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Crucial carbon reduction recommendations due tomorrow

Monday 15th July 2019

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Crucial recommendations affecting the New Zealand farming and electricity sectors are due for release by the government's Interim Climate Change Committee tomorrow (Tuesday) in Wellington.

The ICCC recommendations will coincide with the final day for lodging submissions on the government's flagship climate change legislation, the Climate Change Response (Zero Carbon) Amendment Bill, which seeks to enshrine in law the country's commitment to net zero carbon emissions by 2050 and set up a permanent, independent Climate Change Commission.

About half of New Zealand's greenhouse gas emissions come from agricultural activity in the form of nitrous oxide and methane, meaning the inclusion of agricultural gases in the country's emissions trading scheme and associated climate change policy actions is vital to making progress towards commitments signed at the annual global climate change summit held in Paris in 2015.

BusinessDesk understands the ICCC will recommend a methane reduction target at the bottom end of the 24-to-47 percent range mooted in the Bill, and that a reduction of 10 percent should be sought by 2030.

That is expected to be accepted, if not welcomed, by dairy processors but not by dairy farmers and New Zealand's most prominent farm lobby, Federated Farmers.

Releasing its submission on the Bill today, promotional body NZ Beef & Lamb called on the government to adopt "science-based" targets for methane reduction, with 10 percent by 2050 the goal.

"If further reductions in methane are required, these should not exceed a further 12 percent net reduction by 2050," it said.

However, Dairy NZ says in its submission that 10 percent reduction by 2030 and a reduction of "up to 24 percent" in methane emissions by 2050, "regularly reviewed whilst the science remains unsettled". 

”The Government’s proposed 2050 target range of 24-to-47 percent is not soundly based in science in a New Zealand context and it is higher than official advice", while economic modelling used to inform the Bill "was also undercooked and did not include a robust analysis of the implications for dairy farmers", says Dairy NZ, which made a point of saying its position was supported by four of the largest dairy processing companies, Fonterra, Miraka, Synlait and Tatua.

“DairyNZ estimates that with an up to 50 percent cut in methane dairy farmers total profit could reduce by between 33 to 42 per cent across the 2030-to-2050 period. This is a substantial loss in income and is more than ten times higher than the cost of $2,500 per farm estimated in the Regulatory Impact Statement," Dairy NZ says.

The ICCC is also being asked to recommend on the government's goal of 100 percent renewable electricity by 2035 - a goal of 95 percent is widely perceived to be achievable but that 100 percent would be prohibitively expensive while not providing security of supply.

The committee is understood to be likely to recommend against the 100 percent goal, which was a key feature of the confidence and supply agreement between the Labour Party and its support partner, the Green Party, when forming the Labour-led government in 2017. The goal did not feature in Labour's formal coalition agreement with the New Zealand First party, which is more sympathetic to farmer and small business owners' claims.

Instead, the committee may recommend that energy policy concentrate on "accelerating electrification" of industrial heat processes and the transport fleet, arguing that the 100 percent renewable electricity goal risks both unnecessarily high power prices and less certainty of power supply in years where hydro lakes are low. Around 85 percent of New Zealand's electricity is currently produced from renewable hydro, wind and geothermal power stations, with a tiny but growing proportion supplied by solar power.

The remainder is generated using natural gas, and coal at one power station, with coal on a track to phase-out by 2025.

Once the zero carbon legislation is passed, it will allow the establishment of a permanent Climate Change Commission. The interim committee was formed largely to speed up assessment of the agricultural GHG and renewable electricity targets.


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