ETS changes benefit farmers

The agriculture industry will be $1.6 billion a year better off by 2030 under changes to the emissions trading scheme (ETS), Government papers show.

They also reveal that the biggest subsidies will go to New Zealand's biggest polluters.

Cabinet minutes, released to The Press under the Official Information Act, show the cost of agriculture moving to an "intensity-based" allocation of carbon units will rise from $106 million a year in 2015 to $1.58b a year by 2030.

An intensity-based allocation of carbon units means those businesses that qualify – big polluters competing in international markets – are eligible for a greater subsidy if they produce more.

Delaying agriculture's ETS entry by two years, to 2015, would cost $573m, the papers show.

However, up to $1.75b would be saved by 2017 through the adoption of an intensity-based approach for industrial emitters.

In a July report, one of 51 documents released to The Press, Climate Change Minister Nick Smith said he believed "relatively generous" assistance to the agriculture industry was justified.

"The sector is too important to the New Zealand economy to allow domestic activity to be replaced by less efficient and more polluting operations in other countries."

Smith said the amended scheme would favour bigger polluters and "modestly" disadvantage less emissions-intense firms.

"Those [lesser polluting] firms may have expected to receive a free allocation [of carbon units] under the previous proposals, but will prove ineligible to receive any assistance under this new approach.

"I make no apologies for this ... I think it is important to target the available level of assistance more tightly to those firms with the highest levels of emissions intensity, as they are the firms that will suffer the largest effects."

Labour climate change spokesman Charles Chauvel said the move was a badly disguised subsidy to agriculture that was "ridiculously generous".

"What we need to be doing is spending money on technology that will help agriculture adapt ... not subsidising them so they forever continue to emit greenhouse gases, based on shonky and questionable assumptions."

Federated Farmers president Don Nicolson said $1.6b was a "big figure" but the public should understand farming made a significant contribution to the country's standard of living.

"New Zealand farmers are being told they have to do something environmentally to meet an international standard.

"If other farmers around the world are getting bigger subsidies, and they are, then maybe New Zealand farmers [should be assisted]. If everybody else is doing it, why shouldn't we?"

- © Fairfax NZ News