August - September 2021
It is estimated that to produce one tonne of milk solids, dairy cows emit about ten tonnes of carbon dioxide equivalent (CO2e) largely in the form of methane. The current value of milk solids is estimated by Fonterra to earn a dairy farmer about $8 a kilo this season, about $8000 a tonne. If dairy was in the Emissions Trading Scheme (ETS), at $50 a tonne for CO2e, of the $8000 gross revenue the farmer earned, they would contribute $500. This would likely go towards New Zealand's payment to the world for offshore mitigation. Currently the proposal is, at least initially, to provide dairy farmers with a 95 percent subsidy, meaning that a farmer would pay only $25 of their $500 emissions charge for which they had earned gross income of $8000 as their contribution. The rest of New Zealand would effectively pay the other $475. A fairer scheme? The ETS was launched in 2008 with the intention of agricultural emissions being phased in over 10 years. Farmers were already supposed to be in the ETS by 2018. Yet farmers have been granted a further five year exemption from emissions pricing to develop a scheme for farm by farm measurement of emissions, rather than dairy farmers paying the average of all dairy farmer emissions. our economy, so how else can we reduce our agricultural emissions? New Zealand has been developing a methane vaccine for cows that keeps methanogens (methane-producing microbes) in their rumen (first stomach) for several years. The vaccine seeks to create antibodies in cow's saliva that will in turn destroy the growth of methanogens in the rumen. If scientists can find the right antigens that will slow
To get the benefit of being a low emission dairy farmer, every dairy farmer will need to measure, report and have the ability to verify their unique on farm emissions. Or a waste of time? Let's assume the worst dairy herds emit three times as much methane as the best to produce the same milk solids and that the best emit 25 percent less than the average. So 7.5 tonnes vs 10 tonnes per tonne of milk solids. That means the worst emit 22.5 tonnes of CO2e per tonne of milk solids. So, the best pay an emissions charge of $18.75 (save $6.25) per $8000 of gross revenue and the worst pay $56.25 per $8000 gross revenue. On a 1000 cow dairy herd, producing 400 kilos of milk solids per cow per annum (400,000 kilos of milk solids in total and $3.2 million gross revenue), with 95 percent emissions subsidy, at average efficiency, the ETS would cost that farmer $10,000. The efficient, low emitting farmer would pay $7500 (save $2500 compared with the average) that year and the inefficient, high emitting farmer would pay $22,500 (an extra $12,500) compared to the average. If the difference between the best and the worst is only $15,000 on $3.2 million of gross revenue, will such a price signal make a difference?
the growth and function of methanogens in the rumen, it would be a breakthrough. Vaccination is a highly innovative strategy for decreasing enteric methane emissions. This is because it needs no farm system modifications, is used seldom, and leaves no residues in products. The vaccine's advantage of being applicable across all ruminants can be the turning point not only for New Zealand and the global dairy sector but also
Will it work? What happens to the milk pay out per kilo of milk solids? What happens to the emissions price both domestically and globally, including any border adjustments to sell in foreign markets to offset any domestic subsidy? What happens to the 95 percent subsidy? What happens to average emissions per kilo of milk solids? What happens to the gap between the most and the least efficient dairy producers? Likely trends: emission prices rise, the subsidy reduces, average emissions per kilo of milk solids produced decline, the gap between the best and the worst converges on the average level of emissions. One can only assume the higher the emissions price, the faster we reduce the subsidy, the bigger the reward for low emissions innovation and farm management practices and the sooner emissions will reduce and converge on the average lower level. The higher the subsidy and the longer it lasts, the slower the reduction in emissions to the lower level. Kip Brook Editor-in-chief Make Lemonade www.makelemonade.nz
for livestock-based food production. However, it remains to be seen if New Zealand scientists can create the vaccine due to the complex mechanics involved. In addition, the research has a cost of $4 million to $5 million per year. Other solutions like breeding low emitting cattle, low methane feed additives and methane inhibitors for grazing system are a work-inprogress to lower emissions in the rural sector.
Kunal Sawhney Chief Executive Kalkine Group infrastructurenews.co.nz 29
ENVIRONMENT
What if farmers were in the Emissions Trading Scheme?
