New Zealand Farm-Emissions Tax to Be Lowest Possible, Ardern Says

(Bloomberg) -- New Zealand will set levies on greenhouse gases from the nation’s farms at the lowest possible level so as not to overburden primary producers. 

“The most important thing is getting an emission reduction system set up that lasts,” Prime Minister Jacinda Ardern said in a statement Wednesday in Auckland. “We are working hard alongside the agriculture sector to strike the balance between building good levels of sector buy in, while also ensuring the system is robust and meets our emissions reductions goals.”

In October, the government indicated it would tax agricultural emissions at the farm level rather than including them in the emissions trading scheme. Farmers protested over the requirement to start paying a regulated price for their methane, carbon dioxide and nitrous oxide emissions, saying it would force many from their land, reducing the nation’s exports and hurting rural communities.

Today’s response follows a period of submission from the industry and represents a “workable system,” Ardern said. It includes a five-year pathway for levies from the commencement in 2025 to provide farmers certainty, and will also enable industry input into the levy setting process, she said. 

As announced in October, ministers will set the levies based on advice from the Climate Change Commission. But the government has agreed that a board with representatives from the agriculture sector and Māori will provide advice and act as an avenue for sector input.  

The government is also working with the sector to develop a process to recognize carbon sequestration from on-farm planting so it can be used as an offset to emission levies.

Ardern said the government’s shared goal with the industry is to support farmers to grow exports, reduce emissions and maintain the sector’s international competitive edge. 

“New Zealand needs to be at the front of the queue to stay competitive in a market that is increasingly demanding sustainably produced products,” she said.

Partners in the He Waka Eke Noa industry group, which include Beef+Lamb New Zealand, Dairy New Zealand and the Meat Industry Association, said the government is moving in the right direction but there is work to do on the details.

They welcomed a commitment to take social, cultural and economic impacts into account when setting the emission prices, as well as a commitment in principle to recognize all categories of sequestration, according to a statement. They said there is no support for an approach that drives emission reductions at any cost.

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