Hon Jim Anderton

Minister of Agriculture, Minister for Biosecurity
Minister of Fisheries, Minister of Forestry
Associate Minister of Health
Associate Minister for Tertiary Education

Progressive Leader

20 September 2007 Speech

Sustainable Land Management announcement

Thank you Michael. 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 1990 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 1990s, 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.

ENDS

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