Me, thee and the PCE
Wednesday, May 19, 2021, Howard Moore's blog
Simon Upton was surprised by my remarks on his address to the March NZFFA conference. He invited me to talk to him, not to congratulate me on my brilliant analysis but to express concern that I might have misunderstood his approach. But it wasn’t really a discipline interview. I understood his approach, and it’s not his fault that I have trouble with some of the implications.
First, He Waka Eke Noa is working on “recommendations for an appropriate farm level emissions pricing system from 2025” as an alternative to the Emissions Trading Scheme. In short it is designing a stand-alone programme for farmers outside the ETS. Simon might be familiar with the details but since nothing has been released yet, his suggestion of a methane levy was new to me.
It raised the question of equivalence between a methane levy and a carbon price. The methane levy is likely to be set high enough to change farmer behaviour but not so high as to drive farmers off the land. How high that will be, and where it will sit vis a vis carbon under the Emissions Trading Scheme?
Second, a methane levy is another example of an ad hoc climate change policy, of which there is a growing number (e.g. no more coal-fired boilers). While these are understandable, every ad hoc policy makes investment in production forestry more uncertain.
Although there is general agreement that we need more forests, no-one is addressing the growing body of regulatory risk that puts new planting in doubt. Why expand when there are rising land prices, regulatory uncertainties and potential controls on how much carbon one might claim, after perhaps buying land at full value on the assumption of one credit per tonne sequestered? The commercial forest industry might easily turn its back on the Climate Change Commission and the Government’s expectations for the sector. It’s not obliged to help.
Third, if He Waka Eke Noa is successful then of course trees on farms will be useful for offsetting methane levies. Assuming it measures the changes in carbon storage from one year to the next (‘delta carbon’), farmers will be able to claim credits on land that was in forest in 1990, even though this is excluded from the ETS. And if those credits are tradable (why not?) prices for this land will jump, and there may be a sudden rush to become farmers.
Finally, there are 11 agricultural organisations and two Ministries committed to He Waka Eke Noa and 2,400 participants and two Ministries committed to the ETS. I have a mental picture of these two elephants lumbering across the veldt trying to escape a grass fire, while above them circle the Climate Change Commission and the Parliamentary Commissioner for the Environment giving two caws for right and one caw for left. If only I could draw.
Disclaimer: Personal views expressed in this blog are those of the writers and do not necessarily represent those of the NZ Farm Forestry Association.