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Purpose
1. This aide memoire provides information on nitrous oxide emissions.
Background
2. We recently provided the Minister of Climate Change with an aide memoire on the Climate
Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Bil , to
support his appearance at the Primary Production Select Committee on Thursday, 22 August at
11am.
3. Following this, the Minister of Climate Change’s office requested more information on nitrous
oxide; this aide memoire responds to that request.
Where does nitrous oxide come from?
4. Nitrous oxide is one of the three gases that make up agricultural emissions as reported in New
Zealand’s greenhouse gas inventory – alongside methane and carbon dioxide. Agriculture is the
largest contributor to New Zealand’s nitrous oxide emissions, contributing approximately 90
percent. In the latest greenhouse gas inventory, nitrous oxide was 15 percent of agricultural
emissions and 8 percent of overall gross emissions.
5. Other sources of nitrous oxide include the Energy, Industrial Processes and Product Use, and
waste sectors. Most agricultural nitrous oxide emissions (69 percent in 2022) are generated by
the deposition of animal dung and urine on pastures. See Figure 1 below.
6. New Zealand uses dif erent emissions factors for dung and urine deposited on dif erent farm
slope classes. For every unit of nitrogen deposited, nitrous oxide emissions are much lower on
steep land. These differences are thought to be due to these soils having lower soil fertility,
nitrogen status and moisture content compared with less steep slopes. Farm-level reporting
systems can recognise these differences, whereas processor-level systems cannot.
7. Fertiliser application onto soils generates a further 18 percent of agricultural nitrous oxide
emissions. The impact of coated urea, a mitigation product with wide adoption, is included in the
inventory and reduces nitrous oxide emissions by a small amount.
8. It is a common misconception that all nitrous oxide emissions are from fertiliser application.
Related to this misconception, agencies have previously received submissions to the effect that
a ban or tax on nitrogen fertilisers at the processor-level would be sufficient to address nitrous
oxide emissions.
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Figure 1: Agricultural nitrous oxide emissions broken down by source
9.
The
processes that
drive nitrous
oxide emissions
are complex –
see figure 2 –
and there is a
high degree of
uncertainty in the
estimates in the
greenhouse gas
inventory. The
latest inventory
reported an
uncertainty of +/-
56 percent, and
the 2022 central
estimate of 6,343 kt CO2e has a range of 2,791 to 9,896 kt CO2e. Al the nitrous oxide
estimates in this document have this level of uncertainty. As New Zealand has an active
research programme looking at nitrous oxide emissions and mitigation approaches, we expect
nitrous oxide estimates to change and change substantially in the future.
Figure 2: Schematic of the processes that drive nitrous oxide emissions.
10. Nitrous oxide emissions peaked in 2020 and have fallen by 8 percent since then. This is due to
historically high fertiliser prices driving a drop in the use of urea and other nitrogenous fertilisers.
Nitrous oxide emissions from animal dung and urine changed little over this time period.
11. In the second emissions reduction plan
baseline numbers that are currently out for consultation,
nitrous oxide emissions are expected to decline by 11 percent from 2022 to 2050 – this does not
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include the impact of a pricing system. When the ‘agricultural pricing by 2030’ policy1 is
considered, nitrous oxide emissions are projected to reduce further due to the uptake of
nitrification inhibitors (several of which are under development).
How does nitrous oxide fit within New Zealand’s climate policy framework?
12. Nitrous oxide is a long-lived greenhouse gas and is included in the legislated 2050 net zero
target. There is no specific nitrous oxide target within the net zero target. Within this target
nitrous oxide is converted into carbon dioxide equivalents using standard global warming
potential (GWP) 100 values.
13. Nitrous oxide from agriculture is the largest category of long-lived greenhouse gas emissions
outside of the New Zealand Emissions Trading Scheme (NZ ETS). To meet this 2050 target,
reductions in nitrous oxide and/or additional sequestration, beyond current NZ ETS settings, will
eventually need to be considered. This was identified in the draft of the second emissions
reduction plan (ERP2).
14. Nitrous oxide wil need to be considered in broader agricultural mitigation policies including the
development of a fair and sustainable pricing system for on-farm emissions by 2030.
15. The draft ERP2 includes the development of nitrous oxide mitigation tools and technologies and
on-farm measurement of nitrous oxide emissions. As above in paragraph 11, additional nitrous
oxide reductions, compared to the baseline, are included in the modelling of agricultural pricing.
Next steps
16. As agreed by the Minister of Climate Change’s office, of icials from Ministry for the Environment
and Ministry for Primary Industries will meet with the Minister of Climate Change ahead of his
Select Commit ee appearance (this has been scheduled for 10.30 – 11.00am on Thursday 22
August 2024), and wil be in attendance at the hearing.
1 The model ed emissions effect in the
Agricultural emissions pricing and mitigation technologies (-5.5 Mt
CO2-e in EB3) policy is solely caused by increased uptake of mitigation technologies, and corresponding
emissions reduction from their use. Production and stock numbers are assumed not to be affected by
agricultural emissions pricing. The form of the agricultural pricing mechanism is dependent on future
government policy decisions, and could vary significantly from this.
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Recommendations
It is recommended that you:
a)
Note the contents of this briefing.
YES / NO
9(2)(a)
Jane Chirnside
Hon Todd McClay
Director Resources and Rural Communities
Minister of Agriculture
Ministry for Primary Industries
/ / 2024
Mark Vink
Hon Simon Watts
General Manager Markets
Minister of Climate Change
Market Development
/ / 2024
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Appendix 1. Overview of how the Climate Change Response (Emissions Trading
Scheme Agricultural Obligations) Amendment Bil relates to nitrous oxide
1. The Climate Change Response (Emissions Trading Scheme Agricultural Obligations)
Amendment Bil (the bil ) would amend the Climate Change Response Act 2002 to:
a. remove agriculture activities from the New Zealand Emissions Trading Scheme (NZ
ETS),
b. provide transitional arrangements for agricultural participants who had already
registered under the NZ ETS for agricultural activities, and
c. remove the ‘Primary sector climate change commitments’ which set out milestones to
track progress of the Government – sector agreement (He Waka Eke Noa – Primary
Sector Climate Action Partnership).
2. The Bil must be passed before 1 January 2025 to avoid surrender obligations pertaining to
fertiliser importers and manufacturers’ and animal processors’ agricultural activities commencing
(that is, to avoid these participants being required to pay for their agricultural activities via the NZ
ETS from 1 January 2025).
3. In the absence of this Bil , bringing agriculture into the NZ ETS would result in a single price to
all gases which would contradict the intended split-gas pricing approach reflecting New
Zealand’s approach to split gas targets.
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