Hon Jim Anderton
20/09/2007
I would like to reinforce David’s comments
regarding the commitment the Prime Minister
has made to the sustainability agenda. It
is the kind of leadership New Zealand needs
to take it forward in the 21st century.
I’d also like to acknowledge the many officials
who have worked tirelessly and under extraordinary
pressure to develop this package over the
last year.
I am extremely proud to be part of a Government
that has shown leadership and resolve in
addressing the difficult issues confronting
New Zealand. I am particularly pleased to
be able to announce this morning, landmark
decisions the Government has taken to address
climate change in the land management sectors.
The benign weather, which brings rain and
warm air across the roaring forties to New
Zealand, is a key ingredient in the success
of our biological industries.
For more than 125 years, we have farmed
a largely predictable climate, and from
its fruits have come a first-world standard
of living. But increasingly, we cannot rely
on the rain to fall, the sun to shine and
the grass to grow as and when we expect
it to.
As my colleagues have said we can expect
climate change to bring more droughts, storms,
floods and winds, and if that wasn’t enough,
new pests and diseases are predicted as
well.
And then there are the market implications
of climate change. In our export markets,
consumers and regulators are already asking
hard questions about the sustainability
of our produce. Unless we can say our exports
are from the first truly sustainable country
in the world we will increasingly be shut
out of the markets upon which we rely.
But climate change is not only a risk.
It is also an opportunity for New Zealand.
Just as consumers are turning away from
environmentally damaging products, they
are turning towards environmentally responsible
production and prepared to pay premiums
for it. This is a wave available to New
Zealand to ride. But first, we have to measure
up.
In December last year we put out a discussion
document with the snappy title, “Sustainable
Land Management and Climate Change: Options
for a Plan of Action.” Hundreds of submissions
came in and the Government has listened
to the views of all sectors carefully.
As the Prime Minister and David Parker
have outlined, we have decided to adopt
an economy-wide emissions trading scheme,
which will be combined with complementary
measures to assist New Zealand in transitioning,
over time, to a carbon-constrained future.
The emissions trading scheme will allow
flexibility in the way land is used, while
ensuring decision-makers consider the true
costs, including the cost to the environment,
of their actions.
Emissions trading will allow foresters
to obtain the value of the carbon capture
their trees provide to the rest of us.
Emissions trading will also encourage much
greater levels of tree planting on vulnerable
hill country to protect our soils, waterways
and communities from floods and erosion.
Last week, I launched the NZ Wood campaign,
funded with $4 million from the Government,
which will encourage the use of wood products
to substitute for energy-intensive materials
like concrete, steel and aluminium while
bioenergy developments will provide a renewable,
climate-friendly, energy source.
Today, the forestry sector gets an even
bigger boost.
As David has said, the Government proposes
that the forestry sector enters the emission
trading scheme on 1 January 2008. From next
year, owners of forests planted after 1989
will be eligible for 100 per cent of the
carbon credits and liabilities generated
under the Emissions Trading Scheme. This
is a world first.
Depending on the price of carbon, this
is likely to be worth at least several hundred
million dollars to the forestry sector.
Over the past few years, the Government
has maintained that foresters have no automatic
right to these credits and this remains
our position. However, now that the Government
has agreed in principle to an economy-wide
Emissions Trading Scheme, there is a good
case for also devolving the benefits that
arise from Kyoto.
Of course, the benefits don’t accrue without
liabilities. From 1 January 2008 owners
of exotic forests planted before 11000 will
be liable for emissions that arise if they
choose not to replant their forests after
harvest.
This is important because deforestation
is the second largest source of greenhouse
gas emissions globally, and reducing deforestation
is one of the lowest cost options for reducing
emissions. It is also important to address
immediately as forestry is the one area
where individuals can bring forward their
emissions to beat any future measure.
To help the New Zealand forestry industry
transition, the Government proposes allocating
to the sector 21 million tonnes of carbon
between 2008 and 2012, with a further 34
million tonnes for future periods, at no
cost. This total of 55 million tonnes is
equivalent to the historic rate of deforestation
over the current exotic forest estate.
This free allocation will be distributed
to all forests owners, on the basis of forest
area, who will then be able to trade among
themselves, or with other sectors of the
economy, if they have no wish to deforest.
The first reporting period for forestry
will conclude at the end of 2009, the same
time as transport, allowing the two sectors
to trade emission units between themselves.
Small scale foresters, such as farm foresters
or those who own less than fifty hectares,
will be eligible for exemption under the
scheme and therefore face no liabilities,
but will not receive any free allocation.
In total, the assistance package offered
to forestry, at a carbon price of fifteen
dollars a tonne, is worth around $825 million.
The Government has not yet formed a view
on whether indigenous forests should be
covered by the Scheme and will be consulting
on that further with landowners. Current
controls on indigenous vegetation mean that
significant deforestation is unlikely.
Back in 2003 the Government agreed with
the agriculture sector that the Government
would meet the cost of non-carbon dioxide
emissions from the sector until 2012. In
return, the sector increased its research
efforts on cost-effective abatement technologies.
The Government is sticking by that agreement.
As David outlined, agriculture will come
into the emissions trading scheme on 1 January
2013.
It is proposed that agriculture will start
measuring and reporting its emissions before
then - in 2011. And the Government expects
agriculture will start reducing emissions
before the trading scheme applies to the
sector.
Five years is a long time to prepare but
there is a lot we have to do.
The sector can, and must, rollout existing
technology such as nutrient management plans,
nitrification inhibitors and improved energy
efficiency.
The agriculture sector will benefit in
several ways as it begins to reduce nitrous
oxide emissions. For example, its nutrient
budgets and management plans will reduce
costs. It will improve water quality. It
will be better positioned to compete in
international markets where our environmental
and climate change performance is being
counted.
When agriculture enters the ETS, we propose
an assistance package of emission units
allocated at no cost to the sector.
The total level of free allocation when
the agriculture sector enters the emissions
trading scheme will be at a maximum of 90
per cent of the sector’s 2005 level of emissions.
This will ensure that the sector is not
encouraged to increase its baseline emissions
before it enters the scheme. However, over
time this level of free allocation will
be phased out.
No final decision has yet been made about
the best place to put the obligation for
agricultural emissions. Options include
the farm level, processor/company level,
and sector body level. At the moment, the
Government’s preference is for a processor/company
level point of obligation. But we will work
with the sector closely to develop a practical
and cost-effective system that rewards good
environmental performance.
The emissions trading scheme is the cornerstone
of New Zealand’s efforts to reduce our carbon
emissions. But, on its own, it won’t do
enough to reduce agricultural emissions
significantly over the medium to long term.
We need a technological breakthrough to
do that.
Nor will the emissions trading scheme on
its own address the broader challenge of
how the land management sectors adapt to
climate change or take advantage of the
business opportunities.
The Government is committed to working
through these issues in partnership with
the industry. I am pleased to announce that
the Government will invest $175 million
over the next five years on a plan of action
on land management and climate change.
The plan will help the land management
sector adapt and prepare for the future,
and will be led by a peak group comprising
representatives across the sectors and chaired
by the Director-General of MAF.
A key priority for the plan of action is
increasing our research effort to ensure
New Zealand continues to lead the world
in agricultural emissions research. The
Government has decided to allocate $45 million
over the next five years to turbo-charge
our science investment, and this is to be
base-lined with an ongoing investment of
$10 million annually in out-years.
But getting the science out of the laboratory
and into practice in the field is just as
crucial as the science itself. The plan
of action includes a further $41 million
investment over the next eight years in
technology transfer and farmer education.
A further $10 million will be invested
in research and development, and commercialisation,
of bioenergy and energy efficiency opportunities.
Funding will also be provided for the research
and development of biochar, which is the
use of charcoal to improve soil productivity
and potentially sequester millions of tonnes
of carbon into our soils. You can expect
to hear much more about this in years to
come.
There will be other measures, including
farm scale greenhouse gas monitoring and
reporting, supported by $6 million in funding.
There will be work to break down the barriers
preventing business from capitalising on
climate change opportunities. This will
include a $6 million greenhouse gas footprint
strategy that will allow New Zealand to
take on ‘food miles’ and be on the right
side of the debate.
As part of the plan of action I also announced
last week a $5.7 million community irrigation
fund, which will be established to help
rural communities to adapt to increasing
drought risk.
In addition to devolving carbon credits
the Government has agreed to invest $50
million in an Afforestation Grant Scheme.
This is for landowners who choose to stay
out of the emissions trading scheme and
prefer a simple cash payment instead. It
will likely target tree planting projects
that offer co-benefits such as soil conservation
and improvements to water quality.
This $50 million in new funding comes on
top of the $10m announced in the Budget
for hill country erosion. It is also on
top of the existing East Coast Forestry
Project and Permanent Forest Sinks Initiative.
After funding for sustainable land management
was cancelled in the mid 11000s, we now
have a comprehensive package of measures
to rebuild capacity to address New Zealand’s
land management challenges.
There is a lot in this programme. It is
the largest package of sustainable land
management measures ever developed by a
New Zealand government.
New Zealanders expect our primary industries
to play their part. Our markets expect us
to play our part. We have to get started
with a vision of a sustainable and carbon
neutral New Zealand. This package shows
how and where we begin.