The Government never told Dairy NZ in advance that it would spend $339 million over the next four years on research to reduce dairy cow greenhouse gas emissions.
Nor, as far as Dairy NZ CEO Tim Mackle can tell, is the money contingent on agriculture agreeing to pay for its emissions under the scheme developed by the He Waka Heke Noa partnership of 13 agricultural organisations.
The partnership is due to report to the Government on June 2 on whether it has enough support from farmers to go ahead.
Its proposals have been opposed by Groundswell, who say farmers should pay nothing and instead, the levies they pay industry organisations like DairyNZ should be used to fund research.
But though the Government has not suggested any quid pro quo, yesterday’s research funding announcement will be a powerful incentive for the partnership to agree on a funding formula when it has a key meeting later this week.
The announcement was one of the few tangible new measures announced in yesterday’s Emissions Reduction Plan, a 343-page outline of how New Zealand will meet the Greenhouse Gas Emission Reduction targets announced by the Climate Change Minister a week ago.
Yesterday’s document says it contains “strategies, plans and actions” for achieving our first emissions budget.
But it contains more strategies and plans than actions.
Perhaps more importantly, it does not meet the Nationally Determined Contribution that the Government pledged to make at the Glasgow Climate Change conference last year, which would require New Zealand’s contribution to reduce the increase in global warming by 2050 to 1.5 degrees to be three times bigger than what was announced yesterday.
However, Climate Change Minister, James Shaw, has never made any secret of his desire that we go further domestically.
“What we have said as a country is that we have undertaken responsibility for approximately 150 million tonnes worth of reductions over the course of the next ten years, of which the Climate Change Commission thinks we can get about 50 from our domestic economy,” he said yesterday.
“Now Cabinet, when we signed off on the change to our nationally determined contribution, did say the highest priority must be on the domestic transition.
“So whilst this plan lays out what we intend to do to meet the emissions budgets the Commission thinks we’re able to do in the domestic economy over the course of the next decade, we will be looking for opportunities to go further than that in order to make up more of that commitment towards our nationally determined contributions by 2030 in the domestic economy.”
What the country cannot do domestically will be covered by the purchase of offshore carbon credits; a process that could cost billions of dollars out to 2050.
The problem is that, unlike many countries that have substantial emissions coming from their electricity generating sector, New Zealand’s emissions come from three hard to reduce sectors, agriculture, energy and industry and transport.
The Climate Change Commission said that for New Zealand to reach its first biogenic methane target of a reduction of 10 per cent on 2017 levels by 2030, it would have to include reductions in cow numbers.
Even more would be required to meet the 24 – 47 per cent reduction proposed by 2050.
But yesterday’s announcement makes no reference to reducing cow numbers, a move that drew a scathing response from Greenpeace.
Their lead agriculture campaigner Christine Rose said: “Intensive dairying is the number one cause of climate pollution in Aotearoa, so it’s absolutely staggering to see that the Emissions Reduction Plan fails to include a policy that would reduce cow numbers or phase out synthetic nitrogen fertiliser which drives emissions.”
Instead, the Government has listened to the sector, which is confident it can make sufficient technological advances to reduce its methane output without reducing livestock numbers.
But Dairy NZ said not only did the New Zealand Government want methane reductions but also the dairy industry’s customers.
“The government have come to the party on R&D that will support us with He Waka Heke Noa to help us meet our customers’ demands to meet their emissions reductions goals, many of whom are seeking to do zero carbon by 2050 for their consumers,” said mackle.
“So it’s a really positive move.”
Agriculture makes up half of all New Zealand’s gross Greenhouse Gas (GHG) emissions; the energy and industrial s3ector, 27 per cent and then transport makes up 17 per cent.
There are only around 11,000 dairy herds in New Zealand but 4.4 million motor vehicles. Three quarters are so-called “light motor vehicles” or cars. The owners of those cars constitute a formidable political constituency.
So the Plan has four targets:
- Reduce total kilometres travelled by the light fleet by 20 per cent by 2035 through improved urban form and providing better travel options, particularly in our largest cities.
- Increase zero-emissions vehicles to 30 per cent of the light fleet by 2035.
- Reduce emissions from freight transport5 by 35 per cent by 2035.
- Reduce the emissions intensity of transport fuel by 10 per cent by 2035.
The big moves proposed here include a $569 million “clean Car Upgrade”; a means-tested scrap and replace scheme which will provide subsidies to lower and middle-income households to shift to low emissions cars after scrapping their old ones.
There will be $350 million to “improve urban form” through things like cycleways and also to improve public transport.
There will be $20 million for a vehicle social leasing scheme using low emission vehicles for low-income people.
Dealing with emissions from industry and energy essentially means removing coal-fired boilers, which the Plan budgets $600 million for to replace the boilers with other energy sources.
All that is predictable, but perhaps surprisingly, the Plan has not picked up a Climate Change Commission recommendation to end new LPG connections by 2025.
“We certainly have talked to a number of people and listened,” said Energy Resources Minister Megan Woods.
“They said what we need to do is to fold that work into the gas transition plan.
“There can be a future for that infrastructure using renewable gases.”
The gas industry lobby group, GasNZ, were delighted.
“We already have the luxury of gas infrastructure – a network of pipelines, connections and appliance infrastructure already in place – let’s use that infrastructure for a renewable gas industry, for biogas, hydrogen gas and renewable LPG,” said their CEO, Janet Carson.
But it is hydrogen that is central to Woods’ thinking.
She has always said that the future of the Tiwai Point aluminium smelter was central to any hydrogen strategy. If it closed, the power could be used to hydrolyse water to make hydrogen.
Climate Change Minister James Shaw said a potential Tiwai Point closure in 2024 had not been factored into the emissions reduction budgets, but he said it emitted about two million tonnes of GHGs a year.
However, Woods made it clear the Government was having a side bet that would assist with consenting for the Meridian-Contact alternative proposal for green hydrogen from Southland offshore windfarms.
Backing all this up is a continuing emphasis on forestry offsets though the emphasis will now go on indigenous forest.
And the cash for most of the proposals unveiled yesterday will come from the Emissions Trading Scheme. But this is undergoing review, and Shaw indicated that its settings could be changed through mechanisms such as setting floor and ceiling prices or by changing the number of units on issue to prevent distortions from coming into the system.
But the Minister might contentedly reflect that they have managed to produce an emissions reduction plan which has made the farmers happy. Who would have thought!