Methane can change the game
Farming is risky
business
Farming in New Zealand is not for the faint of heart. The risks are numerous and ever-present, from the high capital costs and low return on assets to the unpredictable swings of commodity prices. Mother Nature can also be unforgiving, with weather events like droughts and floods wreaking havoc on crops, livestock and rural communities. Farmers are constantly grappling with a changing and costly regulatory environment.
Despite these obstacles, New Zealand farmers consistently deliver high-quality produce to the world, while maintaining the highest standards of animal and environmental care.
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Notwithstanding this, we as a farming community need to be honest with ourselves about the unfortunate reality of the climate crisis. We must acknowledge that our industry is a significant contributor to greenhouse gas emissions and take responsibility for our part in addressing the issue.
The methane opportunity
Methane is a potent greenhouse gas that has a much stronger warming effect than carbon dioxide. Over the next 20 years, every tonne of methane emitted will have 81 - 84 times the warming effect of a tonne of carbon. However, unlike carbon dioxide, which remains in the atmosphere for centuries, methane has a relatively short lifespan of around 12 years. This means that reducing methane emissions can have an immediate and dramatic beneficial impact on global warming.
Significant decreases in methane emissions have the potential to stop global warming, help NZ meet and exceed its GHG commitments, and improve the viability of farming by (fully) rewarding farmers who reduce methane emissions as solutions become available
With growing global demand for food, this challenge is immense. But the reward is critical - reducing methane emissions from agriculture is one of the greatest opportunities we have to stop global warming and protect life on earth as we know it.
Long term impact of Methane v CO2
We can't plant our way out of this.
We are chasing the wrong solutions.
Currently, we are losing 50,000 hectares of productive farmland to forestry per year. Over the last 5 years, afforestation has likely resulted in the loss of approximately $775 million in export revenue, with almost no carbon sequestration benefits realized over that time, due to the slow-growing nature of trees. And trees don't absorb methane, which is supercharging global warming right now.
This land-use change not only impacts New Zealand's rural communities and our economy but also has global implications. New Zealand farmers produce food to feed up to 40 million people. Reducing our production, which is already more carbon-efficient than most other countries, will only result in that production being picked up somewhere else, likely with a higher carbon footprint.
WE
The only ledger that matters when it comes to greenhouse gases is the worldwide one. So we need to focus on finding solutions that protect farmland while reducing emissions globally. We cannot afford to lose more farmland and sacrifice the livelihoods of rural communities for short-term gains that come at a long-term cost.
There is an
alternative.
To reduce our emissions, farmers will need to change their farming practices. The previous government's approach to encouraging this was to introduce a levy, with farmers reducing emissions to avoid the tax. But this ignores that there will be a significant cost to reducing emissions. Currently it appears that it will be cheaper to pay the levy than it will be to reduce, achieving nothing. This is why we are advocating for a mechanism that incentivises farmers to make emissions reductions. This can be achieved either through an offset credit that can be sold on the voluntary carbon market to emitters, or ideally, through an inset credit paid for by supply chains to demonstrate real reductions in their scope 3 emissions. This will provide the required financial incentive to accelerate adoption of methane mitigating technologies on farm. We believe in the urgency of the climate crisis. But we also believe in economic reality. Our solution empowers farmers to be climate heroes, protects our vital food system and will accelerate emissions reductions.
But weighting matters.
The key is to drive farmer adoption of solutions as they come on stream.
Currently, methane is valued at 28 times that of carbon dioxide (CO2e) in terms of its global warming potential over a 100-year timescale (GWP100). However, recently scientists have argued that any increase or decrease in methane should be valued at 84 times CO2 instead: its short lifespan but intense warming effect means methane should be viewed in terms of the period in which it is active (max 20 years), rather than averaged over 100 years, which undervalues the true and immediate impact that an increase or decrease of methane emissions could have. This is supported by the IPCC report: Climate Change 2021 – The Physical Science Basis.
In order for the Farm Methane Unit to successfully incentivise farmers to chase methane reductions, it must pay enough to exceed the cost of those reductions. Even using the grossly underweighted GWP100 that ignores recent IPCC science, means that for companies purchasing voluntary carbon credits, 1 Farm Methane Unit could be used to offset 28 tonnes of carbon emissions, and the farmer should receive approximately 28 x the value of a single carbon credit. If using an NZ ETS price of $70 per tonne of carbon, this would result in a farmer receiving $1960 per tonne of methane reduced. This seems a lot, right? But unfortunately, due to the likely cost of methane mitigating technologies, this would barely cover the farmer's costs. In New Zealand, each cow emits approximately100kg of methane every year, and if it costs $100 per cow to reduce methane emissions by 50%, it will cost $2000 to reduce methane by 1 tonne.
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This is why weighting matters. In order for the incentives to be priced at a level which truly enables technology investment and adoption, methane reductions must be valued according to their true impact.