ETS Review Submission

Submission by Robin Grieve, Chairman of Pastural Farming Climate Research Inc.

165 Simons Rd

RD9 Whangarei 0179

094346006 0274795663

I am making this submission on behalf of our members and am available to speak to this submission.


Pastural Farming Climate Research Inc is an incorporated society with over 1300 members. Members of PFCR are concerned with the treatment of livestock biological emissions in the ETS and want them removed on the basis that these emissions do not alter the composition of the atmosphere. No scientific link exists between emissions of enteric methane and an increase in the atmospheric concentration of methane. Furthermore no evidence exists that contradicts the undisputed premise that enteric methane when produced in a steady state does not increase the concentration of methane in the atmosphere. The theory of global warming and the official definition of climate change is that it is caused by human activities which alter the composition of the atmosphere.  Enteric methane produced from steady state does not fit within this definition. Most enteric methane produced in New Zealand is from steady state.

We take exception to this statement by Minister Groser in the forward to the consultation document.

As a signatory to the Kyoto Protocol, New Zealand has an obligation to reduce its emissions to 1990 levels for the period 2008 to 2012 or pay the difference. Following the introduction of the ETS, New Zealand is well on its way to meeting this obligation.

We see this as yet another example of misleading information put out by his Ministry. New Zealand did not commit to reduce its emissions. The 1990 level was the level of gross emissions we produced. The emissions we measure this target against are net emissions. We are well on our way to meeting our obligation under Kyoto because while our gross and net emissions have increased dramatically since 1990, our net emissions of today are lower than our gross emissions of 1990. To say that our obligation is to reduce our emissions to 1990 levels and that we are doing that is untrue. We believe a Minister of the Crown should not be misleading the people of New Zealand in this way.

Consultation Questions

Question 2

We believe the Government should adopt option C

Foresters should be able to choose either compensation or the right to offset; there is no value loss of their land if they can offset so no compensation required.

We also submit that when foresters offset they should be liable for the soil carbon losses that occur when pasture is converted to forestry. If offsetting is to have any environmental integrity the loss of soil carbon, which equates to about one third of the CO2 sequestered by these trees, should be taken into account. Even though soil carbon is not included in the Kyoto Protocol environmental integrity is important and so too is consistency. Certain international units were banned because they did not result from the net removal of any greenhouse gas. So too is the case with offset forestry. Approximately one third of the CO2 they remove does not cause any reduction in the concentration of CO2 in the atmosphere because of soil carbon loss. Consistency and fairness and environmental integrity dictate the soil carbon losses are paid for by the foresters.


Question 1          What do you think of the overall package of amendments the Government is proposing to make to the ETS as outlined in this document?


These are the Govt proposed amendments We are submitting on;


• Provide for a power to delay the entry of emissions from animal livestock and fertiliser use for up to three years if certain criteria are not met, following a review in 2014.


We submit that the words “up to three years” be removed with no limit on how long entry can be delayed.

The reason for this is that if the criteria the Govt has set for the entry of livestock emissions are not met then they should not be included in the ETS regardless of what year it is. There is no reason to set a maximum extension of three years so no limit should be included. In fact there is no logic in having a time limit. This Government proposal is effectively saying that biological emissions should not be in the ETS for these reasons but that after 2018 these reasons are no longer valid. Why would they not be valid after 2018? If they are valid now they will be valid after 2018.


As to the first of the two criteria.


• there are technologies available to reduce these emissions



We submit that this criterion is too vague. It could be said that technologies exist now, The Caygill report said that farmers could reduce emissions by increasing per head production, planting trees and using DCD. The report was incorrect in drawing this conclusion. We will deal with each of these options separately.



DCD is not available to all. If compliance with the ETS is to remain at processor level then only technologies that can apply throughout NZ can be considered for this test. DCD is not a useful option through out New Zealand. It is also only marginal in some areas of New Zealand and the known harmful effects of burning fossil fuel to spray a chemical on the soil to kill the denitrifying bacteria that are an essential part of the nitrogen cycle, which is undoubtedly the most important cycle for life on this planet, far outweigh the minor and only suggested consequences of nitrous oxide itself.




Technologies to reduce emissions must not include the ability to offset emissions by planting trees as this is not a realistic or sound economic proposal for farmers on high value fertile land. It also goes against the intention of the UN not to enact policies that reduce food production. It is also not a technology to reduce emissions, rather it is an offset mechanism only and not a true one at that because the farmer can not offset one activity against another and then account for the balance. The farmer will still have to pay money because of the ETS yet if they have planted trees they only receive NZU’s.  These NZU’s can only be converted to money by the farmer trading them with the inherent liabilities and risks of that.


Increasing per head production

We submit that it is only the ability to reduce emissions greater than 1.3% per year per kg product per year that should trigger this condition being met. Livestock emissions are currently reducing by this amount without an ETS. It also demonstrates how unnecessary it is to use an ETS to reduce emissions. Of course this, option while reducing emissions on an intensity basis usually result in an increase of absolute emissions. Placing extra ETS costs on farmers will promote further increases in absolute emissions as farmers increase production to cover the ETS costs.


On the second of the two criteria

• international competitors are taking sufficient action on their emissions in general.


We submit that this condition is too vague. Who decides what is sufficient and under what criteria? This condition must also define competitors as livestock producers and read that NZ’s biological emissions will not be included in the ETS until our competitors include biological emissions in their carbon reduction scheme.


We understand that the term ‘emissions in general’ was included deliberately instead of saying biological emissions. The reason given that we should include biological emissions in our ETS even if our competitors don’t, is that biological emissions make up a large proportion of our emissions is not necessarily logical.

What does it matter what proportion of our emissions they make up? We just decide what to include and what not to include in our ETS. Europe’s ETS does not include major emitters so we can do the same for biological emissions.

The Government is also eying up opportunities to align our ETS with the Aussies. Having farmers on both sides of the Tasman treated the same way is essential. The relative contribution of each sector to their national emissions profile is quite irrelevant and in addition biological emissions are not an insignificant contributor to the Australian emission profile, yet they are not included. Once New Zealand farmer’s biological emissions are included in the ETS it could not equitably be aligned with Australia’s scheme. This is because then you would have a NZ farmer who is having exactly the same impact on the atmosphere as an Australian farmer buying carbon credits from the Australian farmer. This is because our ETS deems the NZ farmer to be an emitter whereas the Australian farmer who may be involved in identical farming methods receives carbon credits under the carbon farming initiative because their biological emissions are ignored and certain carbon accounting methodologies which are not available to the NZ farmer, receive credits.


The Caygill panel could only refute the claim of unfairness by saying “The argument that no other country includes biological emissions in its emissions trading scheme ignores the point that these emissions are covered by the target for which New Zealand is accountable, whatever happens elsewhere. This is easily solved; don’t include them in the targets. It would be quite legitimate for NZ to set a target which excludes biological emissions. The other countries that are not including biological emissions in their trading schemes are hardly going to be able to complain.


On the proposal to change the Global Warming Potential of methane from 21 to 25 and nitrous oxide from 310 to 298

We submit that GWP’s are a flawed system and that the UN is actively seeking a replacement metric because they do not work. Until this occurs a flawed metric should not be used in major economic policy, namely the ETS. Using GWP’s is disadvantaging NZ and NZ needs to advocate for a fairer system. In the meantime methane and nitrous oxide do not need to be converted to a ‘carbon dioxide equivalent’ they can easily be reported on an individual gas basis.


We also submit that changing the GWP’s at the whim of a conference creates uncertainty. Any value needs to remain unchanged for a defined period. Farmers need to know what these GWP’s will be without fear of another increase at every conference. These conferences cause enough fear already with the fear that our delegates will get carried away in the moment and handicap our future with an agreement. If we are to have GWP’s the Govt needs to set a clear process in place as to how often and when these GWP’s will be subject to change in our ETS.





• Introduce more explicit powers to enable auctioning of NZUs within an overall cap subject to further consultation on the detailed settings.


• Provide a power for appropriate quantitative restrictions on the use of international units subject to further consultation on details.


Consultation does not mean that the Government will do any more than inform so we do not support this proposal without these details.


We submit that the proposed ETS auctioning process and the ability to set a cap and the ability to limit the purchase of international units should not proceed into legislation until all the criteria are in place.

These changes will fundamentally change the way the ETS works with the Government attempting to pass legislation with out any of the necessary detail in place to gauge the impact this will have.


We also submit that any changes a Minister of Climate Change wants to make to the cap, the amount of units available for auction and the percentage of international units an emitter can purchase must be through legislative change, not regulation.


The reason for this is that any changes will directly affect the market making it not a true market. Any changes need to be considered and consulted on and scrutinised by the public through the parliamentary process. With such changes able to be made by regulation the powers future Ministers will have are too great. There is a real possibility that political motivations will be used to change the fundamentals of the scheme and for example turn it into a cash cow for the Government rather than a tool to save the planet. We saw that at the last election with Party’s pledging to take money paid by emitters and use these to fund expenditure not related to global warming mitigation.


We also submit on the proposal to set a cap on emissions based on international targets or commitments. With no international commitments after 2012 other than conditional targets and if these targets are to directly affect the ETS and our economy then for the sake of certainty and so that business can plan ahead, unconditional targets must be set several years in advance and remain relatively constant.





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