Agricultural Emissions: Farm plans and measuring emissions

Friday 21 February, 2020

This is the second article in our series of three relating to the proposed changes to the Emissions Trading Scheme. The first article (view it here) outlined the main changes; this article focuses on agricultural emissions.

Agricultural emissions are not due to come within the Emissions Trading Scheme (ETS) until 2025 in order to give the agricultural sector time to come up with an alternative way to measure and reduce agricultural emissions. Last year, the Government released a Supplementary Order Paper (SOP) for the Climate Change Response (Emissions Trading Reform) Amendment Bill to put timing and performance obligation around developing this alternative. 

The Alternative-Scheme Report

The Ministers for Agriculture and the Environment must prepare a report outlining a system to put a price on emissions from agricultural activities as an alternative to the emissions trading scheme. The report must be prepared and made publicly available by 31 December 2022.  Before preparing the report, the Ministers must ask the Climate Change Commission to advise what assistance, if any, should be given to participants in the scheme, and consider that advice.

The report must cover the following:

• how emissions from agricultural activities will be priced and accounted for;
• whether other activities would be included in the system;
• what methods will be used for calculating emissions and removals;
• whether any assistance will be given to participants:
• how methane emissions will be treated compared to other greenhouse gases, including whether, how, and what types of removals would be recognised;
• what information scheme participants would need to provide and how that information would be used, shared, or made publicly available;
• how participants and relevant industry groups would be engaged with in designing, implementing, and operating the system;
• who would be responsible for administering the system; and
• what legislative amendments are needed for the system to work.

The Progress Report

The Commission must report to the Ministers by 30 June 2022 on

• The progress that the primary sector has made towards meeting its new climate change obligations set out below;
• The progress that has been made towards livestock farmers being ready to start complying with reporting and surrender obligations; and
• Whether there are any barriers to livestock farmers being ready to start complying with those obligations; and
• What further steps (if any) are required by the primary sector or the Government for them to be ready to start complying with those obligations.

New primary sector climate change commitments: reporting requirements and farm plans

The SOP includes the following commitments for farms, which were put forward by industry groups. These commitments will be monitored and reported on by the Climate Change Commission:

• By 31 December 2021, 25% of New Zealand farms have a documented annual total of on-farm greenhouse gas emissions;
• By 31 December 2022, all New Zealand farms have a documented annual total of on-farm greenhouse gas emissions;
• By 1 January 2024, a farm level accounting and reporting system pilot will be completed across a range of farm types.
• By 1 January 2025, a system for farm-level accounting and reporting of 2024 agricultural greenhouse gas emissions at farm level will be in use by all farms.

Farm plans

As well as the above, the industry committed to all farms having a written plan in place to measure and manage their greenhouse gas emissions by 1 January 2025. Guidance will be provided to farmers on how to measure and manage greenhouse gas emissions through farm planning by 1 January 2021 and 25% of farms will have a written plan in place to measure and manage their greenhouse gas emissions by 1 January 2022.

The agricultural sector’s obligation to develop an alternative system to the ETS has been widely publicised, however, the SOP introduces significant reporting and monitoring goals in a short timeframe. We look forward to assisting the agricultural sector to move quickly to achieve these commitments and develop a workable scheme for agriculture, in order to avoid coming under the ETS by default in 2025.

If you have any questions, please get in touch with one of our experts below.