New Zealand Government proposes tax on belching cattle and sheep

New Zealand is on track to become the first country in the world to tax farmers for emissions caused by belching cattle and sheep. The government proposal, drafted in consultation with farming groups, aims to tackle one of the nation’s biggest sources of greenhouse gases. If approved it would be implemented by 2025, with a final decision set to be handed down this December. NZ Climate Change Minister James Shaw told Reuters: “There is no question we need to cut the amount of methane we are putting into the atmosphere, and an effective pricing system for agriculture will play a key part in how we achieve that.” The proposal includes incentives for farmers who reduce emissions from their animals using feed additives, while revenue would be invested in research and development services for the agricultural industry. On-farm forestry could also be used to offset emissions under the scheme. NZ is home to about 10 million cattle and 26 million sheep, with nearly half of its total greenhouse gases emitted from farming in the form of methane. However, those sources were not included in the country’s emissions trading scheme. Meat industry bodies were keen to keep it that way, with Beef and Lamb NZ and the NZ Meat Industry Association issuing a joint statement calling for a farm-level levy system that had been agreed to by all partners. “The proposal, while not perfect, is significantly better than agriculture entering the ETS and gives farmers influence over their future,” the statement said. “Farmer feedback was critical in refining the recommendations and the system can be further refined and improved over time as science evolves.” It is up to the New Zealand Government to decide whether to accept the recommendations. “We know there is a lot of concern about this process among farmers,” the statement says. “While we strongly support the recommended farm-level levy approach and believe it is better than the ETS, what is crucial is the prices that are applied under it.” While those prices have yet to be decided, BLNZ has released its own modelling on the implications of the recommendations based on more than 400 farms. BLNZ said the modelling reinforced the need to take a “cautious approach on the prices applied to agricultural emissions”. Under the industry-recommended levy system, farmers would calculate their methane and nitrous oxide emissions based on what they were doing on-farm, rather than national averages. Unique prices would be set for both gases, which would have their own targets and progress, in a bid to “delink” them from the fossil fuel-driven ETS carbon price. BLNZ chief executive Sam McIvor said he had received many queries from farmers about how to translate the recommendations into potential on-farm costs. “The partnership recommendation is that the prices are kept as low as possible to achieve the desired outcomes and that they should be no higher than if agriculture had gone into the ETS,” he said. “To provide some certainty, the partnership has also recommended the methane price start in 2025 at a maximum of 11¢/kg and be held for three years.” Industry has also called for the the development of a calculator farmers can use to calculate their emissions, sequestration and incentives.