Industry groups now need to decide how to manage the HWEN stand-off with the risk of being left outside the tent
Big decisions are now required, both by rural industry groups and Government, following the Climate Change Commission advice on the He Waka Eke Noa proposals (HWEN). The Climate Change Commission, chaired by Rod Carr, has supported some aspects of the HWEN proposals put forward by industry, but has poured cold reality on other aspects.
Beef+ Lamb and DairyNZ have responded by suggesting that it is all or nothing. However, that is not going to wash with Government. Once again, the rural industry groups have challenging decisions to make as to whether they are inside the tent or outside the tent.
First, there is a key area of agreement which needs to be celebrated. The Climate Change Commission supports the split-gas approach, with this being fundamental to keeping methane away from the Emission Trading Scheme. Given this support, the Government can now be expected to align firmly with this. But there is still a lot of hard work to be done on sorting out the pricing mechanism for methane.
The big area of disagreement between the Climate Change Commission and HWEN relates to sequestration credits for vegetation types that currently lie outside the Emission Trading Scheme. Industry wants this to be included within HWEN, whereas the Commission says this is not administratively practical.
The Commission suggests that there are much better ways to acknowledge the ecosystem benefits of some vegetation types that are not ETS-eligible. There are also some improvements for sequestration within the Emission Trading Scheme itself that could be made.
Before proceeding further, it is important to understand the respective roles of the Government, the Climate Change Commission and HWEN in terms of how we got to the present position and who is responsible for the next steps.
The underlying legislation is the 2019 Climate Change Response (Zero Carbon) Amendment Act which was signed up to by all major parties. The exception to unanimity was ACT Leader David Seymour who, at that time the only ACT member of Parliament, somehow missed the vote while otherwise distracted.
This legislation says that agriculture comes into the Emission Trading Scheme by 1 January 2025 unless acceptable alternative mechanisms can be developed by rural industry partners. That is where HWEN then came into the picture, representing 11 industry groups.
The legislation also says that methane emissions must be reduced by 10 percent by 2030.
The role of the Climate Change Commission in regard to these specific issues is not to question the 10 percent figure. Rather, the 10 percent figure is a ‘given’ within existing legislation. That is the framework within which they have to operate. Accordingly, any discussion of the 10 percent target is a discussion for another time. However, the Commission has been required to report to Government as to the readiness of the rural sector to have an HWEN system operative by I January 2025.
It is in that context that the Commission has given a tick to farm-based methane charges as being feasible, with this being assessed at the level of individual farms rather than as a processor charge.
However, the Commission has also said that trying to achieve this for sequestration is not possible within the required timeframe. Also, the HWEN sequestration proposals fail on grounds of logic, consistency, and equity.
The Commission has also said that at this stage it does not believe that the industry can be ready for farm-level assessment of nitrous oxide, and that the way forward, at least in the interim, is a charge on synthetic nitrogen applied at the processor level. I will return to that later in this article.
A key point going forward is that it is the Government that now has to make the decisions. They don’t have to accept the Climate Change Commission’s recommendations, but they are required by the legislation to explain any non-acceptance. As for HWEN, its role going forward is by invitation.
The Government is free to ignore HWEN if it wishes. Of course, that might have political ramifications at the ballot box next year, but with HWEN partners doing plenty of squabbling among themselves, that could be assessed as manageable.
So where does that take the debate?
As indicated above, the immediate response in a combined statement from both Beef+Lamb and DairyNZ was that the HWEN proposals are ‘all or nothing’. This reflects that HWEN struggled hard to get internal agreement for their current proposals. It required lots of internal political horse trading between the groups and the generation of much internal heat. The idea of negotiating something new is not appealing to them.
The ‘all or nothing’ approach is also likely to have been the attitude of the Federation of Māori Authorities (FOMA), for whom the sequestration issues are very important. However, I have not seen a public statement from them.
Alas, if these industry groups now hold to the ‘all or nothing’ position then the risk is that it will be ‘nothing’. Hopefully, a little reflection might lead to a more nuanced position. But at this stage, based on the drum beats I am hearing on the breeze, I am not hopeful.
I am told that at least some of the partners think that HWEN is in danger of self-destructing. I am told that the program office for HWEN remains in place through to the end of September but nothing has been decided beyond that time.
For much of the last six months, I have made my position known, both publicly and privately to some of the HWEN partners, that their sequestration proposals had no chance of being acceptable to the Climate Change Commission. Some of the partners acknowledged this privately but others were not open to that acknowledgement. Oh, what a mess!
I see no chance that the Government will go against the Climate Change Commission on this matter. Essentially, the Climate Change Commission is saying that trying to bring sequestration within HWEN would be shambolic. It would be a very brave Government to act in contravention to that professional advice.
One of the problems is that Beef+Lamb used the promise of sequestration benefits to keep important parts of their own fractious constituency aligned within their own tent. It is now very difficult for them to walk backwards from that. Perhaps they would prefer to go down fighting.
Ironically, the Climate Change Commission has suggested there are much better ways to get acknowledgement of the ecosystem benefits associated with vegetation types that are not currently included in the ETS. But it seems that key industry groups are not hearing.
Key challenges going forward are to make progress on the pricing of the methane levy, and to work hard on farm-level pricing for nitrous oxide. Both of these issues were poorly handled within HWEN, which got distracted from the main game by sequestration issues on which they were never going to win.
In relation to pricing, the starting point has to be acknowledgement that the whole purpose of the levy is to reduce emissions, but that this has to be done in the context of not destroying pastoral agriculture.
The way forward is surely to start by asking the question as to what are the research, development, extension and education needs (RDE&E) to achieve this. And then, what financial resources are required to achieve this? That will determine the necessary levies.
In discussions with individual partners, I received no disagreement with this approach, but with partners distracted by other issues, it did not come through into the final document.
The other vexing issue is nitrous oxide. Unfortunately, the HWEN document did not lay out with any coherency as to how farm-level assessment might occur, and hence the Climate Change Commission was justified in saying that systems could not be in place as required by 1 January 2025. However, my assessment is that the Climate Change Commission has no fundamental objection to farm-level assessment of nitrous oxide. They just need to be given evidence as to how this could be achieved.
Given the lack of coherency within the industry partners, it seems likely that it will be Government working alone that will now have to make the big decisions, with these decisions required to be made by December 2022. Given the looming implementation date in legislation of 1 January 2025 as set down in legislation, this cannot be further delayed.
Alas, I am not convinced that Government has the technical expertise within the relevant departments of Ministry of Primary Industries and Ministry for Environment to come up with the right architecture to make everything happen in an acceptable way. It is a very difficult task that they face.
Posts from Keith Woodford 
Hi Keith,
A question. You state ‘Nitrous Oxide’ emissions priced on fertiliser purchase. I presume you mean Nitrous oxide & CO2 emissions at farm level related to nitrogen fertiliser?
Most Nitrous Oxide emissions on farm are to do with livestock excreta, the direct Nitrous Oxide & CO2 from fertiliser application is only a proposition (and smaller one at that) of nitrous Oxide?
Is that what you are referring to from CCC advice, or ALL nitrous oxide?
Thanks
Yes, the idea that N fertiliser purchases can be used as a proxy for nitrous oxide emissions is greatly flawed. But to a large extent the CCC was led up the garden path by false information. And HWEN has to take considerable responsibility for that particular mess.
Keith
The face-saving solution regarding inclusion of sequestration within HWEN is to park it until 2025 when the measurement of carbon is customised using an automated nationwide digital approach.
Quantifying sequestration currently under the ETS is a needless, complicated, and administrative shambles. The switch to averaging accounting versus stock change defies belief. The unnecessary pedantic process of defining what constitutes a hectare or more of trees that is resulting in an army of staff to process just over 100 applications for registrations under the ETS a month also defies belief (albeit reintroducing the government protocol of trust and audit, the processing rate would be increased tenfold).
For HWEN proposals to believe that sequestration can be quantified and administered for tree areas that are less than the ETS area threshold of one hectare also defies belief.
However, the above administrative dysfunction could soon change. Utilising satellite data, high resolution imagery, artificial intelligence, and analytics, carbon stocks and balances on an ownership basis, for all woody species, on an automated, annual and New Zealand wide basis can be achieved.
This technology is already being used to quantify forest wood yields and value in real time. The technology is being applied internationally to quantify carbon stocks and balances. This technology is being further expanded by Landcare Research in collaboration with Microsoft for improved detection of land use and forest cover change.
The application of this technology will enable the abandonment of regional lookup tables along with the field measurement approach and associated high costs. The unintelligible ETS forest guides can be abandoned. No more unnecessary pedantic rulings on what does or does not legally constitute a hectare of woody species under the Climate Change Response Act, part xyz.
And for farmers, if desired, woody species can be quantified down to an area equal to a pixel, all summarised and reported to your mobile phone (by-passing the middle dept) as one net-sequestration number on 31 December annually for offsetting the methane or maybe another debate whether you take the money as unified sequesters under the digitally quantified sequestration under the ETS.
Thanks Jeff.
Any further info as to where I can read more about this.
Keith
First reference
https://itbrief.co.nz/story/microsoft-and-manaaki-whenua-to-map-nz-s-forest-cover-change
Keith, the following are background links of interest. The first three links by Interpine Innovation are drone based but they are included to present the detail of mapping a surface via LIDAR.
The technology to achieve the above exists – all that is required is the leadership to make it happen. The technology shift and benefits will be equal to transforming a pen and paper based 1960s accountancy office to a modern accountancy firm with the plain English output and efficiency of Xero [and the administration of forests under the ETS is still using 1960s technology with the user guides written in a foreign (forestry) language].
The forest sector under the Climate Emergency Response Fund has been allocated $329.7 million. Rather than spending on projects such as fabricating the lookup tables for post89 natives this project should take priority. The project should have been initiated as raised over two years ago. Because NZ is the only country to include forests under an ETS there has been no interest from other countries to customise the technology as outlined above to enable the upgrade equivalent to Xero.
The key task is to customise and validate the carbon increment/quantification to the variance of species type and site. The current approach commonly incorporates allocation of carbon per hectare less than half the measured quantity.
The larger corporate owned forests use the above technology customised to value their forest estates with precision on an annual basis. Anecdotally forest resource analysts have described how this technology has also been applied to their mainly pre1990 planted forests to academically explore carbon forestry scenarios. The accuracy of carbon quantification has been applied at the pixel level. Of course, these forest estates have readily available data inputs such as wood density and are single species that would need to be customised for application on a national scale that can all be achieved with forest based leadership.
‘Technology on Steroids’ Remote Sensing, Forest Data Capture & Inventory Management – Past, Present and Future | Interpine Innovation
LiDAR | Interpine Innovation
DJI Matrice 300 with Emesent Hovermap for Drone Based LiDAR Survey | Interpine Innovation
New Biomass Carbon Monitor launched | ForestTECH
New geospatial platform tracks forest carbon from space (esa.int)
Mapping Carbon Beyond Forests: New Harmonized Global Maps of Above and Belowground Biomass Carbon | Earthdata (nasa.gov)
New biomass map to take stock of the world’s carbon (phys.org)
Biomass Carbon Monitor | Home (kayrros.com)
Harmonized global maps of above and belowground biomass carbon density in the year 2010 | Scientific Data (nature.com)
Maps to improve forest biomass estimates (phys.org)
Sorry Keith, those links will require cutting & pasting into a web browser and well worth the effort to obtain an appreciation of this technology
Keith, regarding further evidence of quantifying net sequestration at scale using the very latest technology and at auditable accuracy, click the following link. Scroll to the very base and click the “in” to view the academic background and internationally acclaimed accomplishments of the (modest) company director and staff such as Julian Maclaren.
https://www.carboncrop.nz/meet-the-team
And have a read of how this company is focused on quantifying sequestration across NZ based on state-of-the-art sequestration mapping technologies including satellite data, high resolution imagery, artificial intelligence, and analytics. Meanwhile, the rest of us are subject to the govt dept reformed methodology based on hieroglyphics and unintelligible guides and issued just a portion of the carbon present because that’s what the antiquated lookup table says, and subject to a new regime of penalties eg. if the myriad of (non-automated) rounding protocols is not correctly applied.
Forests as mega CO2 stores applied at scale will provide the biggest contribution to meeting NZs climate mitigation targets in 2030 (but not on our shores), 2050, 2100 and the thousand years to follow, that in a climate emergency is dysfunctionally constrained by a self-congratulatory (non)forestry dept.
Jeff, would the technology you describe be able to make a reasonable assessment of the sequestration of native areas – given they are less uniform (more diverse) than pine forests?
Jason, yes, all the earths surface irrespective of content can be “mapped” and is being mapped and remapped in moments of time at very high resolution. Over 900 satellites circle the earth for mapping purposes. Foresters use ground maps (with virtual tree removal) that contain (large) rabbit hole definition. Mapping dynamic surfaces such as forests and then returning a year or more later to remeasure and quantify the carbon increment (gain or loss) is easy compared to the application of mapping technologies that are now available to quantify tree quality and log-grade out-turn and value equal and better than a traditional inventory approach. Copy and paste the Interpine links above into your web browser and view what is titled “technology on steroids.” The mapping technologies being deployed are numerous including satellite data, high resolution imagery, artificial intelligence, and analytics.
The ability to discern the aerial/satellite mapped difference between native forests and plantations has been available since 2008 (based on old technology). This mapping facility (see link below) is one of the resources we use to determine whether forest land for possible registration under the ETS is, native forest, post1989 regenerated native forest, pre1990 planted forest, post1989 planted exotic species, etc.
https://data.mfe.govt.nz/layer/52375-lucas-nz-land-use-map-1990-2008-2012-2016-v008/
Jason, may I comment on your reply to Keith on the choice of “tent” that farmers may wish to be housed to reduce (real world) achievable emissions. I can assure you that the ETS “circus tent” is not where farmers should reside – leave it to the clowns. The NZ ETS since its inception has not achieved reductions in gross emissions nor is it ever likely to – just perverse outcomes including the doubling and trebling the price of farmland. To believe the application of a classic economics theory that an increasing price on GHGs will result in changes of emissions behaviour is irresponsible particularly given NZs commitment along with its global partners to halve its net emissions within eight years.
To illustrate the point, at the current price of carbon consumers are paying around 16c per litre carbon tax at the pump. Minister Shaw has alternatively applied a policy driven approach to reducing fuel emissions that involves removing bangers from the road that is estimated to reduce emissions by 10,000 tonnes of CO2 by 2035(?) that will be measured by MfE. Minister Shaw also reported that he sought Treasury to calculate what the price of carbon would have to increase to achieve the same transport behaviour change resulting in reduced fuel emissions of 10,000 tonnes CO2? The response was $160/tonne that would translate to an increase of the fuel carbon tax to over 40c/litre. As Minister Shaw stated, such a carbon tax would destroy the economy and have no assurity of achieving the same reduction of emissions. This example can be applied across all sources of emissions including those from agriculture.
The ETS is focused on the govt auctioning over 26 million virtual NZUs/tonnes of CO2 annually that is purchased by emitters returning the govt $2 billion rising to over $4 billion annually by 2030 for spending on climate mitigation projects such as the mega Asia Pacific afforestation project etc.
The only way to cut emissions is to cut emissions that is best implemented via corporate responsibility and policies sector by sector led, measurable, and monitored, and using a stick for those that don’t meet their emissions obligations applied in the same manner as Inland Revenue applies a stick to those who don’t meet their tax obligations. HWEN stay out of the circus tent.
Ooops please excuse my wonky maths, at an effective carbon price of $600/tonne CO2 (that in theory would bring about a change of fossil fuel consumption behaviour) the tax at the petrol pump would be around $1.30/litre (not 40c) that would destroy the economy and have no certainty of achieving the desired emissions reductions versus an incentivised approach
Keith, you will forgive my cynicism but over the years I have become very weary of hearing Feds’ B&L telling us we all need to accept a bad deal to “stay in the tent”.
B&L’s own modelling shows that after the 11c 3 year proposed methane subsidy is lifted that without any recognition of our on-farm sequestration – farm profit (NI hill country) will be slashed by more than 30% for at least a third of us. This will force large numbers of us out of the industry so others can remain “inside the tent”.
You seem to position HWEN as a much better solution than the government throwing farmers under the ETS bus – however, I am not sure that in the long run there is much difference between the two…HWEN Pg 17 Pt 6.9 states there will be an “Establishment of a price ceiling where the levy rate for each gas is no more than if agriculture entered the NZ ETS with 95% free allocation phasing down by 1 percentage point per annum and the maximum price for methane is no greater than $0.11/kg for the first three years of pricing (till 2028).” So it seems to me there is absolutely no guarantee under HWEN that we won’t end up with the ETS in drag, after the first few years of “methane subsidies” are gone.
If “staying in the tent” means our so-called fam leaders acquiescing to a plan that:
1. Will have a huge negative impact on the profitability of our industry long-term,
2. Does not accurately reflect our industry’s warming effect by using GWP*, and instead uses GWP100 which over-estimates the warming impact of methane by 3-4X
3. Does not look at the whole picture of our warming effect because it effectively ignores our on-farm sequestration
4. Asks us to accept a tax burden that no overseas farmer has to bear…
Then it is surely less of a ‘tent’ and more of a ‘trap’ and our farmer leaders would do very well to keep us out of this trap until they can negotiate a better deal.
Jason, Yes, I agree these are important issues. But I wish B+L (and HWEN) had never done that modelling which was flawed in its fundamental thinking and hence was a distraction from what needed to be discussed and achieved.
Keith
This is a hornet nest about to erupt
The public has been misled about climate change and the drivers of climate warming
The GWP100 is centric to poor science and misunderstanding which is obvious when reviewing GHG emissions and warming without taking into account behaviour difference. Plus methane as a short lived GHG also needs paring open to separate biogenic vs fugitive fossil fuel source.
Nitrous oxide is the most potent of agricultural GHG emissions and when examined closely the intensive farms with high usage of nitrogen fertiliser and imported feed will become problematic to mitigate. The intensive farms have overridden and thus disconnected the natural biological cycling of nutrients and other chemical elements e.g. nitrogen and carbon cycle exceeding all attenuative capacity (that would be maintained if farmed to the grass growth curve) hence they are troubled by a high N surplus with high risk losses to climate and freshwater despite relatively improved efficiency.
It is becoming known the intensive land use partners within HWEN had controlling domination in the design of the recommendation. Hence the distortive pricing recommendation for taxation that could see quickened exit of low intensive farms into afforestation to provide offset for methane and nitrous oxide. How is it that the intensive farm sector which has recently intensified thus as a subsector are chiefly responsible for agriculture warming emissions are to get only a light tax of no consequence let alone behaviour change so business-as-usual whereas low intensive farms with relatively benign warming neutral emission and environmental footprint will see a good percentage of these farms go to the wall the likely end outcome afforestation.
I note other replies by Jeff Tombleson and Jason Barrier highlight similar and other issues
So in trying to close yes to farm level yes to split gas and all sequestration must be included within a farm level approach (the technology is there as referenced by Jeff Tombleson)
The ETS is shambolic and not conducive to farmers with small woodlots due to many fishhooks and disincentive so this would require total overhaul to become attractive and workable to participate.
We must recognise importance of food production and so in a New Zealand context for pastoral farming grass-fed natural free range there should be free allocation across all GHGs based upon the grass curve which could be relatively easy to calculate noting some broadness but there is a natural gradient in pasture production already understood. The farmer should be able to position themselves to net off and become warming neutral. Any sequestration above a net off warming neutral position indicates there is sizeable blocks of bush on farm which should be placed in a changed ETS and / or a ecosystem service biodiversity funding system (that is another story)
So finally I concur with Jason Barrier the HWEN Recommendation should be binned and I suggest replaced with a more equitable system based upon farming the land as a natural resource working within limits of attenuation with reference to the grass curve and a warming neutral position, And I concur with Jeff Tombleson that all sequestration on farm can be counted because technology provides a mechanism to do this.
We do not need the government to hash this up but they must make it equitable and workable
The simple winter grazing rules highlights how quick poor policy can be shemozzle and disruptive.
We all want to do our part by farming producing food in a manner that is warming neutral
The real focus on climate warming must be fossil fuels
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