A billion dollar taxpayer subsidy to dairy, for zero climate benefit
Green Media Release 27th Sept 2007

The Green Party is calling on the government to require the dairy industry to pay its way after revealing that, under the government’s emissions trading scheme, $1.2 billion dollars of taxpayers’ money will be given to the dairy industry, for no gain in reducing New Zealand’s greenhouse emissions.

The Greens have prepared a briefing paper (attached) on the fiscal impact of the decision to exclude agriculture from the emissions trading scheme until 2013. This paper finds that taxpayers will pay out around $1.2 billion to buy Kyoto carbon credits to cover the increase in emissions from dairy. This means the dairy industry will have no financial incentive to cut their emissions.

“Why is the Labour government subsidising the dairy industry to the tune of $1.2 billion to cover the increase in dairy’s greenhouse emissions over the 2008-2012 period, instead of bringing dairy inside the emission trading scheme and giving them a financial incentive to cut their emissions” asks Green Co-Leader Dr. Russel Norman.

“The dairy industry is going through boom times and can afford to cover the cost of their increased emissions, rather than relying on the taxpayer to pick up the bill, which would also give the industry a good reason to use available technology to reduce their emissions.

“The Government’s own projections show that there will be an excess of 40.6 million tonnes of agricultural greenhouse gas emissions over 1990 levels over the five years of Kyoto. This increase is entirely attributable to dairy expansion.

“At a conservative price of NZ$30 per tonne of greenhouse emissions, that will cost the taxpayer $1.2 billion to buy Kyoto credits to cover this excess in emissions.

“Agriculture is responsible for half of all New Zealand’s greenhouse emissions but will not face any price for those emissions until 2013 under the government’s emission trading scheme, and hence no financial incentive to seek ways to limit those emissions.

“Contrary to popular belief, there are a number of ways that dairy emissions can be reduced significantly, such as through the use of nitrification inhibitors and stand-off pads in winter. Under the government’s policy there is no financial incentive for the industry to adopt these measures because the taxpayer picks up the bill for the ever-increasing emissions from the dairy sector.

“In addition the taxpayer is stumping up with a further $133 million for research into ways to reduce emissions from the agricultural sector. This is a good investment but adds to the subsidy to the industry.

“The dairy industry is of vital economic importance to New Zealand, especially as it is one of the few industries that is owned by New Zealand producers, but it needs to carry its weight on climate change.”

ENDS

Dairy's Free Ride - Green Briefing 27/9/07

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