Agriculture in the New Zealand Emissions Trading Scheme
A Guide to Agriculture in the Emissions Trading Scheme
The Emissions Trading Scheme (ETS) is the price based mechanism for greenhouse gases and is a key part of overall climate change policy.
The ETS (Agriculture) includes greenhouse gases from pastoral agriculture, horticulture and arable production – methane from livestock emissions and nitrous oxide from animal urine and dung and synthetic fertiliser.
Participants can voluntarily report their emissions in 2011 and are required to report their emissions from 2012 though to 2014, but they are not required to pay for their emissions in these years. Agriculture fully enters the scheme in 2015.
Who is included and when?
Entry in the ETS
| Sector | Voluntary reporting of emissions | Mandatory reporting of emissions | Full obligations: payment for emissions |
|---|---|---|---|
| Forestry | 1 January 2008 | ||
| Transport fuels | 1 January 2010 | 1 July 2010 | |
| Electricity production | 1 January 2010 | 1 July 2010 | |
| Industrial processes | 1 January 2010 | 1 July 2010 | |
| Synthetic gases | 1 January 2011 | 1 January 2012 | 1 January 2013 |
| Waste | 1 January 2011 | 1 January 2012 | 1 January 2013 |
| Agriculture | 1 January 2011 | 1 January 2012 | 1 January 2015 |
Detailed information on forestry in the ETS is available at http://www.maf.govt.nz/sustainable-forestry/
Who has to participate in the ETS (the point of obligation)?
The Act sets the point of obligation for agriculture emissions at processor level. This means meat and dairy processors and fertiliser companies will be responsible for the emissions that occur on farms. The Act allows the Government the option of changing this to farm level sometime in the future.
The flowchart helps explain who is a participant in the Emissions Trading Scheme for agriculture
How will emissions be measured?
The method participants will use to determine their emissions for the ETS will be set out in regulations. The Government will be consulting on draft regulations in 2010.
What does this mean for the sectors?
The principle behind the ETS is that emitters of greenhouse gases must either reduce their emissions or purchase New Zealand Units (NZUs) to pay for those emissions. NZUs can also be earned through forestry plantings as they sequester carbon.
The scheme will be reviewed by an independent panel and this is likely to occur every five years. That review will look at a number of factors, including how New Zealand's trade competitors are addressing their emissions, what mitigation technologies are available, and assess whether the allocation path or other settings might need to be adjusted.
Allocation of emission units
Participants (ie. processors) will be eligible to receive an allocation of emissions units from the New Zealand Government from 2015 to help offset the cost of participation in the ETS.
The allocation will be provided on an output intensity basis. This means that a participant’s allocation will vary with output. The assistance level will be 90 per cent of the emissions baseline and will phase out at –1.3 per cent per annum from 2016. The baseline will be the industry average emissions per unit of output for a given year or years. The baseline is yet to be established and will be set in regulations, so it will be subject to a consultation process.
The allocation will be uncapped, meaning that there is no set limit on the number of units that may be allocated.
Mitigation and adaptation
A research and development programme is underway to identify technological solutions to agriculture emissions. This programme is supported by the Centre for Agricultural Greenhouse Gas Research and the Global Alliance on Agricultural greenhouse gas mitigation research. The phase-in period provides considerable time for research effort.
There are a few options available for landowners to mitigate the impact on their farms at present, including:
- planting forests/trees on farmland (creating carbon sinks);
- using fertiliser more efficiently, and using nitrification inhibitors;
- reducing the carbon intensity of outputs by improving productivity.
Contact for Enquiries
Sustainable Land Management and Climate Change
MAF
Pastoral House
25 The Terrace
PO Box 2526, Wellington
Tel: 0800 CLIMATE (254 628)
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