Sequestration rules will change

Government foreshadows new ETS sequestration categories but then creates yet another communication muddle

The Government’s on-farm sequestration policy appeared to have taken a big step forward with a media release from the Government on 30 November, apparently timed to coincide with the National Field Days at Mystery Creek. However, precisely where the step has landed is not clear.

The media statement released by the Prime Minister’s Office included statements from Prime Minster Jacinda Ardern, Climate Change Minister James Shaw and Agriculture Minister Damien O’Connor.

A key reason why things are less than clear is that once again the Government’s communications messed up in a big way. Remarkably, there were two different versions of the media release. One of these was released to media by Andrew Campbell in his role as Chief Press Secretary in the Office of the Prime Minister. This was the version I was working with when I first drafted this article. The other version is what can currently be found here at the Government’s official Beehive website (beehive.govt.nz)

At the top of both versions of the media release are three dot points, which supposedly encapsulate the key points, and which inevitably provide the criteria that outcomes will be judged against. The problem is that two of the dot points differ significantly between the different versions.

It is as if the Government has tried to spin the new policy in two different directions. Or is this just the spin-doctor officials in the Government’s communication system that have stuffed up in a big way?  Oh, how I wish for a Government-communication system that could stick to concise presentation of facts and policy, and stop trying to impose spin!

What a shambles!

The first dot point, with this being common to both versions, says “Government to work with primary sector on developing a sequestration strategy”.  Further down, the Prime Minister said: “We want a plan for reducing agricultural emissions we can all agree on. We’ve heard sequestration is a top priority for farmers and critical to making He Waka Eke Noa work.”

Where ‘working with primary sector’ finally lands among diverse rural groups only time will tell, but it is certainly an explicit statement. However, Government started saying that more than three years ago. Since then, the notion has become more than a little frayed.

The second dot point in the version from the Office of the Prime Minister said that “Government confirms today it will bring all scientifically robust forms of sequestration into the Emissions Trading Scheme, starting from 2025.”

In contrast, the Beehive version simply says that “Government is committed to sequestration being recognised from 2025”. Well, that Beehive version is a meaningless statement given that sequestration is already included within the ETS, albeit with provisos.

A key missing phrase from the Beehive version is “all scientifically robust forms of sequestration”.  Those words are of fundamental importance.

Another key phrase in the version from the Office of the Prime Minister is that this additional sequestration will be embedded within the Emission Trading Scheme (ETS).  This contrasts with industry’s He Waka Eke Noa (HWEN) proposals that it be funded within HWEN as an offset for methane emissions. 

If sequestration is in the ETS, then funding comes from emitters elsewhere in the economy. If funding comes from HWEN offsets, then it is Peter Farmer paying Paul Farmer by a higher methane levy.

So, getting all sequestration within the ETS would be an outstanding outcome, totally logical, and would remove a fundamental problem within industry’s own HWEN proposals. I have argued consistently for that. Is this what the Government is now promising?

The third dot point in the version from the Office of the Prime Minister was that “This will be done at full value, rather than at a discount, so farmers can realise the true potential of the vegetation on their farms”.

This too is an outstanding outcome, much better than HWEN’s pragmatic proposals that pre-2008 native plantings should be at a discount.

However, the third dot point in the Beehive version takes a different tack, saying absolutely nothing either in the dot points or further down about discounts, but instead that there will be “Transitional arrangements in place from 2025 with entry into the ETS to follow later”

So just what will those transitional arrangements be? And when is later? And if the additional sequestration is to initially be outside the ETS then who is going to pay for these credits?

For the Beehive version, it seems there could be a long transition with Peter Farmer paying for Paul Farmer, and with a consequent need for a higher levy on methane well beyond what is needed for the funding of RDE&E (research, development, extension and education).

The other key outcome, not explicit in either version, but surely now very much on the table, is that the pre-1990 barrier for sequestration from native forests will disappear. This should apply in all situations where native forest owners can show that they are appropriately managing these native forests with fencing and pest control, thereby meeting additionality criteria for the sequestration. 

If this dropping of the 1990 barrier is not the intention of Government, then Minister Shaw’s statement within both versions of the media release that the proposals are a ‘significant shift’ relating to the ETS would not be defensible.

Ironically, the Government already claims sequestration for pre-1990 forests in its national Inventory determinations that are reported to the UNFCCC, but very few industry people have been aware of this.

There has been a widespread belief both in industry and in the broader community that pre-1990 forests were somehow prevented by Kyoto and subsequent agreements. But that is not the case. Rather, the key requirement for international acceptance is that explicit verifiable management decisions are creating additional sequestration beyond what would otherwise occur.

Within New Zealand, it is very clear that fencing and pest management, particularly for deer and possums, are essential for forest health. Without these programmes, native forests go backwards.

One of the key frustrations until now for farmers with native plantings has been the challenge of demonstrating that their native forests satisfied the post-1989 criterion. Everything gets much simpler once that barrier is broken down and farmers can focus on demonstrating that the forests are managed.

The ability to measure this sequestration in native forests is also proceeding in leaps and bounds, with various ‘eye in the sky’ and precise GPS systems. This makes measurement feasible in situations that were previously impractical.

The Government emphasises that a lot of work is now needed to get all the necessary systems in place to make all of this happen.  But two years through to 2025 is still a long time if people put their minds to it.  The rules themselves are not complex. The challenge is to ensure that claimed outcomes are verifiable.

I expect that there will be still be robust discussions regarding the practicality of small holdings of less than a hectare, be those pre-1990 or post-1989.  Also, many of the riparian plantings are essentially of non-woody species and some farmers may be disappointed at how little sequestration is occurring. However, the ecosystem benefits of these plantings go well beyond the sequestration benefits. Let’s see where that ends up.

The priority for Government right now is to clarify exactly what they do mean. Why are there two different versions of the media release? Is one version an earlier draft? And if so which one?  Someone needs to admit to stuffing-up in a big way.

One of the challenges for industry when they next sit around the table with the relevant ministers and their officials will be to make sure that their own knowledge of the science and practicalities is strong. They owe that to their members.

Despite the shambolic way this has been managed and communicated, the good news is that prospects of an agreed path forward in relation to on-farm sequestration credits for native forests, including those where the regeneration commenced pre-1990, now look more feasible than they did just a few weeks ago. 

Of course, this is just one aspect of the greenhouse gas issues that New Zealand has to work on. It still leaves big issues relating to productive farmlands threatened by corporate forestry. And it still leaves methane and nitrous oxide policies in disarray. But hopefully it is a step forward.