If Ireland follows New Zealand’s proposal to tax agricultural emissions at the farm level, it could hurt the country’s international competitiveness, a leading agricultural economist has warned.
In June, New Zealand farmers proposed that the government impose an agricultural emissions pricing system on the sector, as the industry has faced immense political pressure to address its disproportionate contribution to the national greenhouse gases.
Under the draft plan – the first of its kind put together by governments and farming organizations, which includes incentives for farmers to reduce emissions from feed additives and forestry – farmers would pay for their agricultural emissions from 2025, short and long-activated gases are separate too price.
Although the New Zealand government has until December to decide whether to accept the industry proposal, this comes as the Irish government continues to wrestle with practical solutions to quickly and drastically reduce agricultural emissions by 37.5 per cent by 2030.
Asked whether the New Zealand recommendation could potentially work in Ireland, said Michael Wallace, a professor of agriculture and food economics at UCD Independent Farming: “I think many governments (including Ireland) will closely monitor New Zealand’s proposed plan to tax greenhouse gas emissions from agriculture.
“Some will probably wait and learn from the New Zealand experience.
“New Zealand’s agricultural industry strongly opposed the proposal to tax emissions when it was first discussed a few years ago, but they appear to have softened their position of late.
“I suspect that the industry sees the tax as less harmful than the alternatives, such as B. the imposed reduction in livestock.
“The measure was made more palatable to New Zealand industry by proposing to relieve revenue for reinvestment in agricultural research and development and the potential for farmers to adopt emission reduction and carbon sequestration practices.
“However, the devil is in the details when it comes to measuring and monitoring to enable fair and effective implementation.
“From an Irish perspective, a significant issue with such a measure would be the impact on international competitiveness as it would increase production costs. Irish farmers would be at a cost disadvantage compared to producers in other countries that have not introduced a similar emissions tax.
“I do not see an emissions tax for Irish farmers on the immediate horizon, particularly given the current pressures on costs and food security. However, it could be something we could see in the longer term, especially if it has proven effective in New Zealand.”
Alan Matthews, Emeritus Professor of European Agricultural Policy, Trinity College Dublin, described New Zealand’s move as “very positive”.
“New Zealand was the first country in the world to propose pricing agricultural emissions. It originally proposed including agricultural emissions in its Emissions Trading Scheme (ETS), but this drew opposition from farmers’ organizations.
“Instead, they offered to come up with a pricing system for agricultural emissions, which they would then present to the government.
“Their main objection to the government program was that it operated at the processing level (or the fertilizer distributors) and therefore gave no credit to the individual farmer for his efforts to reduce emissions – all farmers would be taxed equally, regardless of how they ran their farm managed.
“So they wanted a system of farm-level emissions accounts that would measure each farm’s net emissions (after any distances) and form the basis of any levy collected.
“This proposal was put to the New Zealand government earlier this year, the New Zealand Climate Commission now gave its opinion on the proposal earlier this month and the government now has until December to decide whether to accept or reverse the industry proposal on the “backstop” in legislation intended to include agriculture in the ETS.
“From my point of view it is very positive that the New Zealand industry has opted for a farm-level system. This means that individual farmers receive a price signal indicating that they should try to produce less of the ‘bad’ environmental good (emissions) and more of the ‘good’ environmental good (distance).
“The European Commission is proposing a carbon farming system later this year that would roll out half of that system, meaning it will pay individual farmers to remove it, but we also need to put a price signal on emissions.
“Simply offering subsidies for mitigation efforts under the CAP and hoping that farmers’ voluntary efforts will be enough to reduce emissions by the required levels will not do.
“Clearly, to limit adverse impacts on competitiveness, any net revenue generated under an emissions pricing scheme should be returned to farmers, either as a lump sum payment per hectare or to subsidize further mitigation efforts.
“The importance of the New Zealand proposal is that they believe they can implement a farm-level emissions budgeting system and that it can work as a climate policy tool.”
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