Climate Change Response (2050 Target and Other Matters) Amendment Bill

Members, we come now to Part 2. Part 2 is the debate on clauses 6 to 10, “Other amendments”, and the Schedule. The question is that Part 2 stand part.

A couple of sets of questions that I want to focus on for the Minister. A little bit of clarification, please, around clause 6, which amends section 5X. It’s setting emissions budgets and ensuring they’re met. There was supposed to be an emissions budget set this year for 2036-40. That’s the fourth emissions period. It was supposed to be set by the end of 2025, but it’s now going to be set by the end of 2027, and so there will be a reason for that delay. It’s a shame that it’s occurred—but if the Minister could just explain why that delay has occurred and explain what prevented you from setting that emissions budget this year, as was required under the existing legislation.

Having said all that, I guess that explains why a lot of this is under urgency. It’s to make sure that the Minister doesn’t have to do that. A quick explanation on that one, Minister, before I head on to the next question.

Thanks, member, for the question. Absolutely right—in the context of the changes that we’re putting through in terms of updating the target, the Climate Change Commission’s advice is based on the status quo target, not the changes we’re going to effect through the passing of this legislation. Hence, we need to extend the timeline to allow the Climate Change Commission time to be able to prepare advice, and, as such, the deadline in the timeline seems practical in the context of the time required for them to do that piece of work.

Look, thank you. A pretty straightforward question—I guess it’s a shame that it slipped. We do mind that, but I don’t want to pursue that further at this stage.

I want to move on to clause 7, which amends section 5ZC of the primary Act. Those, as I said, are matters that the Climate Change Commission must consider and the Minister must consider when preparing emissions budgets. There’s a whole set of things in there, and they’re irrelevant to the current discussion, though obviously not irrelevant. But the one that is being added is new section 5ZC(2)(b)(xii), and it is “the implications, or potential implications, for domestic food production.”

Now, I read this initially in the bill and I thought, “Is that an ambiguity?”, because I couldn’t understand what is meant by “domestic food production”. I’m actually serious about this, and I do want a clarification of it. Is it food produced domestically which could go anywhere in the world or is it food for New Zealand—so domestic food production? There’s actually a genuine ambiguity there, if the Minister could clarify. Is it food produced in New Zealand or is it food produced for New Zealand? They do actually differ. It actually matters. Someone will contest this at some stage, so let’s get it on the record, at least in the Hansard. I just wonder if the Minister might consider clarifying it just a little. I haven’t put in an amendment, but it could be one that you might want to put an amendment in just to clarify exactly what is meant in the law.

To clarify, the point refers to food production that’s undertaken in New Zealand. But, obviously, where those products end up can and will include international sources, because we’re an export nation.

I do think there’s a genuine ambiguity there. It’s now clarified at least in the Hansard, so if a case is taken, it could aid in that. But would the Minister consider an amendment? I think the most straightforward one to do would be to say, maybe, “for food production in New Zealand” rather than trying to say “for domestic food production”. It sounds trivial, but it actually does clarify it a little bit, and it might be something you want to do. Would the Minister consider that? The Minister won’t consider it. He likes to have a little ambiguity in there. OK, then. That’s fine, Minister. We all like to be a bit mysterious from time to time.

Hon Member: Tell us more—a full five minutes on it.

Hon Dr DEBORAH RUSSELL: That’s as far as I’m going to go. I want to understand, then, why we ought to be considered for domestic food production. In terms of setting the methane target, what does the Minister see as the implications or the potential implication being? We know that one way of reducing emissions is to reduce production. Now, I’m not saying that’s the preferred way in this party, but it is a way that it could be done. But what sorts of implications does the Minister see for food production in terms of the methane target?

Thanks to the member for the question in regard to clause 7. The Government, by making this change, is indicating clearly that food production is an important component and should be given greater prominence than the status quo. A range of matters must be considered already as part of that process, and we are simply stipulating that this point, which is noted in clause 7, should be a consideration and should have greater prominence than what it is at the moment under the status quo.

OK, I want to pursue this a little bit further, Minister, because we might say that, obviously, we should be considering economic matters when it comes to setting methane targets or emissions budgets, but here we are, considering food production.

Now, I’m not quite sure why we need to concern ourselves with food production, all right? What’s the problem we’re trying to solve here that we think that the methane target might affect? Now, we might talk about economic issues, but why food production? What is that related to? Why is that a concern when it comes to methane production? You know, if we are going to try to get methane emissions down, as even this reduced target commits us to, what is the issue with food production?

One way we can get those methane targets down is by reducing the amount of food we produce. What is the problem with reducing the amount of food we produce? We know that there are ways of reducing production from dairy farms that don’t result in reduced profit for our dairy farmers. We know that if we move to regenerative farming or move to using fewer imported products, using things like less palm oil—we know there are farmers who manage to do this and retain their profits. This is not about—this is not about—undermining the profitability of farming, because we can actually reduce the number of kilos of milk solids. We can reduce the number of kilos of meat that are produced and not reduce farmers’ profits. What is the problem, then, if the Minister could explain, please?

Thanks, Mr Chair. Well, I’m not going to give a broader 101 lecture on economic growth for the New Zealand economy based on the reliance on a primary sector export market and the correlation of reduction and our production from that sector and why that would be a bad thing for our country, because I think it is pretty obvious. I think what the member may be referring to is how can we derive greater productivity in the context of our broader farming systems, which also includes emissions reduction, and that’s absolutely something we are looking at, and the investment through AgriZeroNZ does that.

The member asked a question around what the considerations are. I mean, one of the considerations is already, in addition to the prominence of food production, economic circumstances and the likely impact of the Minister’s decision on taxation, public spending, and public borrowing. There is a wide range—sort of 12 or 15 types of considerations. Now, food production is already included within the Paris Agreement under a number of clauses, including climate adaptation, to be specific. But the view of the Government and view of feedback is that because of the unique circumstances of the New Zealand economy and being an export- and primary sector - led economy, the prominence of that decision making is not only appropriate but is also recognition that that is very much our unique success factor as an economy and should have prominence in decision making.

I want to explore this a bit further, because I am not sure why we need to consider food production in the number of issues that we go around in terms of the methane target. If we’ve already got economic matters being considered in there, that’s fine, because that would play into that. Of course, I get how our export markets work and the economic issues sitting around that. Then why include this? It seems like an extraneous thing to include. It seems like it’s unnecessary. If we’re already considering economic matters, I would have thought that food production would have been included in those economic matters. Why pull it out and specify it as a different matter that needs to be considered separately?

Thank you, Mr Chair. I just want to say that I think this question that has been deeply prosecuted by Deborah Russell is actually a really important one, because the detail of what the Minister’s intention is, or the Government’s intention is, with this very particular clause is important to understand. The wording of new section 5ZC(2)(b)(xii) says, “the implications, or potential implications, for domestic food production.” Now, he has elucidated that he means both—well, at least earlier on in the explanatory note, it elucidates the “potential implications, for food production in decision-making about emissions budgets”, right. “This would sit alongside existing considerations under the Act, such as the implications, or potential implications, of land-use change for communities. In that context, food production encompasses domestic food production for both consumption and export.”—that is a useful elucidation in the explanatory note. I appreciate that.

But in terms of the implications for food production, because let’s take, for simplicity’s sake, are we concerned in terms of the scope of providing nutrition to ourselves—obviously, we would be concerned if there was a climate action that impacted our ability to provide nutrition for ourselves—or are we concerned with being able to produce a surplus for export? In that regard, I think it’s a very valid point that we should not be in a position where we’re not able to provide nutrition for ourselves, but let’s be clear: 95 percent of the dairy production in this country is a surplus for export. If a dairy farmer wanted to turn their farm into a solar farm and put sheep under it, they might produce less food, but they might also be more profitable. It is an important question as to what is the scope of that investigation into the implications for domestic food production.

Then my second question is: what are we concerned with here? Primarily, providing nutrition to ourselves and potentially the world, because food production is important to the Intergovernmental Panel on Climate Change because we need to provide food and nutrition for people. But in that context, our food production, from the point of view of getting nutrition into human bodies, is among the least efficient in the world. If you are considering that question, are we concerned with the most efficient way of producing nutritious food for people anywhere; therefore, will that be one of the considerations? That’s the question.

My third question is: in the evaluation on the implications of the targets, the emissions budgets, and their impact on food production, are you also assessing the impact of climate change on the ability of us to produce food—because the obvious pay-off here for us having a lower target ambition is that we might get worse climate consequences down the track which actually reduce our ability to produce food. Thank you.

Thanks, Mr Chair. I think these are good points to engage in. I think, first and foremost, when we are considering the implications of this, it would be fair to say that our farming sector is at the forefront of dealing with the impacts of climate change, and its ability to produce in the future is heavily predicated on mitigation in regard to the broader challenges such as temperature rise and other considerations. The recognition around how does this interplay is both in terms of our ability to produce food, which we do for domestic consumption and export, yes, but also taking into account the reality of how climate change will impact farmers. I think it would be fair to say that New Zealand farmers, being some of the most innovative in the world, absolutely understand their land better than anyone and the reality of the challenges in the way in which the climate is impacting that and how they need to adapt and change to that.

In regard to the point around where it sits around that conversation around food production, we very much think in the context of food security. Food security in the context of an export-led nation is not only the domestic needs, obviously, first and foremost, but we do have obligations and responsibility in terms of the production of food that we produce for food security for other nations—particularly in our broader region, as well—and so both of those two components are also considered. Also, in terms of the efficiency of us to produce food versus other countries, we have significant advantages, and hence the leakage conversation not only for emissions but leakage in terms of efficiency of production of food for what is some 40 million other individuals, as well. Hopefully, that gives you some context of that point.

Thank you, Mr Chair. While I’m sure there are still some questions around clause 7, I do want to also open up clauses 8 and 9 for some questioning. This is the other part of the bill. This is about disconnecting the unit price and volumes in the emissions trading scheme (ETS) from our nationally determined contribution. This is quite a significant move—and so significant that when the Minister of Climate Change announced it a few weeks ago, it crashed the ETS price. I want to ask the Minister some questions around that and whether this was a surprise to the Government—is the first question.

The regulatory impact statement on the change notes that no consultation was undertaken. Why was that the case? Why was there not consultation undertaken on that? The analysis was limited due to timing and lack of public input. Why was there a limitation in timing? What were the timing constraints?

Where did this fit in the Minister’s work programme, given that it did crash the ETS price—which I’ll come on to in terms of the kinds of implication that had, in terms of the advice the Minister was getting saying they couldn’t specify any potential costs of this policy and no direct costs. But in reality, when you collapse the carbon price—as the Minister’s announcement did make, with what was going to be in this legislation—we’re talking about hundreds of millions of dollars a year as recently as 2022 in terms of the ETS revenue that the Government receives. It is a significant cost in terms of forgone revenue. Why was it that there wasn’t better advice, first of all? Is the Minister satisfied with the kinds of advice he’s getting from his officials? Why was there no consultation around this? I do have some more questions on that, but I’ll just let the Minister answer these questions.

Thank you very much, Mr Chair. In regard to the emissions trading scheme (ETS) market and the price of the New Zealand emissions units (NZUs) that trades on that market—and we’re talking about the secondary market, in this instance, versus the broader options which are undertaken by the Government—as Minister, I don’t comment on specific changes in regards to the price of those units for the reason that it is an independent market. But I will talk more generally around the points that the member has raised, because I think they are important.

I think, first and foremost, the Government has been consistent and clear around its desire for a credible ETS in order to do the heavy lifting of emissions reduction. The important component around that is the way in which market sentiment takes into account the policy changes and advice such as this announcement and how it interprets that in the context of the way in which the market prices the NZUs. It would be fair to say that there is, I think, opportunities for us to continue to look at ways in which we can ensure that that market sentiment has confidence in the way in which the information that’s being published is understood fully, and there is a wide range of market participants in that regard.

We do engage with the market. The question specifically around consultation, as the member will know, is that because this is a publicly traded market, there are strict requirements around information exchange with that market and very strict requirements around what can be discussed with the market participants before those announcements are made. You are working through a complex and technical area with sensitivities, but we are open as a Government—and with industry—to work with industry, where possible, as much as possible, to ensure that they have confidence in terms of the sentiment moving forward.

We do want the ETS to continue and to be in a position where it does the heavy lifting of emissions reduction. It is an important area of Government policy, hence why it’s one of the five pillars in our climate strategy.

Thank you, Mr Chair. Has the Minister of Climate Change discussed with the Minister of Finance the impact of the secondary market price change and what that will do with the Crown accounts? Of course, the way the way in which Treasury do treat the secondary market unit price—it’s a very technical question, I know. The way in which Treasury treat that secondary market unit price—has he discussed that with the Minister of Finance in terms of the policy decisions that the Government has made that has crashed that unit price? I’m also interested to know from the Minister whether or not this will be reflected in the Half Year Economic and Fiscal Update when it is released next week—so at the half-yearly financial update, whether or not there will be an implication in terms of the Crown accounts that we’ll be seeing there.

The other question I have for the Minister is around the communications he received from the Parliamentary Commissioner for the Environment, Simon Upton—of course, a former National Party Minister—who wrote to the Minister urging him not to go ahead with this disconnection piece that is in clauses 8 and 9 of the legislation. He said that “Trying to decouple New Zealand’s domestic actions from its international commitments is, on the face of the matter, curious. The main reason New Zealand is doing anything about its emissions is to contribute to addressing a global problem”.

I guess, continuing the theme of mysterious actions in the course of this debate, it wasn’t just Dr Deborah Russell that was alleging there was a sense of mystery about this; of course, Simon Upton did, as well. He said, “The motivation for the proposed changes is opaque, a mystery deepened by the need for parliamentary urgency. The only reason I can think of is one grounded in potential litigation risk. Faced with the projected shortfall in meeting the NDC, and the requirement that you must be satisfied that ETS settings are ‘in accordance with’ the NDC”.

Was this a consideration, and did the Minister receive advice? That is the question I have there around the need to make these changes in clauses 8 and 9, for those reasons that the Parliamentary Commissioner outlined, because he said, “decoupling the NDC from these provisions may seem an attractive and straightforward solution to avoiding potential legal challenge.” Was that a motivating factor, and did the Minister receive advice on other ways in which that could be avoided?

Then, Simon Upton also went on to say, “As hard as changing the NDC might be, it is preferable to changing an Act that has, at least until now, had broad parliamentary support.” He suggested that you could revise down the Paris target as an alternative to what you’re doing in clauses 8 and 9. What I’d like to know from the Minister is: did he receive advice on this as an alternative? Is this something that he considered? Did he receive advice from his officials on any other alternative ways that the same outcomes could have been achieved in terms of what we’re seeing in clauses 8 and 9? The other thing I’d like to know is: has he met with or responded to the Parliamentary Commissioner for the Environment?

Thanks to the member for that question. The motivation for the change, in effect, in decoupling this process from the nationally determined contributions (NDC) was included within the materials that was provided to the market. There was a significant amount of information provided to the market, but the underlying motivation and rationale for why this change was undertaken was included within that information.

To reinforce those points, in effect—and as I noted in my speeches to the House in both first and second reading—the purpose of the emissions trading scheme (ETS) is around domestic emissions reduction. The point and purpose of decoupling and, in effect, removing the linkage from the NDC—in effect, our international commitments—removes what is deemed and was assessed as an inconsistency in terms of the role of the ETS. The objective there is actually to focus the ETS on domestic emissions reduction—nothing more than that.

The way in which the market has interpreted that has had a wide range of differing views, but the rationale and motivation of why the policy change was undertaken was included in the information provided to the market.

The Minister of Climate Change, in multiple statements, and I think in the House today, has, basically, said that the Government is putting all of its eggs in the emissions trading scheme (ETS) basket in terms of the strategy for reducing our domestic emissions. They see the ETS as a strategy, not a tool, and it is their primary mechanism. Given that the mere announcement of the changes being made through clauses 8 and 9 in the legislation crashed the ETS market, now that we do have that lowered price of carbon, has the Minister received advice on what the implications will be for decarbonisation and on whether or not businesses will invest in industrial decarbonisation, and how that has changed business cases around that?

We know that some industrials will tout $150 to $200 a tonne as being the tipping point for where they will make the decision to invest in decarbonisation projects. We saw the Minister’s announcement tank the price of carbon into the $40 range. Has he received advice from his officials on what the implications will be for our carbon reductions from the changes in clauses 8 and 9?

Thanks very much, Mr Chair. I want to go back to the question in regard to Crown accounts and I just want to clearly stipulate that there is not a role for officials in my department, nor Ministers, to input into that. That is a process that is undertaken by Treasury, and it is done independently of me.

Thank you very much, Mr Chair. Look, I’m still on clause 7. I do seriously appreciate the Minister of Climate Change’s responses on my previous questions regarding the implications of the food production clause, and I have some follow-ups on that.

In that evaluation, will the Minister also consider emissions intensity of agriculture output and land? The reason I ask that is the point that the Minister has made in opening statements about our efficiency. Obviously, I’ve already elucidated that we have one of the lowest efficiencies in terms of emissions intensity for agricultural output in the OECD. We sit at about No. 48, and the primary reason for that, of course, is that we primarily produce ruminant animals. My question is: will emissions intensity be one of those considerations, and will emissions intensity in terms of agricultural land per hectare be a consideration? By the way, for your clarity, I’m quoting from the OECD report from 2022 on this. I’m happy to provide it to you if you’d like, Minister, and to anyone else in the committee.

In terms of the efficiency of agriculture intensity per hectare of land, we also sit very low in the OECD, at about 45th. Now, that is because, emissions intensity - wise, what we produce has a very high intensity for per 100 grams of protein output, and the things also elucidated in this report are that beef cattle are the most emissions-intensive per 100 kilograms of output, lamb and mutton is next, the fourth is dairy beef, the fifth is cheese, the seventh is milk, and so on and so forth. But for efficiency of production, groundnuts, pulses, peas, nuts, etc., are significantly more efficient in terms of greenhouse gas emissions per 100 kilograms of protein produced. Will that be the sort of thing that is considered in the implications for food production, because, clearly, if we are concerned, as we should be, about both the efficiency and the value of the food production we’re producing, then those would surely be considerations the Minister would want to take into account? Thank you.

I want to follow on just a little bit from what my colleague Steve Abel has been saying and from what I’ve been talking about previously, and that is in terms of the implications of our methane target for domestic food production—meaning food produced in New Zealand. Minister, I was at COP30 recently, and it was a sort of fascinating experience, but I had a long talk to Ian Proudfoot, who is the global head of food or agriculture or—well, I can’t remember what the title is—for KPMG. In the classic way, you can go all the way to Brazil to meet someone who’s based in New Zealand, but that’s what I ended up doing.

He had some really interesting things to say about food production, and it does play into this. That is that as we see the way that food production will develop in terms of vat-based food and synthetic, if you like, foods that are produced, which is the type of food that we produce in New Zealand, it will end up—and it actually already is. This is the type of food that is typically sold to richer nations, to richer consumers, and to consumers that make choices about their food, and what we’re seeing increasingly is that those consumers demand a range of attributes about their food such as that they are sustainable and they don’t produce increased emissions.

Now, I know New Zealand food is not as carbon-heavy as some. Our farmers do produce reasonably carbon-efficient food, though, as Steve Abel laid out just earlier on, however much we like to say it, we are not the most efficient in the world, though we’re not too shabby, either. Nevertheless, if we reduce our methane targets, as is happening, the implication there in terms of our production of food is the extent to which the markets that we are trying to sell to will not choose our food because it does not have the attributes around sustainability that they want. Is that the sort of thing that you anticipate will be taken into account in considering our emissions budget?

I think it’s actually a really important one. Our farmers need markets, they need people to purchase our food, and the types of consumers who purchase our food are the ones who make choices about it. We are the people who can make choices, and those choices increasingly consider sustainability. To what extent is that included in this consideration of domestic food production?

Thank you, Mr Chair. I’m also interested in clause 7, particularly in relation to the Minister of Climate Change’s answer to Steve Abel’s earlier contribution, where Steve Abel was talking about nutrition. The Minister has given us a couple of answers around why it’s important to include domestic food production in here. He has said that of course it includes exports, because our economy relies so much on exports. We don’t want to get into the economics again—I don’t want to relitigate that, and I acknowledge that the Minister said that—but including domestic food production in here because of exports is a very different argument from the other issue that he mentioned, which was that the Paris Agreement talks about the importance of food production. Those are two separate issues, and I’d like to know if the Minister agrees with me that those are separate issues. The Paris Agreement goes to those nutritional points that Steve Abel was talking about, and so his answer seemed to mix those two issues up.

Then the Minister, in another question, talked about food security. He said that food security is first and foremost. That is a separate issue again—food security. I mean, it’s obviously related to nutrition. He said, “and for the countries around us”. Given that commentary, I would like to know if he is expecting the Climate Change Commission to do work into food security when looking at potential implications, and that would be a very interesting piece of work. That’s the one issue related to nutrition which is in the Paris Agreement. Does he expect the Climate Change Commission, in their reporting, to also talk about protein versus carbohydrates, then, as well, and to look at the different foods that come into New Zealand? I think those are two very different points.

Another question related to this is the Climate Change Commission and the funding of the Climate Change Commission. This is an additional piece of work that the Climate Change Commission will be having to do, and we already know that the Climate Change Commission has had a lot of its funding cut, and so what is going to happen for the funding of that?

Then, if there is some mix-up in this relationship between nutrition and the importance of food—which is in the Paris Agreement—but then also for our exports, if it is actually export-led and not about getting nutrition to New Zealanders, is it arbitrary that it’s just about food? Couldn’t it be about other things as well, particularly if that food is lacking in nutrition?

We know that for a lot of our exports, there is a lot of production that’s related to those exports, and so where does that fit in the scheme of things, as well? Would it better, in fact, to expand on this new subparagraph to talk about the different issues that are happening, because the Minister is saying, “Oh well, it’s because exports are important.”, and then he said, “Oh, it’s because Paris says food is important.” Those are two very different issues, and then he said, “Oh well, food security is important.” What are the different parts and what is it?

Again, he also said in response to, I think, one of Steve Abel’s questions to do with the commission that we should be looking at what happens with the implications of climate change on our food production, and so that’s a fourth area, as well. Does he agree that this new subparagraph is supposed to cover all four of those areas or not?

Thanks, Madam Chair. Look, I acknowledge that the member has come to this clause 7 a little bit late, because we have had quite an extensive conversation on this clause—acknowledging that, actually, all of the clauses are about half a page in totality. But let’s go through that one more time.

Questions around the Climate Change Commission—good point raised there. The Climate Change Commission will provide advice. I don’t want to, obviously, pre-empt that advice in terms of what they do, but these considerations that we’re talking about will be part, no doubt, of that, which is helpful in terms of the Government’s decision making. The exporters and the companies that are involved in the export of primary product will, obviously, continue to do what their markets dictate them to do, obviously. So, you know, take that for what it is.

Hon Rachel Brooking: How is that relevant to this?

Hon SIMON WATTS: Well, it’s relevant in the context that we are acknowledging here that food production is, and should be, given prominence in the way in which we make decision making around the way in which we set climate targets. I think that’s pretty sensible, because, actually, food production is really, really critical to our food security and, therefore, linked to our national security and also the role which we play to provide food security and national security to the region in which we play. If we want to talk about the food triangle and, you know, low-carb diets and protein and all that, I don’t think that’s in the bill; I didn’t see it in the half-page I’ve got. Again, that’s out of scope in the context of this bill, but what we do know is that New Zealand exporter and food production involves a wide range of food. I think that’s probably enough to answer.

I’ve only just got here. The Hon Rachel Brooking—and, as I have said in previous committees of the whole House, we’ll try to keep the question and answer sessions going rather than the target of five minutes for every speech.

I appreciate that, as I was yelling at the Minister. No, I’m not going for a target of five minutes.

But, in response to the Minister’s response, the question that he’s not answering is: why has he chosen to insert this clause here? Is it because of our economic reasons with exports or is it because of the nutritional importance of food to New Zealanders and our food security?

Well, again, we’ve discussed and answered that exact question previously. We talked about the fact that it is not only domestic consumption but also the importance of our ability to export that food to other parts of the world, and that is included in the explanatory note to this bill.

I move, That debate on this question now close.

I think there is a bit more to be canvassed in this part, but I can see from the notes from the previous Chair that clause 7 has had quite a lot of interrogation, so maybe it’s time that we did move on.

Well, I put it again to the Minister that he has not answered my question—or he could be answering it. I’m not sure, by his confrontational tone, what he means. Is this both exports, there for economic reasons, and nutrition, there for health reasons and food security and national reasons? But he seems to also be saying it’s for the nutrition of the world. If he can confirm whether or not it’s about the nutrition of the world or not, that would be useful.

The point goes to what I was saying earlier about how arbitrary it is. If it is just about exports, because somehow these exports might be related to the Paris Agreement and food, then that is a very different reason for the insertion of this clause than the nutrition of New Zealanders or just a simple economic argument that we should be making lots of money from exports. That’s a fine argument to have. Yes, we need to make lots of money from exports, but if we’re also tying that to something in the Paris Agreement about food, then we need to get down into how arbitrary it is that it’s just food and not related to the nutrition of that food.

I’ll give a simple example of—imagine a sheep in a paddock down the road from here. That sheep may have one leg of lamb when it gets processed that is consumed in New Zealand by someone in this House this evening for dinner. The other leg may get wrapped and exported to someone in another country in which it will get consumed. That is the reality of food production. We are looking at domestic food production, and that will include both domestic consumption but also international exports. That’s the two parts. The nutritional components of those two legs of lamb, I guess, would probably be quite similar, because they’re from the same sheep. I don’t think we’re getting into that; we’re simply acknowledging that domestic food production is about what we produce here, acknowledging that it will end up in different parts of the world, including here at home.

Just very shortly, it is different to my question, the answer about the sheep and the two legs of the sheep—probably a female sheep. The question about nutrition is: has the Minister of Climate Change put food in this bill because Paris talks about food? That’s one question. If so, then that creates a problem, because if you’re relying on the link to food with Paris, then we need to be talking about nutrition. If it is simply what I put to him earlier—that it’s about exports and the economics of exports—that’s a legitimate thing to be thinking about. If it’s about the food security of New Zealanders, that’s fine too. But has he put food in here because of that Paris Agreement? This is why this is very muddled—the reasoning and the logic for this new addition.

As I noted before in a response, the food production is already included in parts of the Paris accord—in particular, statements in the context that the way in which greenhouse gas emissions develop needs to be “in a manner that does not threaten food production;”, for example, under article 2.1(b). The simple answer to the member’s question: it is both. That is what we’re referring to.

Again, I’m not sure how much more we can describe what is pretty clear on the implications, or potential implications, for domestic food production. The New Zealand Government have deemed that food production and export of our food to the world is a key element to our economy and should have greater prominence in the decision-making consideration in the way in which we set targets. I don’t think that is controversial—actually, I think most New Zealanders would have thought, “I would have expected you would have done that already.” The reality is we’re now putting that very clearly in the criteria.

Thank you very much, Madam Chair. It might feel like we’re really overlitigating this point, but I actually think it’s quite an important one. Can I put it another way, Minister? We’re talking about biogenic methane, which comes from ruminant animals. That is one part of our food production. It is not by any means the whole part of our food production. In terms of the emissions challenge we have, when we take the pie graph of New Zealand’s emissions, we find that half of that graph is agricultural emissions, predominantly methane and nitrous oxide—and we’re dealing here with biogenic methane, which is the methane part of that pie graph that comes from ruminant animals in New Zealand. We have a lot of it because we have a lot of ruminant animals. But a quarter of that total emissions profile in New Zealand is only one part of that food production system—it is the dairy part of it. The other quarter of that pie chart is every sheep in this country—22 million of them, I think—every beef cow—

Miles Anderson: No, it’s 17.5 million.

STEVE ABEL: Down to 17—Jesus! There are about 4 million beef cows; every chicken, every pig—hopefully, not in farrowing crates—every vegetable produced, every fruit produced, all the wine, and every other part of food production in our country makes as much emissions as just the dairy industry makes.

CHAIRPERSON (Maureen Pugh): Can I just check that we’re talking to clause 7?

STEVE ABEL: I’m talking exactly to clause 7, yes—thank you, Madam Chair. My question is, Minister, with the emphasis you are putting on biogenic methane, the wording of clause 7, new section 5ZC(2)(b)(xii)—“the implications, or potential implications, for domestic food production.”—alludes to the idea that if there is an impact in reducing the number of ruminant animals or, let’s say, dairy cows, even if you’ve still got the same number of beef and sheep, would be a problem for food production, when, in fact, that other part of that pie chart that’s the more efficient part of our agricultural system—i.e., not the dairy part—

Grant McCallum: Based on what?

STEVE ABEL: Based on science, Grant. My goodness! Why don’t you take a call, mate.

CHAIRPERSON (Maureen Pugh): Why don’t you come back to your debate.

STEVE ABEL: The other part of that pie graph that is not based on dairy cows could expand agriculturally across the landscape, God forbid, and we would be reducing the number of dairy cows, but we could be producing more food. I’m just concerned to clarify, Minister, does this clause have the effect of protecting the status quo, highest methane emissions sector in this country or does it allow us to have land use that means more low - methane emitting food production?

The clause we have discussed at length—in regards to clause 7—in no way constrains any future State position that is predicated on the status quo. That may infer that there is greater dairy production in the future; it may infer that there is a different mix of production from other sectors. What the member is referring to is using a status quo model of where the dairy sector, in five or 10 years from now, does not have tools that are currently under development, that would, in effect, allow it to create more production and output than the status quo per livestock unit with less emissions as a result of that livestock unit, and greater resilience to other considerations around the impact of climate change, such as increased temperature.

If you consider where we could and will be in the future—and we can’t foresee that exactly—we definitely are of the view that we will have more tools and innovation available in the future than what we have currently. Therefore that, in the context of an export-led nation and as a food producer for the world, will give us quite a significant opportunity—an economic opportunity—to be able to, in effect, consider ability to create greater output and production to feed the broader world, linked back to the food security’s considerations that we have because of climate change in other parts of the world that are more heavily impacting them than us.

There is no constraint around that; it could work in differing ways. Again, it’s not for us to dictate the view of how that sector will be structured in the future, but it is our role to remove constraints and barriers that would enable innovation to drive greater productivity. That is what we see as an opportunity within the primary sector in order to continue to drive our economy.

Thank you to the Minister of Climate Change for those answers on food. It sounds like it’s very wide-ranging.

Now, I would like to move to clause 9, and this is—I know it’s been touched on already, the deletion of that “and the nationally determined contribution”, but what I want the Minister to answer is why it is necessary to delete that. I realise some of the policy issues that were raised in those contributions, but at subsection (3) of section 30GC in the principal Act, it says, “However, they need not strictly accord with the budgets or contributions as long as the Minister is satisfied that the discrepancy is justified, after considering the other matters under this section.”

My question is: given that there’s already an out to consider about those contributions—the nationally determined contributions—why is it necessary to make this change in clause 9?

I have already answered the similar question exactly on why we are doing the point under clause 9 in regards to clause 9(1), and the linkages around clause 9(2) and (3) are, in effect, remedial in the context of that point under clause 9(1).

I think the Minister of Climate Change must not have heard me, because my point was not whether or not “nationally determined contribution” should or should not be in there—just that there is no need for his amendment because there is already an out.

I move, That debate on this question now close.

I’m tempted to take the closure motion, but I will give members another opportunity to move into the other couple of clauses that are available.

Francisco Hernandez: Madam Chair.

CHAIRPERSON (Maureen Pugh): Have you got something new there?

Yes. Thank you, Madam Chair. Just before I move on to the Schedule, I do want to ask an inconsistency that I potentially identified in clause 9(1), which is that the Minister of Climate Change has made reference to how the idea of the changes to this is to decouple the emissions trading scheme from the nationally determined contribution, because the Government’s stance is that this is purely a domestic tool.

However, I just wanted to point out to the Minister that under section 30GB(2)(a)(iii)(C) of the Climate Change Response Act, it makes reference to “approved overseas units used;” and there’s reference to “overseas units” scattered all across the parts of the legislation that this Government is seeking to amend. If the Government was consistent in its objective of seeking to truly decouple the domestic targets from the nationally determined contribution, would the Minister consider deleting those other parts, or is there another programme of work under way to amend the rest of the legislation to make it consistent with the policy objectives of this Government?

I want to move on now to the final Schedule, the new Part 6 that’s being inserted into Schedule 1AA. I’m just curious why the Government chose to—I mean, it was like the Government knew coming into this year that the emissions budgets were due at the end of the year. Why insert this section and why delay the provision of this advice? One possible answer might be the methane review, but that doesn’t change the targets that could have been incorporated in the potential for the new targets under new Part 6, so why change it altogether?

Again, for my earlier question around the overseas units that are scattered throughout that section of legislation—thank you.

I thank the member for the question. Actually, in regards to the question that the member has noted around the Schedule on why, I have actually previously answered that, but I’m happy just to reinforce the answer there. The practical reality is that under the status quo, the advice that we have received from the Climate Change Commission is based on the current target. We’re changing the targets. As a result, we need to allow adequate time for the Climate Change Commission to prepare new advice so that we can consider that before considering any changes. There is simply no time available because we’re here and now and we would have a matter of weeks if we didn’t allow an extension of that time. Hence, that is the purpose of that point.

Just to clarify in regards to when I used the word “decoupling”, we were referring here to the accordance components within the requirements of the Act. In effect, the stipulation under clause 9(1), which is the clause reference that we were talking about here, is changing the legal minimum. That is the accordance test which—just to clarify the word “decouple”, that’s the context in which I am using there.

In regards to the questions around clause 9(2) and (3) and whether I have any intention to change that, the answer is no. Hopefully, that answers all of the points, including the Schedule. Thank you.

Grant—sorry, Miles Anderson. I was looking at you.

I move, That debate on this question now close.

The question is that Francisco Hernandez’s tabled amendment to clause 6, new section 5X(3)(d), to replace “2027” with “2026” be agreed to.

The question is that Francisco Hernandez’s tabled amendment to clause 7, new section 5ZC(2)(b)(xii), to insert the words “with particular regard to maximising calorific efficiency” be agreed to.

The question is that Francisco Hernandez’s tabled amendment to clause 7, new section 5ZC(2)(b)(xii), to insert the words “with particular regard to the climatic conditions upon which that production relies” be agreed to.

The question is that Francisco Hernandez’s tabled amendment to clause 7, new section 5ZC(2)(b)(xii), to insert the words “with particular regard to the incentives for progressing lower carbon food production methods” be agreed to.

The question is that Francisco Hernandez’s tabled amendment to clause 7, new section 5ZC(2)(b)(xii), to insert the words “with particular regard to long-term food sustainability challenges” be agreed to.

The question is that Mariameno Kapa-Kingi’s tabled amendment to clause 7, new section 5ZC(2)(b)(xii), to insert subparagraph (xiii) be agreed to.

The question is that Francisco Hernandez’s tabled amendment to delete clause 8 be agreed to.

The question is that Francisco Hernandez’s tabled amendment to delete clause 9 be agreed to.

The question is that Francisco Hernandez’s tabled amendment replacing clause 9, to replace “accordance with” with “alignment with” in section 30GC(2) of the principal Act be agreed to.

The question is that Francisco Hernandez’s tabled amendment replacing clause 9, to replace “are in accordance with” with “have regard to” in section 30GC(2) of the principal Act be agreed to.

Francisco Hernandez’s tabled amendment replacing clause 9, to replace paragraph (a) in section 30GC(2) of the principal Act with “the emissions budget is the primary priority and the nationally determined contribution for New Zealand under the Paris Agreement that applies to” is ruled out of order as being inconsistent with the principles and objects of the bill.

The question is that Francisco Hernandez’s tabled amendment replacing clause 9, to replace paragraph (a) in section 30GC(2) of the principal Act with “the emissions budget and, optionally, the nationally determined contribution for New Zealand under the Paris Agreement it applies to” be agreed to.

Francisco Hernandez’s two remaining tabled amendments replacing clause 9, to replace section 30GC(2) and paragraph (a) of that subsection are ruled out of order as being inconsistent with the principles and objects of the bill. Francisco Hernandez’s tabled amendments to clause 10 are ruled out of order as not being in the correct form of legislation.

We’ll move to the Schedule. The question is that Francisco Hernandez’s tabled amendment to the Schedule, new clause 50(2)(b), to replace “31 March 2027” with “31 March 2026” be agreed to.

The question is that Mariameno Kapa-Kingi’s tabled amendment to the Schedule, new clause 50, to insert new subclause (4) be agreed to.