The madness of Tim Groser

By   /   June 26, 2013  /   8 Comments

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The irony here is that New Zealand’s farmers are amongst the most efficient and adaptable in the world, and have already made great strides in reducing emissions per unit of output, as Groser pointed out in his speech. To believe that they can’t cope with a carbon constrained future and need to be featherbedded while the rest of the economy pays their bills is to treat them with contempt.

tim-groser

Climate change minister Tim Groser describes pricing agricultural carbon emissions as “utter environmental and economic madness”. The madness is his.

At the recent National Agricultural Fieldays, climate change and trade minister Tim Groser defended NZ agriculture’s exclusion from the emission trading scheme, calling any attempt to price agricultural emissions “utter environmental and economic madness”. No doubt this went down well with his audience, but it’s just another example of how out of touch with reality — and economic sanity — Groser and his cabinet colleagues have become. Here’s why.

First, some context. Agricultural greenhouse gas emissions are the biggest single sector in New Zealand’s emissions profile, making up 47% of the total. That’s unusual in international terms. The European Union’s agricultural sector, for instance, only accounts for 10% of their emissions. That disparity means that how agricultural emissions are treated has very important implications for the NZ economy.

Let’s assume for the sake of argument that at some point in the next few years the international community are going to agree on a programme of emissions reductions, a successor to the Kyoto Protocol. New Zealand will, I presume, be a good global citizen and play its part, committing to a substantial cut in emissions in coming decades. Our emissions trading scheme will play its part by placing a cost on the half of national emissions it covers. All well and good. What about the other half?

If NZ has committed to emissions cuts but excludes agriculture from the accounting, then the rest of the economy will have to make all of the emissions reductions required. This amounts to a huge, and almost certainly very expensive, economic distortion. Transport fuel and energy prices would have to rise far more than they would if agriculture were playing its part. In effect it would be a significant transfer of wealth from the rest of the economy to the agricultural sector.

That’s bad enough, but one of the key principles of putting a price on greenhouse gases is to send an economic signal — to encourage investment in emissions reductions, or to encourage businesses to adopt lower emissions pathways. In agricultural terms, this might mean slowing down or stopping the expansion of the high emissions dairy sector, shifting investment into other high value sectors that don’t carry the same carbon penalty. Without carbon pricing, the agriculture sector can continue to expand in high emissions activities, locking not just agriculture but the whole country into a higher emissions pathway, costing everyone more money in the long run.

Choosing a higher emissions pathway also increases NZ’s vulnerability to climate change. Pastoral agriculture is responsible for most emissions from the sector, and is the most vulnerable to drought. During last summer’s drought, pastoral farm incomes dropped and GDP took a substantial hit, while the nation’s grape growers basked in the sunshine and harvested a record crop in terms of both quality and quantity. If we expect droughts to become more common in future — and we do — then would it not be a good national strategy to nudge farmers away from drought-exposed crops to those that are much more resilient?

Farmers argue, of course, that if they have to pay carbon costs while their competitors in other markets do not, then they will lose business. That would be true if the carbon cost they had to bear was large, but that need not be the case. The ETS is designed to allow existing emissions to be “grandfathered” — effectively free — while new sources of emissions carry a cost. What’s important is that the price signal operates at the point where decisions on investment or best practice are made.

Nor is it fair to assume that farmers overseas are not already facing costs. In the EU, for instance, where agricultural emissions are not directly priced, emissions have nevertheless been falling. The biggest contribution to that reduction came from the introduction of a “Nitrates Directive”, a set of regulations designed to reduce and prevent water pollution by nitrates from agricultural use.

So where’s the economic and environmental madness here? With a government and climate change minister whose policies lock the country into a high emissions pathway, one that will impose high costs on the economy and make it more vulnerable to future climate changes? Or with those who advocate that agriculture play its fair part in dealing with the problem that’s going to shape all our futures?

The irony here is that New Zealand’s farmers are amongst the most efficient and adaptable in the world, and have already made great strides in reducing emissions per unit of output, as Groser pointed out in his speech. To believe that they can’t cope with a carbon constrained future and need to be featherbedded while the rest of the economy pays their bills is to treat them with contempt. If NZ’s agricultural future depends on innovation, as Groser told his Fieldays audience, then that innovation needs to be deployed in meeting the challenges of climate change and emissions reductions.

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8 Comments

  1. […] scheme would be “utter environmental and economic madness”. At The Daily Blog today, I explain why Groser is talking utter nonsense, and agriculture needs to be included in the ETS as soon as […]

  2. Tom Bennion says:

    So Grosser, master of the universe, international negotiations guru, trashes our international climate position, drives innovation out of our agriculture sector, makes this speech just as Obama gets v serious on climate change. Along with China. How much are we paying him again?

  3. Robert Atack says:

    I know you know this Gareth.
    We are locked into 400 ppm minimum for the foreseeable future, the last time the earth was at 400ppm it was 6 degrees warmer than pre industrial and the oceans where 23 meters higher, with no ice, the only reason we haven’t fried yet is because the ice and deep water temperatures haven’t caught up with 400ppm .
    It doesn’t matter what we do from now on, humans have done so much damage to the environment, another 20 years or so of human existence, and the inevitable nuclear ‘holocaust’ will leave the planet reasonably fucked for at least the next 10 million years…… then as Jay Hanson says, the ‘superior’ species will crawl out of a cave, and vote the biggest liar as there leader.
    So it wouldn’t matter if NZ sunk beneath the ocean tonight, or we discovered another Ghawar under Taupo, or we trebled our farting cows, we are fucked.

  4. LittleToe says:

    Obama: ” The problem with all these tired excuses for inaction is that it’s a — (inaudible) — a fundamental lack of faith in American business and American ingenuity. (Applause.)”

    Tim and Co. are determined to sell NZ out.

    Once the US and China start moving to stamp on GHGs, blockaded NZ meat rotting on the wharfs will look relatively inconsequential.

  5. Mike Johnson says:

    Thanks for this, Gareth. I’ve always thought it a sad irony that those most affected by climate change – our farmers – are the least able to accept the reality of it. While I appreciate the logic behind ETS in terms of sending market signals, I’m not sure we can claim that, globally, they have been a great success in bringing down GHG emissions, although I stand to be corrected on that.

    The ‘nitrates directive’ is an interesting way forward, however. Something like that is much needed to protect the snapper breeding ground in the Kaipara Harbour, and the positive knock-on effect of helping with emissions doubles the benefit.

    The fundamental issue behind this is our monocultural factory farming methods. This has given rise to a mindset among farmers that acknowledges no environmental limits or constraints and is deeply hostile to gubmint interference. I’m pessimistic that we can fix this by snipping around the edges with ETSs. Only when we’re forced into a more balanced, reciprocal relationship with the natural forces on which we depend will we see an end to agricultural pollution, including GHGs.

  6. The introduction of agricultural emissions into the New Zealand emissions trading scheme is a mistake for several reasons. This is in no way to suggest that there isn’t a place for reducing agricultural emissions generally but rather for a generous grandfathering regime. First, no other country that I am aware of includes agriculture in its emissions trading scheme. Secondly, New Zealand has failed to adopt article 3.4 of the Kyoto Protocol which relates to forest management, revegetation, cropland management and grazing land management. As part of this New Zealand unlike Australian states does not have a legislative carbon sequestration right. Thirdly, many farmers are taking active steps in the provision of renewable energy and transmissions lines. That is, wind farms, geothermal power stations and hyrdo electric power stations are on many agricultural sites. Fourthly, outside of nitrate emissions, agricultural emissions are difficult to remedy. It is indeed possible to have grain fed dairy sector with animals shut in sheds hours each day but this raises its own animal health issues. Fifthly, the Resource Management Act 1991 in planning to decide between a pig farm and a dairy farm cannot as it is currently interpreted (we are all awaiting a Supreme Court decision on the issue) take into account emissions from the diary farm but the smell of the pig farm can be taken into account. Sixthly, this is perhaps the most important of all is that Auckland unlike Wellington lives on fossil fuels. Auckland’s love affair with roads and fossil fuel generated electricity from Huntly and Otahuhu is weighing the country down. This cannot and should be swept under the carpet in a wave of blaming agricultural for New Zealand’s greenhouse gas emissions.

    • As long as international on GHG mitigation makes no distinction between GHGs from agriculture and any other anthropogenic source, then NZ has a problem. Excluding agriculture from an all gases ETS in an economy where 50 % of emissions comes from that sector is a huge economic distortion. For most other countries it’s much less of an issue – they can wear giving ag a free ride because its contribution to their emissions is usually small.

      If international negotiations on emissions reductions came up with a system that excluded agricultural emissions, then it would be OK to leave it out of NZ’s ETS. There’s no sign that’s on the table.

      At the same time, I think NZ agriculture will find it easier to make emissions reductions than you perhaps envisage, particularly if farmers’ enthusiasm for diary expansion could be tempered. An expansion in non-pastoral agriculture & horticulture at the expense of dairy would bring lots of side benefits in water quality etc, as well as in emissions.

      • RedBlue says:

        The rules do not make a distinction. But the targets do. Each country has a different target based on their ability to mitigate. NZ having 50% of emissions from agriculture is no doubt factored into our target.

        So if NZ has a target based on the intricacies of our economy, it would not be fair to ignore those intricacies when meeting that target. For example, within a target of x there may be an expectation that fossil emissions reduce 2x and ag emissions reduce 0.5x.

        That is not to say agriculture should never reduce emissions or be in the ETS. Only to say applying international commitments in a uniform manner ignores the process that went into them.

        NZ should develop agriculture policy that makes sense for NZ and ignore purist arguments based on false interpretations of equity. On the EU directive, well obviously they over nitrate because of ag subsidies (EU has the highest levels of over N use in world). We already have far lower levels of nitrogen use.