Some form of transitional assistance for farming could help ease the financial impact of any future inclusion of agriculture in the Government’s emissions trading scheme (ETS), says Waikato Regional Council.
The ETS regime involves dis-incentivising production of greenhouse gases by requiring that net emitters purchase carbon credits from the likes of foresters or otherwise offsetting those emissions. Cows and sheep produce a large part of this country’s greenhouse gases and Waikato hosts a large proportion of the national dairy herd. But agriculture is currently excluded from the scheme.
A submission endorsed 9-4 at today’s council meeting on a Productivity Commission paper said it will be difficult for New Zealand to transition to a low-emissions economy as long as agriculture is excluded from the ETS. Inclusion was necessary for the scheme to be effective.
However, the submission says the council recognises that to include agriculture may be difficult for the sector and suggests “it may be worth investigating whether some sort of offsetting tax cuts or credits on farm incomes could be used so that the overall effect on farm incomes is neutral”. The commission’s paper also suggests a transition period will be essential.
The report noted the council has a strong interest in climate change, as the region is a major contributor to the New Zealand economy indirectly through the generation of electricity and directly from the export of primary produce.
“Both are to some extent influenced by climate change and both in turn have an influence on the greenhouse gas emissions profile of the region and of the nation. Both are major contributors to the economic wellbeing of the region and the nation.”
Most if not all of the activities the council is currently engaged in either affect or are affected by climate change, and the submission makes a range of other comments about how greenhouse gases can be minimised and the efficiency of the ETS improved.
The Productivity Commission had posed a number of questions in its paper released for public feedback in August.
The council – which recognises through its strategic direction that moving to a low carbon economy is essential for the region – will now forward its submission to the commission which is due to publish a draft report on the way forward early next year.