Climate Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Bill

Members, we now come to Part 2. Part 2 is the debate on clauses 35 to 39, “Consequential revocations and amendments to other legislation”. The question is that Part 2 stand part.

Thank you very much, Mr Chair. Part 2 relates to a narrow aspect in regards to revoking two pieces of secondary legislation that will be made redundant on the commencement date of this bill and they relate to agricultural obligations.

Thank you, Mr Chair. This goes back to a discussion we’re having on Part 1, but it is of course relevant for Part 2 as well because, as the Minister just set out, this does relate to regulations relating to removing, now, all the references to agriculture that have been taken out of the emissions trading scheme (ETS).

As we were just discussing in Part 1—and this is relevant to Part 2—it’s going beyond the methane emissions of agriculture because, of course, it also includes synthetic fertilisers. We see that at clause 37, where in fact the words “synthetic fertilisers” are looking at me in bold from the bill in front of me. That is, “In clause 3, revoke the definitions of calf, cow, heifer, milk solids, slaughter point,”—which all sound maybe quite related to animals—“synthetic fertilisers containing nitrogen, and vealer.” I probably pronounced that wrong. This point about synthetic fertilisers—that we haven’t had answered by the Minister—is that he said that 3.8 percent of our emissions are from nitrous oxide relating to synthetic fertilisers. Why do they need to be removed from the ETS? The Minister said, “Well, because the other nitrous oxide is related to ruminants and things that come from ruminants”—I’d be quiet about that—“but because that other nitrous oxide relates to ruminants, then that should be bundled together with the methane that comes from ruminants.” However, as my colleague Francisco Hernandez has been saying, that’s not how methane is treated—that you have methane from waste being treated quite separately.

He will know the number off the top of his head. I can’t remember it off the top of my head, but I think it might be around 7 percent; 3.8 percent is still a lot, and if we can get rid of 3.8 percent, then we should, because a lot of time and effort goes into reducing that methane by quite small increments, and every increment counts. I’d again invite the Minister to explain how his logic works for that 3.8 percent relating to fertiliser use of nitrous oxide, whereas it doesn’t relate to other gases that are separated out into other industries, regardless of whether or not they’re related to the same gas. The point being: methane—often related to ruminants but also related to landfills—is treated separately and that the landfills are still in the ETS and they’re not being removed despite the fact that methane is also related to ruminants. The logic just doesn’t seem to be there.

Beyond that point, there’s 3.8 percent relating to synthetic fertilisers, something that we should be aiming to remove from our system and we should be using the “polluter pays” principle for it. That, again, was another question that I asked in the Part 1 debate, which was: does he agree with the logic of his ACT colleagues and members of the executive that, in fact, the market is the only thing that should determine farmer behaviour? That seems to be a total abrogation of the “polluter pays” principle, and I haven’t heard that from the National Party before—that the “polluter pays” principle is something that they want to get rid of. As I’ve mentioned before, we do keep seeing that the ETS is the main instrument that the Government wants to rely on. They’ve got rid of those complementary policies, so it seems an about-face to suddenly say, “Well, the ‘polluter pays’ doesn’t now apply to these emissions.”

I’d also appreciate the Minister confirming the Ministry for the Environment numbers of over 50 percent of emissions being from agriculture. What I would like him to confirm is that is the National Party’s position—and they don’t question that, because members from his party were questioning that the other night.

Thanks very much to the member for the question. It is correct that 3.8 percent of total agricultural emissions come from nitrous oxide from synthetic fertiliser. This was included in the draft emissions reduction plan: there are already a number of technology innovations in play and already being utilised by farmers in regards to synthetic fertiliser in the reductions of emissions in regards to that, and the uptake in regards to that is progressing already without any incentives by Government in order to achieve that. We do take a market-based approach in regards to that, and as I’ve noted already it is included in the draft emissions reduction plan. The current status quo in terms of the trajectory of emissions reduction for methane in particular is on track in regards to our 2030 target.

Thank you, Mr Chair. I rise to speak to Part 2 and I’m particularly interested in hearing from the Minister about the proposed amendment. I’m wondering whether the Minister would consider our amendment related to clause 37, where we propose to delete clause 37. I’m aware that the Minister is placing a lot of faith in the magic bullet approach to agricultural emissions and in unproven technologies, and we are concerned that by shutting the door to ensuring that we can reduce agricultural emissions through the emissions trading scheme, we are not going to be able to meet our commitments. I’m also very aware that I’ve got a sheep at home that needs shearing at the moment, and I don’t want us to spend a whole lot of time when we could be doing more useful things.

The amendment amends the Climate Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Bill to retain references to definitions related to agricultural activity in the Climate Change (General Exemptions Order) 2009, including “calf, cow, heifer, milk solids, slaughter point, synthetic fertilisers containing nitrogen, and vealer.” It supports retaining a legislative framework, including definitions to enable agricultural emissions pricing at a later date. The reason why this is important is that, if we don’t meet our emissions targets, the country is going to be in for a huge bill and a future Government will be responsible and the population will suffer. What we’re asking for is an amendment retaining reference to all those aforementioned terms, definitions, as follows: calf—so, male or female bovine under 12 months of age and weighing less than 40 kilograms at the slaughter point; cow, meaning a female bovine with more than six months permanent teeth; heifer, meaning a female bovine with no more than six permanent teeth, etc.

It seems like a very simple thing we could do to ensure that, while the bill may pass, we are not cutting off options in the future. We’re ensuring that we have an ability to do this at a future point when there’s a need. Is the Minister willing to consider this amendment and to think about what we can do and whether there might be a change of heart at a certain point? Is he willing to consider that there might be a sense of regret as we see the world turning towards conspiracy theories and climate denial? Will he consider an approach that is going to help us reduce agricultural emissions while supporting our farmers to do the right thing, while providing the carrot through Jobs for Nature, the ability to support farmers who have lower intensive practices through ensuring that we support regenerative agriculture? If we come back to the definitions, what would be really helpful is if we retain those—delete clause 37—and that would enable us to ensure that we are not simply stopping here and we’ve got options in the future. I’d appreciate the Minister considering this amendment, and a response would be appreciated.

Thanks, Mr Chair. To the member, no, we won’t be accepting that amendment. It’s not helpful because agriculture isn’t going to stay within the emissions trading scheme (ETS). Why would you leave clauses in there in that regard when that is not the intent, and, actually, that is a consensus intent by not just the Government but by the Opposition, who were also in that position, regarding taking the agricultural elements out of the ETS?

Thank you, Mr Chairman. Clause 35(1), in Part 2, revokes the Climate Change (Agriculture Sector) Regulations 2010. Those regulations were put in place by the last National Government, they were amended once, but they were there in order to have the information base for the future, should there be an emissions obligation at the processor level. I’ve previously, in an earlier contribution on Part 1, explained why I have thought that it is silly to require every farmer to report their emissions. It’s an unnecessary administrative burden; it doesn’t change the outcome very much. It’s much better to have a processor-level obligation, which is a lot more efficient administratively, with volunteers being rewarded and the bulk of the price signal flowing through from the processor, based on reporting at the processor level.

Of course, the Climate Change (Agriculture Sector) Regulations 2010 form the basis for that reporting of the emissions at the processor level, and I have those opened on my device here at the moment. Regulation 9 of the Climate Change (Agriculture Sector) Regulations 2010 is that one that says that “A participant who, in a year, carries out [an] activity of dairy processing of milk … must … record the total quantity [of] tonnes of milk solids” and report it. I’m sure that the systems that are in place by the processors at the moment are very simple; it’s not a very onerous task for them to continue doing that for the two years or three years that the Minister of Climate Change has allowed himself to rejig emissions pricing by the date that he’s promised there to be some form of agriculture emissions.

The cost-benefit analysis in the regulatory impact statement makes no reference to the cost, so far as my reading of it, that is being imposed on processors by those regulations that have been there for over a decade. I think it is a logical assumption that one of the possible outcomes of the future system is to actually, for the majority of people, collect things at the processor level rather than requiring expensive and time-consuming reporting which annoys farmers and is unnecessary. It seems to me to be not justified by the Minister to revoke those regulations at this stage. I would like the Minister to inform the committee of what information he has as to the cost that this existing regulation imposes on those processors in the intervening period, in order for the committee to assess whether it’s wise to revoke that regulation. I have an amendment in my name that I’m about to table which moves that clause 35(1) be deleted.

Thank you, Mr Chair. I would like to thank the member formerly from Dunedin, and also the member from Dunedin, Scott Willis, and the member for Dunedin, Rachel Brooking for their excellent contributions—it’s good to get the “from” and “for” right when that list and electorate MP distinction is in place!

Look, I just wanted to point out that this regulation that David Parker has referred to was actually a regulation that was formed under the Key Government. By the way that this Government is going, it seems like that was the last National Government that actually cared about climate change, at least enough to actually bother measuring their emissions. I mean, as the Hon David Parker has already said, there’s actually no requirement. When this regulation was made, there was no requirement for agriculture to be in the emissions trading scheme (ETS) at a process level or otherwise. These regulations, essentially, just enable measurements of them. If we’re actually serious about meeting our nationally determined contributions, measurement is the first step. If you’re not measuring it, how can you manage it? Also, importantly, it sets a baseline for emissions factors that other emissions inventories potentially rely on. There’s a danger that, if we actually scrap this regulation, it might have implications for climate reporting. If we’re removing an aspect of a regulation that other legislative processes might rely on, the unintended consequence might be to actually in some way delay the progress of reporting or monitoring.

That leads on to a related question which I was hoping to ask the Minister in Part 1, but I didn’t get the chance to.

CHAIRPERSON (Barbara Kuriger): We’ll stick to Part 2, please.

FRANCISCO HERNANDEZ: Yes, but it’s related to Part 2.

CHAIRPERSON (Barbara Kuriger): If it’s related in Part 2, that’s fine.

FRANCISCO HERNANDEZ: It’s related to the way we measure emissions and the sort of accounting targets that we’ve got. Under the nationally determined contribution that we have, which agricultural emissions are a part of, we counted them in the previous nationally determined contribution, and we measured some level of contribution from the agricultural sector to that nationally determined contribution. My question is: with the repeal of the requirement to report—and also with the repeal of the requirement to do anything at all other than rely on, I guess, the technological mitigation and the methane inhibitors which the second emissions reduction plan is counting on—is there a concern that, by repealing all these mechanisms, there’s a further emissions gap that’s been opened in the nationally determined contribution?

Even under all the actions of the previous Government, there was already an emissions gap between the domestic action and the nationally determined contribution, which would have had to be met with, potentially, international credits. Now with the repeal of these regulations to measure and with the repeal of these regulations to take action, has it opened a further emissions gap? Has there been any kind of quantification done to see what the impact of opening up that further emissions gap might be? As you’re well aware, as the Minister of Climate Change, policy proposals are required to undergo a CIPA, a Climate Implications of Policy Assessment. I mean, obviously, this is legislation—there’s also a policy proposal, so maybe we should start doing Climate Implications of Policy Assessments for legislation as well.

Suze Redmayne: Getting repetitive.

FRANCISCO HERNANDEZ: But it’s relevant. It’s all relevant. It’s all connected in some way.

Tim Costley: Conjuring was the word you used—conjuring!

FRANCISCO HERNANDEZ: Yeah, conjuring—it’s everywhere. Yeah, I’m a conjurer. So, yes, my question is: why repeal legislation that was actually set up during a previous National Government, the Key Government, which was just set up to enable participants to actually measure their emissions and report on them? It’s a reporting framework. I understand, fair enough, you’re repealing clause 35(2)—that actually does mandate participants to take part in the ETS. I understand why you’re repealing that, but why repeal secondary legislation that actually creates an emissions reporting framework, and one that’s already working and one that’s already standardised? If we want to create consistency between different administrations, it seems like keeping one of the centrepieces of the Key administration is a really good way that we can do that. Thank you.

I move, That debate on this question now close.

The question is that Steve Abel’s tabled amendment to delete clause 35 be agreed to.

The question is that the Hon David Parker’s tabled amendment to delete clause 35(1) be agreed to.

The question is that Steve Abel’s tabled amendment to delete clause 37 be agreed to.

Steve Abel’s tabled amendments to delete Part 2 are out of order as being a direct negation of the question.

We now come to Schedule 1, with no debate. Steve Abel’s tabled amendments to Schedule 1 are out of order as being inconsistent with the objects and principles of the bill.

Schedule 1 agreed to.

We now come to Schedule 2, with no debate. Steve Abel’s tabled amendment to Schedule 2 are out of order as being inconsistent with a previous decision of the committee.

Schedule 2 agreed to.

Clauses 1 and 2