ETS did not put a watertight cap on emissions, because of the unlimited ability to plant new forests to allow pollutants to rise, the "significant" free carbon allocations given to some of the country's biggest emitters, and political constraints on how high future governments were likely to let the carbon price rise. Carbon prices can affect power bills, food and other costs.

"There are multiple ways in which the scheme does not cap emissions in any year, or even any one budget period," Carr said.

"If you're going to rely on a cap and trade system and a market determined price ... you have to be prepared to have a price significantly higher than the marginal cost of planting a tree.

"If you truly capped emission in any budget period, the price might not be socially acceptable."

He said overseas markets which had carbon prices high enough to drive emissions cuts without help from other policies also used "targeted social assistance" to reduce the financial burden on households.

Deforestation figures are the missing piece

The commission's report raised questions about whether the country's first emissions budget, from 2022-2025, was on solid ground.

The government said projections show it would be met, but the commission's independent assessment concluded it might be in danger because of uncertainty in areas including deforestation, transport emissions and the risk of electricity emissions rising if the country experiences a dry year (which would dent hydro power, boosting the need to burn coal and gas).

Climate Change Minister Simon Watts responded to the commission's report on Tuesday, saying projections in the government's draft Emissions Reduction Plan "show that we can both deliver our first and second emissions budgets and grow the economy by using a least-cost approach to climate change".

"We acknowledge the commission has used the data available to them. Their findings are three months behind the government's policy work and recent announcements including the release of the draft Emissions Reduction Plan," he said.

Carr said there was an "element of truth" in saying the government's figures were more recent than the commission's, which assessed the impact of policies up until 1 April.

"But we want to be a bit careful. The most recent data is not always the most robust," Carr said. That was shown by Stats NZ sometimes correcting its faster-turnaround estimates, he said.

Carr said the commission was required by Parliament to use the most robust data, which meant using the national inventory of greenhouse gas emissions, which was last updated in December 2022. However, it had also used more recent information.

Carr said the big missing piece of data was about forestry - and the government also did not have access to that.

"The government has received some more data (than the commission), but one of the biggest pieces of data neither of us have that could change things is deforestation, so how many trees have been chopped down and are likely to be chopped down in the first emissions budget period. The government can't control that, the commission doesn't know what it is, but there will be a number coming out later this year."

The report urged the government to go further to make sure it would meet the budgets, if this kind of data did not go its way.

"You've got to build uncertainty into your plan, because there are some things you don't control," Carr said.

"For example, Tiwai Point choosing to stay open increased emissions from aluminum smelting, and Marsden point oil refinery closing reduced emissions."

"In the following decade, there will be other changes that are unforeseeable, so you really need to account for uncertain," he said.

The commission's report found in 2022 - the last year for which robust greenhouse gas figures are available - emissions fell 3.4 million tonnes, and 3.2 million tonnes of that - 94 percent - was for reasons beyond the control of any government.

"They were things like it rained so we made lots of hydro electricity," Carr said.

"The oil price, which we don't control, was high so New Zealanders were constrained in how many kilometres they drove their ... high-emitting cars," he said.

"Fertiliser prices were extremely high so that limited the appetite of New Zealand farmers to buy and spread nitrogen fertilisers.

"If you genuinely want a high confidence you're going to achieve your emission budgets this decade, you need to cope with that uncertainty, and that means leaving some room for error.

"Error in measurement, and for the uncertainty of things you can't control."