Tuesday, 29 June 2021

Agriculture and the ETS

Interesting idea for getting some agricultural emissions into the covered sector: bring fertiliser into the ETS. 

No Right Turn points to the proposal:

Nitrous Oxide is a potent greenhouse gas, 265 times worse per ton than carbon dioxide. Its also long-lived, with a half-life of 121 years in the atmosphere. New Zealand emitted 8.36 million tons CO2-equivalent of it in 2019, almost 10% of our total emissions. And yet, we're doing nothing to limit that. Why not? Because its emitted by farmers, of course.

1.5 million tons CO2-equivalent of those emissions is caused by farmers' (over)use of fertiliser. Stuff's Olivia Wannan points out that we have an easy way to control this: bring it into the ETS:

In its new report, the Climate Change Commission noted fertilisers could be charged the same levy that is already put on every litre of petrol. By pricing fertiliser under the Emissions Trading Scheme (ETS), the country could start making in-roads on the greenhouse gas now.

However, the Government took this option off the table in its deal with the agricultural industry – a 2019 partnership called He Waka Eke Noa, set up to solve the thorny problem of how to measure and price greenhouse gases from sheep and cows.

That solution won’t take effect until 2025, which will give the country just 25 years to get nitrous oxide to net zero.

Which isn't good enough. This is the lowest-hanging of low-hanging fruit, and sticking a carbon price on it would incentivise farmers to use less. And it makes perfect sense to do it at the importer/producer level (as is done for oil, coal, and everything else), not least because its far easier to audit two fertiliser companies to ensure they're not cheating than thousands of farmers. As for how much it would cost, at the current carbon price of $43.35 a ton, we're talking an extra ~$31.60 per ton of fertiliser. According to this article, urea sells for $1290 a ton, so we're talking a roughly 2.5% increase - less than the extra they'll be paying on a new, dirty ute. And of course that cost can be completely avoided just by using less.

Our refusal to bring fertiliser into the ETS is effectively a $65 million a year subsidy to farmers, ot encourage them to pollute not just the global atmosphere, but also our rivers and streams (which is where the nitrogen ends up). Its also a subsidy for dead babiesbowel cancer, and poisoned drinking water. We wouldn't accept it if the government subsidised tobacco companies to cause cancer - but that's effectively what they're doing with farmers. Pretty obviously, I think that needs to stop. Farmers need to pay the full cost of their pollution, as well as facing environmental controls to prevent them from poisoning our waterways. And if the government refuses to do that, we need to get a government who will.

The last paragraph's rhetoric is over the top. But we do need better freshwater management, and to me that means cap-and-trade over multipollutant space in catchments big enough for it to make sense. 

I haven't checked the numbers here provided. But it's hard to see any obvious case against getting a CO2-equivalent price onto fertiliser, charged like petrol at point of manufacture or import, by bringing it into the ETS.

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