Fed Farmers on ETS

The Fed Farmers VP has an op ed in the Dom Post:

Today, we can ill afford to further weaken the economy unless we wish to replace recession with depression. Research by the New Zealand Institute of Economic Research shows that the ETS could lead to 22,000 job losses.

The Agriculture and Forestry Ministry says the ETS will progressively reduce farm profitability and viability by 61.6 per cent for the average dairy farm and 80.3 per cent for the average sheep and beef farm. That is an economic implosion.

All of this will be taken from a sector that has outperformed the rest of the economy for 25 of the past 27 years.

The ETS over-reaches itself by putting a price of carbon on all emissions, whereas Kyoto requires New Zealand to account only for emissions above 1990 levels. We don’t need an ETS to meet our Kyoto obligations.

For better or worse we are in Kyoto. But whether a carbon tax, an ETS or simply just paying our liability (if we even have one) is the best option is far from clear. And if we have an ETS, will we be the only country in the world to include agriculture?

Worse, the ETS takes us where no other country has gone and applies a price of carbon to emissions arising from food production. It also prevents productive land being used for farming if it has trees on it. Forests are best planted on marginal land unsuited to food production, so we need pragmatism not dogmatism.

Therefore, we must ask, where is the global upside if New Zealand artificially throttles back its agricultural production, allowing less efficient producers to fill the void?

And that is why any replacement to Kyoto, must include all emitting countries. Otherwise we will damage our economy and damage the environment more.

But before anyone accuses Federated Farmers of being reactionary, climate change is real. There is no doubt that 6.8 billion human beings affect the environment and humanity grows at the rate of 80 million new mouths each year.

So, if we abandon the ETS, what could be done to get New Zealand through to 2012 when the Kyoto protocol lapses?

Given carbon is cheap right now, the Government could purchase Kyoto emissions units to put in the bank, giving us the means to meet our liabilities through to 2012.

A low-level carbon charge could be introduced and set at a rate that recovers just enough revenue to account for any emissions deficit.

The Government could fund the planting of lots of trees to develop new forestry sinks and jobs. Instead of following the international pack, New Zealand could lead it by pushing for each country to allocate a percentage of GDP toward climate change initiatives.

It is interesting that even Australia has delayed its ETS by a year.

Denmark, one of Europe’s greenest countries, considered a tax on its farming sector in February but quickly realised what folly this was and excluded the primary production of food from its Kyoto response in March. Denmark correctly saw there was no point in sacrificing its farmers when less efficient countries would only produce more.

In Denmark, agriculture accounts for about 19 per cent of all exports; in New Zealand, it’s a jaw- dropping 64 per cent. So why should we care if New Zealand agricultural emissions actually increase? Our farmers generate enough food to feed at least 1 per cent of humanity but are continually chastised for the supposed 0.1 per cent of global emissions this generates.

He makes a strong case.