NZ’s moo-t point on the environment

The NZ Productivity Commission recently released a draft report on the transition to a low-emissions economy - good bedtime reading with 140 findings and 50 recommendations over 503 pages. But it should be read by policy makers, the agriculture sector and investors.

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In it, we learn agriculture comprises almost half of New Zealand’s greenhouse gas emissions, by far the highest proportion in the Organisation for Economic Co-operation and Development (OECD). 

"The nation has signed up to production-based targets and faces significant challenges to reach them.”

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New Zealand is certainly pulling its weight in contributing to global greenhouse gas emissions with the fifth highest gross emissions per capita, meaning the finger can’t just be pointed at population growth. 

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Doing their bit

The challenge for New Zealand is that when it comes to agriculture production, there is currently no silver bullet: the only effective way to meaningfully reduce agricultural emissions is to reduce agricultural production.

The vast majority of New Zealand’s agri production is exported, and in a global comparison New Zealand is a highly efficient producer in terms of greenhouse gas emissions per unit of product. One could therefore argue the production-based emissions methodology is not entirely appropriate and New Zealanders should rather be judged on the implied carbon footprint of what they consume.

But that is a moot point – the nation has signed up to production-based targets and faces significant challenges to reach them. 

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However, no mitigation option currently exists for achieving dramatic reductions in New Zealand’s agricultural emissions without substantially reducing production.

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Cow in the room

To reach the set targets by 2050 there will need to be three key drivers:

  • a significant expansion of forestry;
  • the electrification of transport;
  • changes to the structure and methods of agricultural production.

The latter will be the most contentious, as under current technology it implies that New Zealand needs to move away from dairy and sheep and beef farming towards horticulture and cropping.

Successful development of a methane vaccine for animals would be a game changer but is far from certain. However, New Zealand certainly has every incentive to throw everything at the problem.

Sharon Zollner is Chief Economist NZ at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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