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Legislative context
6. The Climate Change Response Act 2002 (CCRA) sets out the following domestic targets to
reduce emissions:
a. Net zero emissions of all greenhouse gas (GHG) emissions other than biogenic
methane by 2050.
b. 24 to 47 per cent reduction below 2017 biogenic methane emissions by 2050,
including 10 per cent reduction below 2017 biogenic methane emissions by 2030.
7. The Committee has expressed interest in GHG metrics and values for different gasses, so you
could also clarify that New Zealand’s domestic biogenic methane target does not rely on the use
of GHG metrics, rather, it requires a gross reduction in biogenic methane emissions relative to
2017 levels.
8. The biogenic methane target, which currently has a wide range, is under review. An
independent review of the science of methane and the 2050 target for consistency with no
additional warming from agricultural methane emissions will be completed by the end of the
year. The Commission will also provide advice to the Government on New Zealand’s 2050
target (including biogenic methane) by December 2024. The two reviews will give the
Government a robust evidence base to use when it considers the 2050 target, and its response
to the Commission’s advice, next year.
9. To meet our domestic targets, the CCRA requires the Government to set emissions budgets and
prepare emissions reduction plans that set out the plans to achieve those budgets. Emissions
budgets cover all gases and sectors and are measured in terms of carbon dioxide equivalent
(aggregated using the GHG metric GWP100, and AR5 conversion factors).
10. The Government is currently consulting on the second emissions reduction plan (ERP2), which
must include the policies and actions New Zealand will take to meet the second emissions
budget. You could highlight to the Committee that ERP2 accounts for agriculture being taken out
of the NZ ETS – that is, it does not give rise to a ‘gap’ in our climate response from a sufficiency
perspective, as other action is being taken.
11. Key actions in the agriculture chapter in ERP2 include:
a. Accelerating the development and commercialisation of mitigation tools and
technologies to reduce on-farm emissions;
b. Developing a standardised methodology for estimating on-farm emissions, to support
measurement by 2025; and
c. Commitment to a fair and sustainable pricing system for agricultural emissions by
2030.
Rationale for removing agriculture from the NZ ETS
12. This Bill supports the Government's coalition agreements and the National Party’s manifesto
commitment to keep agriculture out of the NZ ETS. You could also highlight that:
a. Pricing agricultural emissions through the NZ ETS would mean a single price is
applied to all agricultural gases. This is inconsistent with the split-gas approach of
New Zealand’s legislated targets, where there is a separate target for biogenic
methane.
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b. The farm level obligations could require up to 100,000 animal farmers to be
registered, reporting, and paying for their emissions in the NZ ETS.1 This could have
disproportionate impacts on smaller farms (which face similar compliance costs to
larger farms), and would significantly increase the number of participants in the
scheme (currently there are about 4,700 participants).
c. The large increase in NZ ETS participants would also result in significant
administrative and implementation costs. The Government’s commitment to price
agricultural emissions at the farm level outside of the NZ ETS by 2030 would mean
that system changes made to price agriculture within the NZ ETS would be short-
lived.
d. Pricing emissions at the processor level is unlikely to effectively incentivise farmers to
directly reduce their on-farm emissions. This is because the emissions cost borne by
the processors would likely be passed on to farmers without regard to each farmers'
individual emissions efficiency.
13. Note, the Committee has questioned why agricultural nitrous oxide emissions, particularly from
the use of synthetic fertiliser, should be removed from the NZ ETS.2 This is on the basis that the
above issues do not apply as strongly to nitrous oxide: it is a long-lived gas and the
Commission has commented previously that fertiliser emissions could effectively be priced at
the processor level through the NZ ETS. If raised, you could note:
a. That the Government was clear in its commitment to taking agriculture out of the NZ
ETS.
b. That you expect that the management of nitrous oxide emissions will be considered
as part of the broader agriculture mitigation policies – and that you expect a coherent
approach to be taken, including to best support farmers to manage their agricultural
emissions footprint in a way that best suits their farm businesses.
Next steps 14. To further support your appearance at the Committee:
a. Appendix A provides you with an overview of emerging themes from public
submissions.
b. Appendix B provides you with the information requests from the Primary Production
Select Committee (and responses provided).
c. Appendix C provides you with some further back pocket questions and answers.
d. Appendix D provides you with the list of the Primary Production Select Committee
Members.
15. Officials from MfE and MPI are available for a pre-meet ahead of your appearance (this has
been tentatively scheduled for 10.30 – 11.00am on Thursday 22 August 2024), and will be in
attendance at the hearing.
1 Currently under the CCRA, from 1 January 2025, fertiliser and animal processors will be required to pay for
agricultural emissions. Animal farmers will be required to report their emissions from 1 January 2026, and pay
for these emissions from 1 January 2027 (at which point surrender obligations for animal processors would
cease).
2 Nitrous oxide emissions from synthetic fertiliser makes up around 18 percent of agricultural nitrous oxide
emissions. Around 68 per cent of nitrous oxide emissions come from livestock urine and dung.
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Recommendations
It is recommended that you:
a)
Agree to forward the briefing to Hon Todd McClay – Minister of Agriculture.
YES / NO
b)
Agree to a pre-meet with MfE and MPI officials (ahead of your appearance) at 10.30 –
11.00am, Thursday 22 August 2024 to support your attendance.
YES / NO
Cheryl Moir
Hon Simon Watts
Manager
Minister of Climate Change
Market Development
/ / 2024
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Appendix A: Emerging themes from submissions
1. The Select Committee received around 580 submissions from consultation on the Bill. There
have been submissions from primary sector groups, environmental NGOs, and an iwi group
(Ngāi Tai ki Tamaki Trust).
2. At this stage, officials have analysed around half of these submissions and the emerging themes
include:
Almost half of submissions support the Bill for the following reasons:
• Agriculture’s inclusion in the NZ ETS would significantly impact agricultural production and
New Zealand’s economy.
• New Zealand farmers are world leaders in producing carbon efficient agricultural products
and its inclusion in the NZ ETS would shift agricultural production to less efficient countries,
resulting in an increase in global emissions.
• The warming impact of biogenic methane needs to be better understood to inform actions on
agricultural policies and climate change targets.
Around half of the submissions do not support the Bill, for the following reasons:
• Keeping agriculture in the ETS is necessary to enable New Zealand to achieve its climate
change targets.
• The Bill is inconsistent with the reality of the climate crisis and the Government and all New
Zealanders need to take urgent action to address the climate crisis.
• The Bil is retrogressive and would impact New Zealand’s ‘clean, green’ reputation, and
there is some concern that it may impact New Zealand’s trade relations.
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Responses to initial briefing questions
Question 1. The impact of the IPCC Sixth Assessment Report (AR6) on the 53 percent figure in the
initial briefing (context slide 1), and implications of AR6 for consideration of methane
.
AR5 values are required to be used until the end of 2030 Reporting requirements for the post-2030 period under the Paris Agreement will come up for
negotiation in 2027, aiming to conclude in time for a decision in 2028. This includes consideration of
advice in AR6.
To convert methane and nitrous oxide emissions into a common metric, carbon dioxide equivalents
(CO2e), New Zealand’s national greenhouse gas inventory reporting to the United Nations uses
Global Warming Potential (GWP) values based on a 100-year time frame (GWP100) and the values
set out in the Fifth Assessment Report (AR5). This approach was agreed in 2018 by the Conference
of Parties to the Paris Agreement (CMA) and will apply until a decision to apply different metrics is
agreed by the CMA.
The Sixth Assessment Report (AR6) was published in 2022, after this decision was taken, and has
updated values for GWP100. While AR5 features a single GWP100 conversion factor of methane
(28), AR6 has different values for biogenic methane (27.0) and fossil methane (29.8). The value for
nitrous oxide under AR6 also changes from 265 to 273.
Implications of AR6
If the AR6 GWP100 value for biogenic methane was adopted for reporting post-2030, compared to
the AR5 GWP100, and based on 2022 levels, New Zealand’s value for biogenic methane in CO2e
would decrease by 3.6% and nitrous oxide would increase by 3.0%. Adoption of AR6 values would
have a small impact on agricultural emissions’ share of total emissions. Note that this change would
apply to the entire time series covered by the inventory.
AR6 also includes a discussion on
‘Comparing Long-lived with Short-lived Greenhouse Gases’ (Section 7.6.1.4, page 1014, of
Climate Change 2021: The Physical Science Basis). This section
discusses different types of metrics including different variants of GWP including GWP star (GWP*),
global temperature-change potentials (GTP), combined GTP, and split gas targets. This advice will
be considered by parties to the Paris Agreement as they reach agreement on post-2030 reporting
requirements in 2027 and 2028.
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These participants may also have to pay units if certain land is cleared or deforested. Owners of
pre-1990 production forests become mandatory participants in the NZ ETS if land is deforested and
converted to another land use.
How different gases are converted to CO2 equivalent
In New Zealand's Greenhouse Gas Inventory different GHGs are aggregated using the GHG metric
GWP100. GWP100 is the required metric used at an international level for measuring countries’
progress under the Paris Agreement when accounting for their NDCs and aggregating the non-
carbon dioxide gases together in the reporting of national GHG emissions inventories under the
UNFCCC.
New Zealand currently uses GWP100 conversion factors from the Intergovernmental Panel on
Climate Change Fifth Assessment Report (AR5) as discussed in question 1.
Question 3. An overview of relevant modelling, including the effect the bill would have on emissions
reductions plans (including ERP3), particularly in terms of tonnages and costs.
The Regulatory Impact Analysis prepared to inform the policy decisions taken by the Government
relating to the Bill included a cost/benefit analysis. This showed that pricing emissions at a
processor level in the NZ ETS has a small positive benefit (Benefit Cost Ratio of 1.24, Net Present
Value of $0.97 billion over the next 20 years). This benefit arises because the costs of reducing
emissions in agriculture are lower than alternative ways of reducing emissions. In the case of
including agriculture in the NZ ETS at processer level, the reductions were found to occur
predominantly through land use change from sheep and beef farming to forestry.
Note the applicability of this analysis is limited, as under the CCRA, processor level pricing would be
superseded by farm level surrender obligations in 2027. Amending the CCRA to remove agricultural
processor level pricing will mean that the potential economic net benefit suggested by this modelling
would be reversed. In addition, this cost/benefit analysis was original y conducted as part of officials’
analysis of the He Waka Eke Noa process, so it is now a few years old and does not capture more
recent methodological improvements to the estimation of agricultural greenhouse gases.
This modelling also found that including agriculture in the NZ ETS at processor level would reduce
agricultural emissions by 16% by 2030. Note that the level of free allocation decreasing from 95% in
2025 to 90% in 2030, as specified currently in the CCRA, effectively doubles the NZ ETS price
agricultural participants face. This is because participants would go from paying for 5 percent of
their emissions, to paying for 10 percent of their emissions.
Under the CCRA, the Government is required to publish an emissions reduction plan for each
emissions budget. The plan must outline the strategy and actions the Government will take across
all sectors of the economy to meet emissions budgets, among other things. The recently released
discussion document for the second emissions reduction plan (ERP2) takes account of the
Government’s proposal to prevent agriculture from entering the NZ ETS from 2025. Instead, it
includes the introduction of an agricultural emissions pricing system no later than 2030.
The modelling conducted to support the consultation indicated the impact of that system would be to
reduce emissions by 0.1 Mt CO2-e in emissions budget 2 and 5.5 Mt CO2-e in emissions budget 34
(Table 10, Technical annex to the discussion document). These reductions are from uptake of
mitigation driven by an agricultural pricing mechanism implemented on 1 January 2030. As no
decisions have been taken regarding this pricing mechanism, it is modelled as a generic incentive
on the uptake of mitigation.
4 ERP3 will detail the Governments’ plan for meeting emissions budget 3.
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Question 4. How the costs of NZ ETS administration are currently managed, particularly by small
businesses covered by the NZ ETS.
Who is a participant
A participant is a person or entity who carries out an activity covered by the NZ ETS. Participation
may be mandatory or voluntary depending on the activity. Participation can occur in different ways:
• Those whose activities release greenhouse gases have to surrender New Zealand emission unit
(NZUs) or other eligible emission units to the Government. An example of this could be a
company that mines natural gas, as this will emit greenhouse gases when it is used.
• Those whose activities remove greenhouse gases from the atmosphere, or from New Zealand,
may earn NZUs from the Government. An example of this is owners of forests that absorb
greenhouse gases, or a business that exports products containing hydrofluorocarbons.
• Some people and organisations receive NZUs from the Government. This is to reduce the
financial impact of being part of the scheme. It is generally for sectors that face high costs as a
result of the NZ ETS because they are emissions intensive.
The point of obligation in the NZ ETS (that is the participant in the scheme) is generally as far
upstream in the supply chain as possible. This means most businesses in New Zealand are not
required to be participants in the NZ ETS.
The Environmental Protection Authority (EPA) manages the administration of the NZ ETS. As at the
end of June 2024 there are 4,726 participants (the majority of which are forestry participants).
The design of the NZ ETS system
The Climate Change Response Act specifies the activities that are included in the Scheme for each
of the following industry sectors: forestry, liquid fossil fuels, stationary energy, industrial processes,
synthetic greenhouse gases, agriculture and waste.
People carrying out the specified activities are required to participate in the Scheme.
For example, the obligation to surrender NZ ETS units for liquid fossil fuels (such as petrol, diesel
and aviation fuel) is placed on the companies importing the fuel, rather than on the drivers of fossil-
fuelled vehicles. These emissions costs can be passed on to consumers of products through the
supply chain to then influence behaviour to reduce emissions.
If agriculture were to enter the NZ ETS, the upstream principal would indicate the pricing should be
applied at the processor level. However, this is unlikely to incentivise farmers to reduce their
emissions. This is because processor level pricing is likely to be based on national averages of
farming emissions – and so the actions of individual farmers to reduce their own emissions would
not be rewarded. Effectively incentivising emissions reductions would require farm-level pricing, but
that also means there would be a very large number of participants entering the NZ ETS (up to
100,000).
This would lead to a much higher administration costs for both the NZ ETS system overall (due to
higher number of participants), as well as higher costs for each individual participant.
Non-forestry participants in the NZ ETS
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There are no direct fees or charges for registering or reporting as a participant in the NZ ETS for
non-forestry participants. Participants will incur indirect costs associated with the time and any
external expertise required to support their involvement in the NZ ETS such as monitoring,
calculating emissions, and buying units to surrender.
There are some direct processing costs charged if a participant voluntarily applies for an emission
ruling about a participant’s obligations. These fees (fixed and variable) are outlined in the Climate
Change (Emissions Rulings: Fees and Charges) Regulations 2010.
Costs for forestry participants
Forestry participants face a fee for participation that is dependent on a number of factors such as
size of hectares planted and type of forest. There are fees for services such as applying to register
in the NZ ETS, applying for an emissions ruling, transferring responsibility for land in the NZ ETS,
and submitting emissions returns.
As an example, the fees associated with registering post-1989 forest land varies from around $562
for under 10 hectares to $4,743 for over 500 hectares.
The government has recently announced a review into fees for NZ ETS forestry participants
(Government announces independent review of forestry ETS costs | Beehive.govt.nz). The
Government has also announced there will be no annual charge in the 2023/24 financial year for
post-1989 forest land registered in the NZ ETS.
Cost to the regulator
EPA is a Crown Agent established under the Environmental Protection Authority Act 2011, they are
responsible for operating NZ ETS. The work done by EPA in functional areas is covered by a mix of
Crown funding and funding from charges and fees. Crown funding is provided through three
appropriations in Vote Environment: EPA functions, Emissions Trading Scheme, and Exclusive
Economic Zone major prosecutions.
Question 5. Provide a summary of New Zealand’s trade obligations regarding agricultural
emissions.
The obligations in New Zealand’s Free Trade Agreements (FTAs) do not impose additional
commitments on the agriculture sector in relation to the Climate Change Response (Emissions
Trading Scheme Agricultural Obligations) Amendment Bill, and the Bill will not affect the ability of
New Zealand agriculture sector exporters to access tariff preferences under FTAs.
New Zealand’s most recent FTAs with the United Kingdom and European Union have included
provisions on trade and climate change. These include commitments to promote mutual
supportiveness between trade and climate policies, promote emissions trading and facilitate the
removal of obstacles to trade and investment in goods and services of particular relevance for
climate change mitigation and adaptation.
The New Zealand-United Kingdom Free Trade Agreement (UK FTA) contains an article on
Sustainable Agriculture which requires both Parties to take measures to, and promote efforts to,
reduce greenhouse gas emissions from agricultural production.
The New Zealand-European Union Free Trade Agreement (EU FTA) includes obligations that
require New Zealand and the EU to “effectively implement” the Paris Agreement and to “refrain from
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any action or omission that materially defeats the object and purpose of the Paris Agreement”.
However, the EU FTA does not change or expand the underlying Paris Agreement commitments.
These FTAs require and encourage cooperation on emissions trading and carbon markets with our
trading partners, but do not prescribe particular approaches.
More detail on EU FTA and UK FTA
EU FTA: The Sustainable Food Systems chapter of the EU FTA includes commitments relating to
cooperation between New Zealand and the EU and it is not subject to the dispute settlement
mechanism in the EU FTA. By providing the Sub-committee established under the chapter with the
discretion to establish its own priorities, the chapter ensures cooperation activities can reflect
changing understandings of food systems and domestic settings over time.
UK FTA: The focus of the commitments in the Environment chapter are actions to address
environmentally harmful subsidies; support for global initiatives including climate change, fisheries
management, biodiversity protection, and the transition to a circular economy; and cooperation to
advance policies on matters of mutual interest to New Zealand and the UK. The Climate Change
Response (ETS Agricultural Obligations) Amendment Bill does not affect these commitments.
Other New Zealand FTAs also include environmental provisions, but they are usually focused on
cooperation.
Question 6. How feral animals are accounted for in the NZ Greenhouse Gas Inventory.
Direct emissions from wild or feral ruminants such as wild goats, and deer are not accounted for in
the inventory (possums and other monogastric feral animals emit very little methane and are also
not accounted for in the inventory).
The guidance from the Intergovernmental Panel on Climate Change states that emissions should
only be considered from animals under domestic management.
We are not aware of any country that reports emissions from non-domesticated animals in their
national GHG Inventory.
The indirect impacts of wild animals grazing on forests and activities such as pest management are
not explicitly accounted for under the land use, land-use change, and forestry sector of the
Inventory. However, if these types of activities are having a tangible impact on forest growth, they
may be indirectly captured through the assumptions used in the forestry accounting and physical
observations required to estimate removals.
Question 7. Advice about currently available and upcoming or anticipated tools and technologies
for emissions reductions in the agriculture sector, including possible timelines and reduction
impacts, and information on costs, with particular reference to the six years to 2030.
Within the draft second emissions reduction plan (ERP2) officials made the following assumptions
based on consulting a range of people involved in mitigation research.
• Methane inhibitors: 45% efficacy, available 2028 with peak adoption for dairy 69% by 2041
and for beef 15% by 2047. The cost is assumed to be $65 to $77 per tonne CO2e reduced.
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• Low-emissions feeds for dairy cattle: 8% efficacy, available from 2024 with peak adoption 6%
by 2035.
• EcoPond™ for dairy: 92% efficacy, available from 2025 with peak adoption 3% by 2037. The
cost is assumed to be $244 per tonne CO2e.
• Nitrification inhibitors for dairy: 17% efficacy, available from 2030 with peak adoption 1% by
2045.
• The efficacy of low-methane genetics for sheep, beef and dairy cattle increases through time,
improvements in this trait are slow but permanent and cumulative. The cost is expected to be
$2 to $20 per tonne CO2e reduced.
These uptake levels are driven by an agricultural pricing mechanism implemented on 1 January
2030. As no decisions have been taken regarding this pricing mechanism, it is modelled as a
generic incentive on the uptake of mitigation. Uptake prior to 1 January 2030 is expected to be
limited.
Responses to evidence hearing questions
An overview of NDC1
Nationally determined contributions (NDCs) are each country's effort towards delivering on the goals
of the Paris Agreement, including keeping global average temperature well below 2 degrees while
pursing efforts to limit the temperature increase to 1.5 degrees.
NDCs are required to be communicated every five years. They need to reflect a country’s highest
possible ambition and must be a progression on their previous NDC. Countries have committed to
their first NDCs, which cover the period 2021-2030, and next year will be required to communicate
their second NDC, for the period 2031-2035.
New Zealand’s first NDC is a 50 per cent reduction of net emissions below our gross 2005 level by
2030, and is managed as a provisional emissions budget of 571 MtCO2-e over the 2021-2030
period. New Zealand’s domestic emissions are projected to be 672 MtCO2-e over this same period,
assuming we meet emissions budgets one and two (EB1 and EB2).
Note that the 571 MtCO2-e budget under NDC1 is provisional. It will change as New Zealand’s
greenhouse gas (GHG) inventory data is updated across the NDC period, and will only be finalised
when the inventory data for 2021-2030 is published.
As we have noted previously, AR5 values are required to be used until the end of 2030 – i.e., the
end of the NDC1 period. Decisions on reporting requirements for the post-2030 period under the
Paris Agreement, which will come up for negotiation in 2027, will not have an impact on NDC1. Any
impacts on NDC2 are not known at this time
An explanation of the NDC gap and factors that influence it.
As noted above, New Zealand’s domestic emissions covering 2021-2030 are currently expected to
be higher than our target under NDC1. This results in an “NDC gap” – the difference between
projected emissions over the period and the provisional NDC emissions budget. This is illustrated in
Figure 0.1 from the discussion document on the Second Emissions Reduction Plan (ERP2)5:
5 Note the ERP2 discussion document outlines the proposed policies and strategies to meet EB2. For the
avoidance of doubt, as part of this, it takes account of the Government’s proposal to prevent agriculture from
entering the NZ ETS from 2025.
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The NDC gap is subject to change over the NDC period because of methodological updates. The
methodology used to construct New Zealand’s GHG inventory is periodically reviewed, resulting in
changes to historical data for 2005 and 2020 that will impact the provisional NDC1 budget.
The mechanisms available to close this gap are overachievement (that is greater abatement and/or
sequestration than required) of New Zealand’s emissions budgets and international cooperation.
The Government has expressed its intention to meet New Zealand’s NDC1 through prioritising
domestic action. The Minister of Climate Change is the lead Minister for this work.
Chapter 7 of the Climate Economic and Fiscal Assessment, produced by the Treasury and the
Ministry for the Environment, provides some scenario analysis on the potential cost of purchasing
offshore mitigation toward New Zealand’s NDC1 – available at:
https://www.treasury.govt.nz/sites/default/files/2023-04/cefa23.pdf
How will we ensure any international cooperation has environmental integrity?
New Zealand plays an active role in the negotiations of Article 6 of the Paris Agreement under
which the rules for buying and selling offshore mitigation are established. New Zealand seeks to
advance rules that ensure transparency and environmental integrity. The rules include robust
accounting to avoid double counting as well as environmental and social safeguards.
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Appendix C: Back pocket Questions & Answers
1. The following back-pocket Q&As relate to previous topics discussed at the Committee. These
include:
a. The impact of the IPCC Sixth Assessment Report (AR6) on New Zealand’s agricultural
emissions profile.
b. An overview of New Zealand’s First Nationally Determined Contribution (NDC1) and an
explanation of the NDC gap and factors that influence it.
c. Overview of nitrous oxide emissions from synthetic fertiliser use.
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NZ agricultural emissions profile and AR5 and AR6
• The Sixth Assessment Report (AR6) was published in
2022 and has updated values for GWP100. Compared
to AR5, the value for biogenic methane changes from 28
to 27 and for nitrous oxide from 265 to 273.
• If the AR6 GWP100 value for biogenic methane was
adopted for reporting post-2030, compared to the AR5
What is the potential difference
GWP100, New Zealand’s value for biogenic methane in
in New Zealand’s agricultural
CO2e would decrease by 3.6% and nitrous oxide would
emissions profile from using
increase by 3.0%. Note that this change would apply to
AR6?
the entire time series covered by the inventory.
• This would not have a substantial impact on the
percentage of total agricultural emissions relative to
gross emissions (e.g. in 2022, total agricultural
emissions would be 52.6% of gross emissions using
AR6 values instead of 53.2% using AR5).
• Methane is a powerful but short-lived GHG that accounts
for approximately one third of net global warming since
the Industrial Revolution.
• The latest report from the IPCC (AR6) states that limiting
global warming to 1.5°C or 2°C involves reaching net-
zero carbon dioxide emissions in the 2050s or 2070s,
along with deep reductions of other GHGs (including
methane).
• Lower ambition of global emissions reductions in
methane would require achieving net-zero carbon
dioxide at an earlier date and greater emissions
reductions in other GHGs to achieve the goals of the
Paris Agreement.
• Under the CCRA New Zealand adopted a split-gas
approach to the 2050 domestic target based on scientific
evidence that biogenic methane, as a short-lived gas,
does not have to reduce to zero to limit global warming
to 1.5°C.
Why is the short-term effect of
• New Zealand’s domestic 2050 biogenic methane target
methane not considered in our
requires a gross reduction in biogenic methane
climate change target?
emissions and was not set using GHG metrics (e.g.,
GWP100).
• The Government has established an independent panel
to review the methane science and provide advice on
what our domestic 2050 biogenic methane target should
be, consistent with the principle of no additional
warming.
• The panel will report back to the Government by the end
of the year. Its work will complement the Climate
Change Commission’s review of the 2050 targets this
year and wil inform the Government’s response to the
Commission’s advice in 2025.
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New Zealand’s NDC1
• New Zealand’s first NDC is a 50 per cent reduction of
net emissions below our gross 2005 level by 2030, and
is managed as a provisional emissions budget of 571
MtCO2-e over the 2021-2030 period. New Zealand’s
domestic emissions are projected to be 672 MtCO2-e
over this same period, assuming we meet emissions
What is New Zealand’s NDC1?
budgets one and two (EB1 and EB2).
• Note that the 571 MtCO2-e budget under NDC1 is
provisional. It wil change as New Zealand’s GHG
inventory data is updated across the NDC period, and
will only be finalised when the inventory data for 2021-
2030 is published.
• New Zealand’s domestic emissions covering 2021-2030
are currently expected to be higher than our target under
NDC1. This results in an “NDC gap” – the difference
between projected emissions over the period and the
provisional NDC emissions budget.
How will the Government close
• The mechanisms available to close this gap are
New Zealand’s “NDC gap”?
overachievement (that is greater abatement and/or
sequestration than required) of New Zealand’s
emissions budgets and international cooperation.
• The Government has expressed its intention to meet
New Zealand’s NDC1 through prioritising domestic
action.
• ERP2, which we are consulting on at the moment, must
be sufficient to meet EB2. It includes taking agriculture
out of the NZ ETS – we’ve accounted for this change in
What is the impact of this Bill
the plan.
on meeting ERP2?
• Achieving Target 9 requires us meeting emissions
budget one and two – which this Government is
committed to doing
Agricultural nitrous oxide emissions
• Total emissions from synthetic nitrogen fertiliser
(including CO2 from urea) contributed 3.8 per cent of
agricultural emissions in 2022.
Nitrous oxide
•
What percentage of
Nitrous oxide emissions are a long-lived gas and is part
agricultural emissions come
of our 2050 net zero target. It is currently estimated to
comprise about 9% of New Zealand’s emissions –
from synthetic nitrogen
and
fertiliser?
agriculture is the largest contributor (in 2022, it
contributed over 90%). Dairy is the key contributor to
nitrous oxide emissions.
• Synthetic nitrogen fertilisers make up around 18% of
nitrous oxide emissions from agriculture emissions.
• Dung and urine make up a majority (68%) of nitrous
oxide emissions within the agriculture sector.
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• Urea, which is made up of nitrogen and has the highest
quick release nitrogen content of any solid fertiliser. It is
also the most common form of nitrogen fertiliser used.
Use of urea emits both nitrous oxide and a small amount
of carbon dioxide.
What type of synthetic nitrogen
• Nitrogenous fertilisers, which mix nitrogen with other
fertiliser is used in the
compounds such as sulphur, phosphate, magnesium,
agricultural sector?
and potassium.
• Urea fertiliser coated with urease inhibitor, which
maximises nitrogen available for plant uptake reducing
the amount of nitrogen needed and leading to less
nitrous oxide being emitted.
• Agricultural processors include manufacturers and
importers of synthetic fertiliser containing nitrogen; and
What are the NZ ETS
farm-level participants would include persons that
“purchase, other than for on
obligations related to fertiliser
-selling, synthetic fertiliser
use?
containing nitrogen for application to land”.
• For the avoidance of doubt, the Bill proposes to remove
these obligations.
• There are currently 11 participants that are in the NZ
ETS under the activity
“Importing or manufacturing
synthetic fertilisers containing nitrogen”. This means that
they are currently required to report their emissions to
How many agricultural
the EPA.
•
processors import or
Examples include Ballance Agri-Nutrients Ltd,
manufacture synthetic fertiliser
Ravensdown Ltd, PGG Wrightsons Ltd.
containing nitrogen?
• Farm-level obligations for synthetic fertiliser use does
not automatically ‘turn on’ by 2026, instead the Minister
of Climate Change would need to submit an Order in
Council to shift the obligations from processors to
farmers.
Page 19 of 19
CLASSIFICATION
CLASSIFICATION
Priority – Medium
Appendix D: Primary Production Select Committee Members
Chairperson
Deputy - Chairperson
Member
Cameron, Mark
Anderson, Miles
Abel, Steve
ACT Party,
National Party,
Green Party
List
Waitaki
List
Member
Member
Member
Luxton, Jo
Redmayne, Suze
Tangaere-Manuel, Cushla
Labour Party,
National Party,
Labour Party,
List
Rangitīkei
Ikaroa-Rāwhiti
Member
Wedd, Catherine National Party,
Tukituki
CLASSIFICATION
