Climate Change and Agriculture in NZ OECD Committee on Agriculture 19 November 2009

Transcription

1 Climate Change and Agriculture in NZ OECD Committee on Agriculture 19 November 2009 Hayden Montgomery Senior Analyst International Climate Change Ministry of Agriculture and Forestry

2 Outline of presentation Agriculture s contribution to GHGs Agriculture in NZ NZ Policy for Agriculture Mitigation potential

3 Annual global GHG emissions % 11% 38% N2O soils 12% CH4 enteric Biomass burning Rice mgmt. other 32%

4 Global agriculture GHG trends : Developed countries, EIT: -12% Developing countries: +32% Source: US-EPA 2007

5 New Zealand land use context Land-based economy almost half of New Zealand in agricultural land NZ agriculture primarily pastoral supplements used Almost 40 million sheep, over 5 million dairy cattle, almost 5 million beef cattle Trends since 1990: sheep numbers halved dairy numbers increased 40% beef numbers fairly stable Photo: Gilbert van Reenen

6 NZ agriculture GHGs Agriculture 49% of total GHG emissions (37.7MtCO2) Reflects the importance of agriculture to New Zealand s economy Industrial Waste 6% 2% Agricultural emissions have increased by 16% since % increase in emissions from enteric fermentation 27% increase in emissions from agricultural soils Energy 43% Agriculture 49%

7 NZ Government Policy Response: NZETS - overview Economy wide, all sectors, all gases Participants report their emissions (or the emissions that will arise from their activities) and surrender units equal to those emissions Units of trade will be a New Zealand Unit (NZU) NZUs will be convertible to Kyoto Protocol units (with limits) Severe penalties for non-compliance NZUs will be allocated to those most affected - phased out over time Agriculture enters ETS on 1 January, 2013

8 NZ ETS agriculture point of obligation Default is set at processor/company level Minimises number of participants Majority of emissions captured Defined as slaughtering animals, processing milk or colostrum; or importing and manufacturing nitrogen fertiliser. Farm level is an option and would improve incentives, but may not be technically feasible in the short-term Very few options for mitigation currently, particularly for enteric methane so would incentive be any different? Photo: Gilbert van Reenen

9 Millions of tonnes CO2-e NZ ETS agriculture allocation Purpose Manage the transition Reduce regrets from irreversible changes Compensate for losses in wealth Pre ETS 90% of 2005 emissions from agriculture Review clause Depend on competitors International negotiations Methodology to be determined Agriculture excluded Agriculture phase-in Free NZUs Actual emissions Projected emissions 90% of 2005 Emissions

10 Net Farm Profit Before Tax NZ ETS agriculture farm impacts in $NZD $80,000 $71,790 $70,000 $60,000 $50,000 $57,060 $48,342 $44,512 $40,000 $30,000 $27,550 $20,000 $10,000 $0 National Dairy Model $9,544 National Sheep and Beef Model 06/07 Base Profit Profit in 2013 profit in 2030

11 NZ ETS - forestry All post-1989 forests can receive credits and associated liabilities Forestry included from 1 January 2008 Obligations and future liabilities run with the land and bind future owners Forest owners receive NZUs convertible to Kyoto Units Deforestation of pre-1990 included in ETS from 1 January 2008 Allocation to exotic pre-1990 forests for CP1

12 Importance of forestry Forestry is predicted to offset 17% of NZ s emissions over CP1 Forestry is only significant mitigation option available to farmers currently Significant land area in NZ able to be planted, particularly marginal farm land in extensive systems

13 Policy considerations and trade-offs Point of obligation; low transaction cost v reward for individual action Lack of mitigation potential Phase out of free allocation? Verification & compliance costs Lack of knowledge of wider effects of ETS e.g. land use dynamics Food security v reducing emissions Leakage and competitiveness

14 Sustainable Land Management Plan of Action Complements ETS Government to invest $175 million over next 5 years on Sustainable Land Management and Climate Change Plan of Action Plan to be developed and delivered in close partnership with land based sectors Three pillars: adaptation, mitigation, business opportunities Covers all land-based primary sectors Three supporting programmes: research and innovation technology transfer and information communication and engagement

15 NZ agriculture GHG research Ministry of Agriculture and Forestry Mitigation research - NZ$45M over 5 years Inventory development NZ$15M over 5 years Monitoring and measuring farm emissions and mitigation NZ$6M over 5 years Technology Transfer NZ$41M over 8 years Greenhouse gas footprint strategy - NZ$6M over 5 years International collaboration NZ$5M over 5 years LEARN Pastoral Greenhouse Gas Research Consortium NZ$25M over 5 years

16 Considerations for mitigation Agriculture is 6.7% GDP and over 50% of export earnings Concerns with competitors without binding Kyoto targets or not pricing agriculture emissions Price premium for carbon-friendly goods? Many (mostly) small businesses high transaction costs Limited technology currently available Cultural and knowledge barriers Photo: Gilbert van Reenen

17 Mitigation potential Calculating mitigation potential is extremely difficult Key uncertainty is predicting human behaviour NZ has no subsidies on agriculture so farmers follow market forces behaviour impacted by commodity cycles, exchange rates etc Multi-gas system with feedbacks Biological systems variable climate variable soils emissions vary across time and space Result: economic potential is currently small fraction of technical potential Photo: Gilbert van Reenen

18 Potential mitigation options for grazing systems Methane breeding for methane efficiency 3-7% (speculative) vaccine? Nitrous Oxide DCDs 2-3% Feed pads - 1% Herd homes - 0.6% Photo: Gilbert van Reenen

19 Linkages between adaptation and mitigation Impacts of future climate Increased forestry at the edges of climatic range Reduced plant available N and P Lower protein but higher water soluble carbohydrate content of plants Small increase in herbage yield Greater legume content Increased levels of plant pathogens Reduced emissions of the agricultural greenhouse gases methane and nitrous oxide DCD effectiveness reduced with more rain Practices limiting adaptive capacity Breeding efficiency Maladaptation

20 Closing remarks Need to take a systems approach feedbacks Need to look for solutions on-farm 85% of GHGs in livestock agriculture Need increase in global investment in science Need to work with developing countries projected growth Need to balance mitigation effort with food security/production no regrets Need good links between industry, science and policy