Friday, July 22, 2022

Kiwis to tax cattle methane emissions

A proposal for pricing greenhouse gas emissions from dairy and sheep farms would cost the typical New Zealand farm about $15,000 per year.

The proposal has a combination of levies and discounts, but has yet to be passed into law.

The calculation for a 330-hectare dairy operation assumed the farm would emit 2,600 kg per hectare per year of methane, priced at 88 cents per kg. This 780,000kg emission would cost the farm more than $60,000 in levies.

The farm would emit 910kg/hectare in carbon dioxide equivalent per year of nitrous oxide, and 965kg of carbon dioxide. These would be priced at $3.38 per tonne. The farm’s total 662.5 tonnes per year emissions of these gases would cost it $10,600 in emissions.

The proposed livestock emissions levy includes an incentive discount for approved emission reduction actions and technologies. For example, if the 330-hectare dairy farm switched its breeding policy to methane-reducing genetics (expected to cost $11.94 per AI straw over and above currently used AI straws), it would get credit for a 20 per cent reduction in methane from the cows. That would cut the levy payment by about $23.000.

Sequestration on the farm would also reduce the levy. If it had 20 hectares of productive forestry, this would sequester 20 tonnes of carbon dioxide equivalent per year per hectare. And 10 hectares of riverside native plantations would sequester seven tons per year per hectare. 

So the levy cost to the farmer works out at $14,888, according to this example, which was prepared by US Department of Agriculture experts, using a modelling approach of Beef + Lamb New Zealand Ltd., the farmer-owned organisation representing New Zealand’s sheep and beef farmers.

In 2019, New Zealand was one of the first countries to bind its climate commitments into law, including objectives for agriculture.

And the country is on the way to becoming the first country to tax “four-legged” emissions, following the recommendations on an alternative agricultural emissions solution (to the country’s Emissions Trading Scheme), which was put forward recently by the New Zealand Primary Sector Climate Action Partnership.

Leading the way on climate action, and with New Zealand having seven times more cows and sheep than people and an average of 153 hectares per dairy farm, their climate change policy may well be adapted and used by other countries with relatively big agricultural sectors, such as Ireland.

The collaboration between the government and the agriculture sector recommended the government “introduce a farm-level split-gas levy on agricultural emissions with built-in incentives to reduce emissions and sequester carbon.”

The split-gas levy would separate charges directed at farmers for short-lived gas emissions such as methane (CH4) and long-lived gases such as nitrous oxide (N20) and carbon dioxide (CO2). Climate scientists say such policies are needed urgently worldwide because reducing short-lived greenhouse gases like methane is the best hope for a fast reduction of global warming.

Carbon dioxide is the main greenhouse gas that causes human-induced warming, but even aggressive reductions of carbon dioxide emissions would have no effect on warming until about 2040. In contrast, measures to reduce methane emissions now could bring global cooling results within 10 years or so.

Reducing methane emissions sharply now could give the world a fighting chance to deal with the carbon dioxide problem over the coming decades, the Kiwis say.

The final decision on the recommendations in New Zealand will be made by the country’s government, probably in December.