Why does methane matter?

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Methane is a very different gas to CO2.  On the one hand, it has a far more detrimental impact on the earth as soon as it is emitted into the atmosphere:  it is up to 84x more warming than CO2*.  When we think about gases creating a greenhouse around the earth, methane works like double glazing - it is much, much more effective than CO2 in trapping heat in.  But on the other hand, it is short-lived:  after 12 years, it effectively dissipates.  This means that if we can significantly reduce methane emissions, fast, we will have the greatest impact in halting further warming.  It also means that if we add new methane emissions, the earth's warming will accelerate way faster than if emitting more CO2. 

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* Based on GWP20.  Normally emissions of CO2 use the GWP100 (100 year) formula, because CO2 takes about 100 years on average to break down.  On average methane takes just 12 years – so using GWP20 to weight the true impact of methane compared to CO2 is far more appropriate.

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What does farming have to do with methane?
 

Ruminant farming is a significant source of methane emissions (Almost 40% of New Zealand's total GHG’s come from animal methane – using the GWP100 formula).  Ruminant animals (sheep, cows, deer etc) eat plant material, and part of their microbial digestive process produces methane, which they belch out into the atmosphere.  There are other sources of methane, too, like landfills, oil and natural gas systems, coal mining, wastewater treatment, and certain industrial processes, but we are concerned about those methane emissions that come from farming. 

 

What is the environmental impact of our current methane emissions from ruminant farming?

 

If we continue to emit the same volume of methane, each year, our total methane emissions will not change over time, as each year, methane emissions from 12 years ago, have dissipated due to methane's short lifespan.  On the other hand, CO2 has an average lifespan of over 100 years, and our CO2 emissions now are higher than they were even 10 years ago - so every tonne of CO2 that we emit now is a 'new' emission - it is not replacing one that was made 10 years ago, quite unlike methane .  Keeping agricultural methane emissions at their current levels, is referred to as "steady state" methane emissions.   Further supporting our position is the IPCC acknowledgement that while the long-term effect of methane is overstated, the short-term effect of methane is actually understated.  It is the short-term effect that is relevant here given methane only exists for 12 years, not 100.

 

Specifically, in the IPCC’s report: Climate Change 2021 – The Physical Science Basis (chapter 7, page 1,016 of the 2,409 page report), it reads: ‘By comparison expressing methane emissions as CO2 equivalent emissions using GWP-100 overstates the effect of constant methane emissions on global surface temperature by a  factor of 3–4 (Lynch et  al., 2020, their Figure 5), while understating the effect of any new methane emission source by a factor of 4–5 over the 20 years following the introduction of the new source (Lynch et al., 2020, their Figure 4).

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If reducing methane is so important, why are you advocating not taxing steady state methane emissions?

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In theory this makes sense. However, we strongly believe in doing everything we can to reduce methane emissions, fast.  The purpose of a tax on emissions should be to drive behavioural change to reduce those emissions.  But the reality is, no matter how high a tax on emissions is, it is not yet possible to reduce emissions to zero (or anywhere near that) - the only way that farmers could avoid such a new cost would be to reduce animal numbers.  

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There are technologies in development which will aid farmers to make significant emissions reductions in time, but if a tax is imposed before or only shortly after these come to market, many farmers will go to the wall, or sell out – all for no decrease in global warming.  Sheep and beef farming profitability in particular is for many, very marginal as it is.  The current proposal will put many into the red - the Government estimate 10-20%.  This is not a good result for New Zealand in terms of social impact or export income.  While New Zealand (rightly) aims to reduce its agricultural emissions, we are currently one of the most emissions-efficient food producers in the world. 

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If we achieve our reductions by reducing the amount of food we produce, other less emissions-efficient food producing countries, will likely fill that void.  The net effect for the world in this scenario, is higher emissions.  This is why we believe it is so important to allow farmers to continue producing at their current levels, without the introduction of a new tax on steady state emissions, for now.  Once technologies are available, at a price that is affordable, we would support the introduction of a tax. 

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The actual solution is that the farmer first be able to quantify their real-time emissions.  In the interim the emissions will have to be estimated using general factors and models.  These estimates are the basis of the New Zealand Government’s scheme.

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So, what about new emissions? 

 

Additional emissions are different.  As outlined above, methane is significantly more damaging to the environment than CO2 for the first decade after it is emitted.  That is why it is imperative that we do not add to our current warming by increasing our agricultural emissions. 

 

The Government’s current approach is to use a methane-to-CO2 factor of 28 to both tax and incentivise the farmer.  We contend that the number needs to reflect the real short term impact of methane over the 12 years it is in the atmosphere.  Using a more appropriate (higher) warming factor, not 28, will also result in a much bigger carrot to turbo boost private sector investment in methane mitigation technologies, plus change behaviours.  A spin-off will also see less farm conversion into pine because the methane reduction carrot will change the economics. 

 

Any change to methane emissions from animals on-farm should be recognised for the scale of impact it has, so:

• Any increase in methane is a big cost to the environment, so should be a big cost to the farmer;

• Any decrease in methane is a big benefit to the environment, so should be a big benefit to the farmer;

• The status quo, for now, should be cost neutral, to protect our farms while technology catches up.

 

There are ways of reducing methane emissions, now - how do we get that happening, if we don't tax steady state emissions?

 

We agree - there are ways farmers can reduce their emissions a little currently, without impacting production, such as productivity improvements.  These tend to be incremental.  We’re supportive of this but in terms of really moving the dial fast, we believe the only way to do this is to provide significant incentives to farmers to make these changes.  Incentives can come from Gov’t, and they can come from the market (eg. the international carbon market)

 

Subject to the level of offsetting incentives, we are supportive of a levy to raise money to put back into emissions R&D on new technologies etc.  However this by itself will not be enough to really move the dial, fast.  Plus the lack of clarity around the types and level of incentive and what activities will qualify, is stifling progress. 

 

Below, we talk below about the establishment of a Farm Methane Unit, correctly weighted to reflect the true impact of methane relative to CO2 over methane’s 12 years of existence.  This will provide a bigger market-led incentive to move the dial faster by heavily penalising new additional emissions whilst heavily rewarding future reductions without penalising the status quo.

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How to value animal produced methane? – what’s this talk of a Farm Methane Unit or FMU?

 

We do support a high tax on additional methane emissions, to ensure we collectively stick to steady state emissions, and no more.  However we recognise that all farms are different, and that ways for farmers to trade between themselves within a steady state environment would also help.

 

And just as we support a high tax on additional methane emissions, we contend that significant private sector investment in new innovative solutions will only occur if those farmers who reduce methane output be allowed to monetise that reduction to its full, true value. 

 

The best mechanism for this is by way of a tradeable Farm Methane Unit or FMU (using the appropriate CO2e factor, not the 100 year factor of 28). 

 

The Government may decide to develop such a Farm Methane Units scheme, but providing the farmer with the option of being able to trade their FMU’s via the international voluntary market we believe, is fundamental.   This is because the international carbon price for sequestered carbon from trees can and does differ from New Zealand’s ETS pricing.  This is because our Gov’t controls the supply of NZ Units in the ETS, which in turn influences the NZU price relative to international pricing.

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Why are you so worried about farms being converted to pine forests?

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A Dec 2021 Beef and Lamb NZ Ltd study shows that productive farm land is already being sold for carbon forestry (B&L Farm to Forest Report).   While MMV understands unproductive farmland being planted*, losing productive farmland to forestry is another matter – and one that will have enormous economic, social and environmental consequences for New Zealand. 

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Pine Carbon forestry:

·       Employs virtually no-one after the forest is planted;

·       Does not produce food for the world;

·       Does not contribute to our export receipts;

·       Significantly changes New Zealand's unique landscape;

·       Risks New Zealand's native forests (wilding pines); and

·       Creates a huge fire risk, particularly as our summers get hotter – and if our forests eventually burn, any environmental gain, is undone in an instant. 

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New Zealand becoming a tiny carbon sink is inconsequential for global emissions (especially as our food production will likely be picked up elsewhere), and will destroy the livelihoods of many.  Instead, we can use our farmland to prove how to produce food at the lowest rate of emissions.  This will give us a comparative advantage over our competitors as consumers become more selective about the emissions profile of their purchases, and will provide better outcomes for the planet. 

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* Disclaimer:  MMV’s owner has an investment in a business designed to empower Iwi, that supports the planting of a mix of pine, hardwood and native onto primarily unproductive class 6 and class 7 land, plus provides Iwi with the option of seeding those carbon forests (at time of thinning) with natives - to transition those areas back to native over the long term.  An intergenerational approach.  Meantime the nearer term carbon revenue from such plantings provide Iwi landowners the opportunity to recapitalise and invest much needed capital into the productive parts of their farmland).

 

When you say pine forests generate greater returns to investors compared to sheep and beef farming, what are the numbers?

 

Professor Keith Woodward put it best in his Aug 2021 article in Interest.co.nz in Aug 2021 when the carbon price he used for such analysis was just $48/t of CO2 sequestered.  His comparison for beef and lamb Class 4 hill country showed that under carbon forestry, the estimated IRR was 7.0%, compared to about 2.5% under sheep and beef.  Since that analysis the IRR expected from Carbon forestry based on today’s ETS price is closer to 18% IRR  https://www.interest.co.nz/rural-news/112168/carbon-price-now-high-enough-change-land-use-sufficiently-blow-away-sheep-and

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Aren't you just saying all of this because you are invested in methane mitigation?

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Of course, this is a valid question.  However, our motivation is way deeper than that.  We own sheep and beef farms and want to keep on farming.  We also share this planet and see the impacts of climate warming.  Business as usual is not an option.  If we invest and find solutions to reducing methane and can make some money by sharing that technology, it’s a win win.

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What is Methane Mitigation Ventures working on to help farmers reduce emissions?

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Methane Mitigation Ventures (MMV) has partnered with world leaders in natural methane mitigating technologies, to secure products for New Zealand farmers as they become available.  We are actively working with these partners and MPI through an SFFF grant, to assess the efficacy of these products in a New Zealand pastoral farming system. 

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How long until a product is available?

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At commercial scale, 2025​

 

How will we feed these products to our animals?

 

For Dairy, it will be in-shed feeding at milking time, or possibly a bolus (but will take longer to get to market)

For Sheep and Beef, unless there is a controlled release ruminal bolus, it is currently unclear how to deploy in this segment.

 

How do we know the products are safe?

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There is an MPI regulatory process (ACVM) to ensure such products are safe to animals, environment and humans.

 

What does MMV mean when it says we ‘need an instant cap on new emissions’?

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We mean two things:

1. The planet is burning and there is no time to slowly reduce the rate of increase

2. We need to cap the absolute level of methane being put into the atmosphere.  This should not prevent farmers from producing more (meat or milk) if that can be achieved from the same (or preferably lower) level of methane produced currently.

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Remembering that Methane is a short-lived gas and breaks down almost as fast as it’s produced.  Farmers should be rewarded for improved efficiency if that can be achieved without adding additional methane to the atmosphere.

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