RURAL PROFESSIONALS’ SEMINAR

GREENHOUSE GAS EMISSIONS ON NEW ZEALAND FARMS

2019 / 2020

With grateful thanks to BNZ for supporting a number of the seminars, and to the following individuals for their

expert input to the seminar content:

Cecile de Klein, Stewart Ledgard, Robyn Dynes (AgResearch)

David Whitehead, Paul Mudge (Manaaki Whenua Landcare Research)

Louis Schipper (University of Waikato)

John-Paul Praat, Peter Handford (Groundtruth)

All content is © copyright New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC)

February 2020

Reproduction in whole or in part without written permission is prohibited.

Photo credits: Dave Allen (Dave Allen Photography); Ministry for Primary Industries; AgResearch; DairyNZ; NIWA

Organising partners

1

Contents

Sett ing the Scene

The Science

Economics

Case Studies

Dairy

Sheep and Beef

Forestry, Carbon and the NZ ETS

Soi l Carbon

Tools

Thank you for attending our one-day

seminar on greenhouse gas emissions on

New Zealand farms. We hope you found

the presentations informative and helpful.

Rural professionals will continue to play a

critical role in helping farm owners and

managers make sense of, and ultimately

address, the greenhouse gas emissions that

their farm system is responsible for. The

challenge for farmers is significant, and

unique to every farm. Many farmers are

eager to do whatever they can to address

the problem, but no-one is underestimating

how difficult it will be in the face of

continuing consumer demand and the

need for farm businesses to remain viable.

Having the plain facts is critical, and that’s

what this seminar – and book – aim to

provide. If you have additional questions,

please contact us using the details on the

inside back cover.

Dr Harry Clark, NZAGRC

Phil Journeaux, AgFirst

3

25

41

49

50

52

69

79

91

Notes

2

SETTING THE SCENE

3

Why climate change matters

4

Earth is heating up due to rapidly increasing concentrations of greenhouse gases in the atmosphere.

Significant changes to the climate are occurring as a result, which are affecting our natural

environment, primary sector, infrastructure and built environment, as well as human health.

Agricultural emissions – methane and

nitrous oxide – make up about half of New

Zealand’s reported emissions. Over the last

25 years, farmers have become more

efficient and have reduced emissions

intensity – or greenhouse gas emissions

per unit of product – by about 1% each

year. These improvements have helped

stabilise methane and nitrous oxide

emissions.

But this is not enough. Emissions of long-

lived greenhouse gases (carbon dioxide

and nitrous oxide) must collectively go to

net zero to achieve the “well below” 2°C

temperature target set in the Paris

Agreement to which New Zealand is a

signatory. Methane emissions do not have

to go to zero to achieve this target, but

they must reduce.

In New Zealand the number of days >25oC is predicted to increase

2015 2100

Source: Royal Society of New Zealand 2016

5

Impacts of a warming climate

Globally:

• Earth’s average temperature has

increased by about 1°C since

humans started using fossil

fuels. Most of the warming has

occurred since the mid-1980s, with

18 of the 19 warmest years on

record occurring since 2000.

• The polar ice caps have melted

faster in the last 20 years than at

any other time in the last 10,000

years, and the majority of glaciers

around the world are retreating.

• The sea level has risen by about

20cm since scientific records

began in 1880, and the rate of rise

has increased in recent decades.

• There has been a 30% increase in

ocean acidity in the last 250 years.

• Higher temperatures have resulted

in more heat waves, warmer

winters, and heavier rainfall.

In New Zealand:

• Temperatures are about 1°C hotter

than they were a century ago, with

three of the hottest years on record

occurring since 2014.

• Sea levels have risen 14–22cm since

the early 1900s.

• Our glaciers have lost 25% of their

ice in the past 40 years.

• The country is experiencing fewer

frost days and more warm days.

Some locations are also experiencing

drier soils and altered precipitation

patterns.

• More intense weather events

(droughts and storms) have occurred

in many parts of the country in the

last few years, and at unexpected

times of the year.

These impacts are set to continue.

Implications for freshwater:

• Increased runoff in S and W of South Island.

• Reduced runoff in NE of the South Island

and in E and N of the North Island.

• Annual flows increase 5-10% in eastward

rivers with headwaters in Southern Alps

(winter/spring).

6

As our climate changes, it might not be

possible to farm in the same way or the

same places as we can now.

A couple of degrees of warming might not

seem much, but it can have a big effect on

crop and pasture growth, and on pests

and diseases.

Here are some projections:

• Many places will see more than 80 days

per year above 25°C by 2100 (see

graphic on page 4), which will have a

significant impact on ryegrass growth

(which prefers temperatures in the

range of 5–18°C) and animal

performance.

• Annual average rainfall is expected to

decrease in the north-eastern South

Island and northern and eastern North

Island and increase in other parts of

New Zealand.

• Farmers in dry areas can expect up to

10% more drought days by 2040.

The sceptics’ viewClimate change sceptics, or ‘deniers’, argue that the climate isn’t warming, or that

any observed warming is a result of natural climate variation and not emissions of

greenhouse gases such as carbon dioxide, methane and nitrous oxide.

Within the agricultural sector, some have argued that methane doesn’t matter or

that methane and nitrous oxide make an insignificant contribution and should not

be targeted in any national framework for reducing emissions.

Still others argue that increased carbon dioxide is actually good for the planet.

There is strong evidence that the climate is changing (see page 7). This will impact

agriculture through changes in temperature, rainfall and water availability . There

are likely to be winners and losers - both globally (some higher latitudes may gain,

equatorial regions tend to lose), between countries (Australia may be more

vulnerable than New Zealand) and within countries (our east coast might get hotter

and drier, while the extreme south gets warmer and wetter).

7

Why reduce emissions?

This graph illustrates that the climate IS changing.

8

Source: UK Met Office, Morice et al. 2012, and MAGICC v6 simulations (Meinshausen et al. 2011) Source: Reisinger and Clark,

2016

Modelled (MAGICC) versus actual temperatures

This graph illustrates that warming IS caused by increasing levels of atmospheric carbon dioxide, methane and nitrous oxide.

Methane does matter

9

There are many ways to

reach a given

temperature goal with

respect to atmospheric

greenhouse gas

reduction targets. Some

will be more technically

feasible and

economically costly than

others.

These graphs indicate

that methane DOES

matter.

New Zealand’s emissions profile

0 10 20 30 40 50 60 70 80 90 100

Percentage

CO2

36,023.7 kt

(45%)

CH4

34,132.1 kt CO2-e

(42%)

N2O

9,116.5 kt

CO2-e

(11%)

F-gases 1,581.2 kt

CO2-e (2%)

LULUCF

–23,958.4 kt CO₂-e (–

30%)

Agriculture 38,880.7

kt CO₂-e (48%)

Energy

32,876.6 kt CO₂-e

(41%)

IPPU 4,968.6 kt CO₂-e (6%)

Waste 4,124.7 kt CO₂-e (5%)

Tokelau

2.86 kt

CO₂-e

(.004%)

-30,000 -15,000 0 15,000 30,000 45,000 60,000 75,000 90,000

kt CO2-equivalent

N2OCO2 CH4

680 14

Other Energy

Transport

Agriculture

9 80 11

New Zealand’s emissions profile is unique.

Globally, carbon dioxide is the main

greenhouse gas, but in New Zealand in

2017:

• Emissions from agriculture made up

almost half (48%) of our total reported

emissions.

• Emissions from agriculture have been

relatively stable since 2012.

• Methane emitted from ruminant

digestive systems made up 71% of

agricultural emissions.

We are responsible for less than 0.2% of the

world’s greenhouse gas emissions

Greenhouse gases from ruminant livestock

are a major part of our emissions

contribution - more so than for any other

developed country. The livestock sector

provides 33% of our export revenue.

Dairying has replaced much of sheep

grazing and some beef over time. The deer

population has hovered around 1 million.

Typical developed country (%) Typical developed country (%)

10

New Zealand’s agricultural emissions

New Zealand’s agricultural emissions have

risen by about 12% since 1990. Emissions

from dairy farming have risen, while

emissions from sheep farming have

dropped. There’s been little change in

emissions from beef farming.

Our total agricultural emissions peaked

around 2005. There was a large drop in

2007, due mainly to a rapid fall in sheep

numbers following drought. Since 2012,

emissions have remained relatively stable.

In 2017, methane emitted from ruminant

livestock made up 71% of total reported

agricultural emissions. Nitrous oxide,

largely from the nitrogen in animal urine, is

responsible for 21% of the reported total.

The remainder is mostly methane from

manure management, and carbon dioxide

from fertiliser, lime and dolomite.

Projections (the dashed and dotted lines in

the graph) are very difficult – which

presents a challenge when setting

reduction targets and associated policies.

Projections from New Zealand’s Fourth Biennial Report to the UNFCCC.

See the Ministry for the Environment website for the full report.

How are agricultural emissions changing?

11

Without Measures (WOM)

With Existing Measures (WEM)

With Additional Measures (WAM)

Absolute emissions versus emissions intensity

New Zealand's gains in efficiency

have reduced emissions per unit of

product. In dairy this has been driven

by an increased milk yield per cow,

and for sheep through increased

reproductive efficiency and higher

lamb growth rates and carcass

weights.

However, reducing intensity does not

guarantee a reduction in absolute

emissions. In New Zealand the dairy

sector has reduced intensity but

increased emissions. The sheep and

beef sector has reduced intensity and

reduced emissions.

All efficiency improvements are

good, but on their own they do not

guarantee a reduction in absolute

emissions.

12

Carbon

footprint

13

Efficiency gains have not reduced

emissions because we produce more

product (dairy). If product had

remained constant, absolute

emissions would have gone down.

Efficiency gains reduce emissions

below Business As Usual (BAU). Milk

and meat produced in New Zealand

have low emissions per kg of product

when compared with global

averages. Developing countries tend

to have high emissions per unit of

product.

DairyNZ estimates that producing a

litre of milk in New Zealand creates

only 40% of the average emissions

associated with producing a litre of

milk elsewhere in the world. The story

is similar for beef and lamb

production.

The average emissions per unit of product for dairy is 8.8 kg CO2e*/kg milk solids (range 4.3-17.2); the average for sheep and

beef is 16.0 kg CO2e per kg meat (range 3.8-33.7).

*CO2e = ‘carbon dioxide equivalent’ – a means of equating the different Global Warming Potentials of different greenhouse

gases (see page 18).

The size of the mitigation task

14

What are New Zealand’s

greenhouse gas reduction

commitments?

New Zealand ratified the Paris Agreement

in 2016, joining 187 countries in agreeing to

keep the increase in global average

temperature well below 2° C above pre-

industrial levels, while pursuing efforts to

limit the temperature increase to 1.5° C.

New Zealand’s contribution to the Paris

Agreement is to reduce emissions by 30%

below 2005 levels by 2030.

New Zealand has also legislated longer

term targets via the Zero Carbon Act:

• Net emissions of carbon dioxide and

nitrous oxide are to reduce to zero by

2050.

• Methane is to reduce to 10% below 2017

levels by 2030, and 24-47% below 2017

levels by 2050.

In his 2018 report Mitigating agricultural greenhouse gas emissions: Strategies for meeting

New Zealand’s goals, Professor Sir Peter Gluckman explained that New Zealand’s

commitments under the Paris Agreement have twin goals:

(i) reducing emissions in line with our international commitments; and

(ii) playing our part in the increasingly urgent global problem of climate change.

This includes safeguarding our reputation as a food-producing, trading and tourism-

focused nation, and the value our markets place on our natural environment and the

high-quality products it allows us to generate.

We need to find ways to minimise environmental impact (for example, greenhouse gases,

nutrient loss to waterways and enhanced biodiversity) while maintaining financial viability

and the social licence to operate. This will take education and action on all fronts.

15

New Zealand’s Paris Agreement 2030 target

New Zealand’s projected BAU emissions

over 2021-2030 (target accounting). Total

net emissions ~ 703 Mt.

The orange bars represent the amount of

abatement needed over 2021-2030 to meet New

Zealand’s Nationally Determined Contribution

(NDC) ~ 102Mt

The grey bars represent the budget of

emissions New Zealand can emit according to

its first NDC (2030 target). Provisionally

estimated at 601 Mt.

16

New Zealand’s 2050 targets

18

Additional requirement that

biogenic methane is 10% below

2017 levels by 2030

An illustrative straight-line

pathway to a 24 - 47% reduction

in methane emissions by 2050

An illustrative straight-line pathway for

meeting the Zero Carbon Act 2050

targets of a 24-47% reduction in biogenic

methane below 2017 levels and net zero

for other gases

These emissions might have to be

mitigated by buying overseas carbon

credits

While national targets should be informed by science,

science alone cannot determine them. There are other

factors to consider, including:

• The diverse nature of greenhouse gases

• The nature of international agreements

• The availability of mitigation options

• The cost of reduction – absolute, and relative to other

gases

• Social and economic consequences

• Global equity issues.

There is significant misunderstanding around targets and

science.

For example, a Parliamentary Commissioner for the

Environment report suggested reducing New Zealand’s

methane emissions by 10 – 22% would mean methane adds

no more warming, while an IPCC report states that

agricultural methane emissions need to reduce by 24 – 47%

to meet the international 1.5oC temperature goal.

Setting national reduction targets

17

Why have separate targets for different gases?

All greenhouse gases cause warming, but

the metrics used to equate different gases

don’t tell the whole story.

Globally, carbon dioxide emissions must

at a minimum go to net zero if

international temperature targets are to

be achieved.

Methane is a very potent short-lived gas.

Most of a methane emission disappears

within 50 years, but averaged over 100

years, one tonne of methane causes

about 30 times the warming as one tonne

of carbon dioxide. Some of the heat

trapped by methane causes other

changes in the global climate system as

well, resulting in warming that extends

beyond methane’s relatively short lifetime

in the atmosphere.

Methane emissions don’t need to get to

zero to avoid further warming. Reductions

in methane will help slow climate change

and are critical for keeping warming to

well below 2oC.

a century, and its warming effect

continues for several centuries after it

has disappeared. Nitrous oxide

emissions need to get to net zero to

prevent additional warming.

Nitrous oxide is a very potent and

long-lived gas. Tonne-for-tonne, it is

nearly 300 times more effective at

absorbing heat than carbon dioxide,

over a 100-year period. Every emission

remains in the atmosphere for around

18

Global Warming Potentials – one way of combining different gases into a common unit

Nitrous oxide is relatively long-lived, more similar to carbon dioxide. Long-

lived gases need to go to net-zero.Methane doesn’t need to go to zero.

But … the less methane, the better for

the climate.

19

Different gases have different warming effects

Warming caused by New Zealand’s emissions

20

Policies to reduce New Zealand’s

greenhouse gas emissions

The Zero Carbon Act is the Government’s cornerstone climate change policy. It

sets the 2050 targets into law (see page 14), as well as introducing:

• A system of emissions ‘budgets’ to act as stepping stones towards the long-

term targets

• Requirements for action on adaptation

• A Climate Change Commission to provide independent, evidence-based

advice, including on the setting of the five-yearly emissions budgets, and

monitoring the Government’s progress towards the targets.

Another key component of the Government’s policies on climate change is the

New Zealand Emissions Trading Scheme (NZ ETS), which is the principal

instrument for achieving emissions reductions.

Originally, the NZ ETS was intended to be an all-gases, all-sectors scheme, but

when it was established, it did not include agricultural emissions. It also has no

emissions cap, an initially weak carbon price due to the ability to purchase

international units, and special arrangements such as a two-for-one deal that

weakened its impact.

NZ ETS settings are currently being modified to improve its ability to deliver on

the targets.

21

A common statement…

Some commentators argue that reducing

New Zealand’s emissions is perverse.

They say that if we reduce production due

to a price on greenhouse gases, less

efficient producers will increase their

production and global emissions will go up.

But it’s not as simple as that:

• Many of our competitors produce

similar emissions per unit of product

• Most of our competitors have national

mitigation targets to meet – if they

expand agriculture, emissions must

reduce elsewhere in their economy

• Our competitors in the developed world

also face constraints on production

• There is scope to maintain production

and reduce greenhouse gas emissions.

In a world-first, New Zealand’s agri-food and fibre sector, the

Government and Māori are partnering to develop practical

and cost-effective ways to measure and price emissions at

the farm level by 2025. The partnership is known as ‘He Waka

Eke Noa’ (we’re all in this together).

Critical aspects include:

• Improved tools for estimating and benchmarking

emissions on farms

• Integrated farm plans that include a climate module

• Investment in research, development and

commercialisation

• Increased farm advisory capacity and capability

• Incentives for early adopters

• Recognition of on-farm mitigation such as small plantings,

riparian areas and natural cover.

In 2022, the Climate Change Commission will check progress.

If commitments aren’t being met, the Government can bring

the sector into the NZ ETS at the processor level before 2025.

If the farm-level pricing mechanism is not in place by 2025,

agriculture will be brought into the ETS with the point of

obligation at the processor level.

22

A He Waka Eke Noa Steering Group has been set up,

comprising representatives of industry organisations,

iwi/Māori and Government. Eight workstreams are underway,

building towards a policy package that includes farm level

pricing of emissions from 2025 onwards:

1. On-farm emissions reporting

2. On-farm sequestration

3. On-farm emissions pricing

4. Farm plans

5. Māori agribusiness

6. Extension

7. Innovation and uptake

8. Supporting early action

He Waka Eke Noa - the plan for agriculture

He Waka Eke Noa: timeframe

Actions Deadline

Guidance provided to farmers to measure on-farm GHG emissions 1 January 2021

25% of all farms have their GHG emission figures 31 December 2021

25% of all farms have a written GHG plan 1 January 2022

100% of all farms have their GHG emission figures 31 December 2022

Pilot farm accounting system completed 1 January 2024

100% of farms using the accounting system for reporting 2024 emissions 1 January 2025

100% of farms have a written GHG plan 1 January 2025

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In summary…Mitigating climate change will cost, but not mitigating is likely to cost more.

There is strong pressure to reduce agricultural emissions due to our emissions

profile.

All greenhouse gases are not created equal – methane is different, so can

justify a different target. This is now set in the Zero Carbon Act:

• Net emissions of carbon dioxide and nitrous oxide to reduce to zero by 2050

• Methane to reduce to 10% below 2017 levels by 2030, and 24-47% below

2017 levels by 2050.

There is currently no price on agricultural greenhouse gas emissions in the NZ

ETS. Work is underway in a joint Government/industry partnership to develop a

mechanism for measuring and pricing emissions at the farm level by 2025.

THE SCIENCE

25

26

Where do livestock emissions come from?

• Livestock are neither a source nor a sink of carbon dioxide (CO2)

• Livestock are a source of methane (CH4)

• Livestock are a source of nitrous oxide (N2O), and cause a permanent loss of nitrogen (N)

C & N

CO

2

CO2

CH4

CH4

N

•

CO

2

CO

2

C & N in product

CO

2

27

Livestock emissions are part of the carbon

and nitrogen cycles.

The carbon in atmospheric carbon dioxide

cycles through plants, then the soil and/or

animals that consume the plants. Most re-

enters the atmosphere in the form of

carbon dioxide.

Plants remove carbon dioxide via

photosynthesis and return it by

respiration. Soils absorb carbon dioxide

and return it to the atmosphere when soil

micro-organisms use litter, dead roots

and manure as their food source (for

more information on soil carbon, see

pages 79-90). Humans who eat plant and

animal products containing carbon return

it as carbon dioxide to the atmosphere via

respiration. This is not only carbon neutral,

but carbon dioxide neutral.

However, micro-organisms found in the

rumen of animals use plant carbon (which

was removed from the atmosphere as

carbon dioxide) as their food source and

convert some of it to methane, which the

animal mostly belches out. Methane

contains the same amount of carbon as

carbon dioxide but behaves very

differently in the atmosphere. Methane

eventually decays back into carbon

dioxide after around 12 years. But while it

is in the atmosphere, it makes a significant

contribution to the overall warming effect

because it is much more effective at

absorbing heat radiation than carbon

dioxide. This means that while the cycle is

still ‘carbon neutral’, it is not greenhouse

gas or warming-neutral.

It’s estimated that emissions of methane

have contributed almost 40% of the total

warming effect from all human activities

so far.

The same quantity of carbon is stored in grass at the start and end of each year. The

quantity of carbon stored in a tree increases year on year, while the tree grows.

Why don’t we count the carbon stored in grass?

Grass removes carbon dioxide from the atmosphere as it grows, but returns it to the atmosphere when it is harvested. Trees do exactly

the same. However, the interval between harvesting grass is weeks, while trees are harvested after decades or centuries – or not at all.

28

Why don’t we count the carbon stored in soils?

• Carbon stocks are already high under many New Zealand pastoral soils.

• There is large uncertainty due to a limited evidence base and the high spatial and temporal variability of soil carbon.

• It is difficult to identify specific management practices that can reliably increase rates of soil carbon accumulation.

For more information on soil carbon, refer to pages 79 - 90.

Many farmers are convinced they are increasing stocks of soil carbon – however it is challenging to

prove this at present.

29

30

Methane (CH4)

How is methane produced?

Methane has several sources, including

wetlands, landfills, forest fires, agriculture

and fossil fuel extraction. In New

Zealand, the largest proportion by far

(95%) is belched out by livestock.

Ruminants such as cows, sheep, deer and

goats have four-chambered stomachs,

enabling them to readily break down and

extract energy and nutrients from fibrous

plants like grass. Microbes in the rumen

break down complex carbohydrates into

simpler molecules – a process known as

enteric fermentation. Some of these

microbes produce methane, which the

animal then mostly burps out.

Almost three-quarters of all reported

agricultural greenhouse gas emissions

are in the form of enteric methane

emissions from ruminant animals.

What influences how much

methane is produced?

The amount of methane produced by an

individual ruminant animal is directly

linked to how much it eats. The average

dairy animal produces approximately

82kg of methane per year, the average

deer approximately 22kg per year, and

the average sheep approximately 12kg

per year.

Approximately 21g of methane is

produced per kg of feed eaten. Some

individual feeds have lower emissions –

e.g. forage rape produces about 30% less

methane per kilogram of dry matter

eaten than pasture.

Emissions per unit of intake for different

diets are relatively constant, so large

changes in diet are needed (e.g. >30%

cereal; >60% fodder beet) to affect

emissions.

Some additives reduce emissions (e.g.

lipids, monensin, essential oils, garlic)

but the effect is small and variable.

There is some variation between

animals in emissions per unit of intake,

linked to rumen size, rate of passage

and microbial community structure.

The amount of methane produced by

an individual ruminant animal is

directly linked to how much it eats.

31

Nitrous oxide (N2O)

Where does nitrous oxide

come from?

Nitrous oxide is emitted into the

atmosphere when micro-organisms act

on nitrogen introduced to the soil via

synthetic fertilisers, legumes such as

white clover, or animal urine and dung.

About 1% of nitrogen in the soil, from

any source, is lost as nitrous oxide.

Many farmers use nitrogen-based

fertilisers or legumes to enrich their soil

with nitrogen and help crops and

pastures flourish. In addition, grazing

ruminant livestock eat pasture or crops

that are rich in nitrogen. They use only

a fraction of it to support their own

growth and productivity – producing

milk, for example. The rest simply

passes out the other end in urine and

dung, which creates very concentrated

nitrogen patches in the soil.

Complex microbial communities

transform the nitrogen into a form that

plants can use. But not all of it is taken

up by plant roots. Some sits in the soil

as nitrate, which can leach or run off in

irrigation or rainwater. Different

microbes transform some into nitrous

oxide and emit it into the atmosphere.

New Zealand’s emissions of nitrous

oxide have risen by about half since

1990 – mostly as a result of increased

use of nitrogen-based fertilisers and

the intensification of dairying.

Nitrous oxide accounts for around 21%

of New Zealand’s total agricultural

greenhouse gas emissions. By far the

biggest proportion of that is the result

of livestock urine patches on the soil.

Nitrous oxide accounts for around 12%

of New Zealand’s total greenhouse gas

emissions. That compares with carbon

dioxide at around 44% and methane

at around 43%.

32

Leaching

N2 fixation

Nitrous oxide

(N2O)

N fertiliser

& effluent

NO3

NO3

Urea/urine

NH4

Nitrification

NH3

Volatilisation

Deposition

Denitrification

Nitrous oxide emissions from agriculture

De Klein CAM, Pinares-Patino C, Waghorn GC (2008). Greenhouse gas

emissions. Book chapter. Environmental Impacts of Pasture-Based

Farming, pg 1-32

33

Mitigation options for New Zealand agriculture

Estimating your emissions (‘knowing your number’) is the first mitigation step

Knowing what your greenhouse gas emissions are is the critical first step towards planning for reductions. A survey carried

out in March 2019 found that only 2% of New Zealand farmers know what their emissions are.

There are actions that farmers can take

now to reduce emissions.

However, there is no ‘one-size-fits-all’

solution. Each farmer will need to

identify the right mix of actions for

them and their farm, taking into

account their specific climate and soil

conditions, current management

system, and what advice and skills they

can draw on.

There are two main drivers of on-farm

emissions:

Methane emissions are largely a

function of the quantity of feed eaten

by an animal (dry matter intake).

Generally, the methane emissions from

predominantly pasture-fed livestock in

New Zealand stay constant at around

21 grams of methane for every

kilogram of feed eaten.

Nitrous oxide emissions are largely a

function of the amount of nitrogen

added to the land through fertiliser,

urine and dung. A fixed proportion of

this nitrogen is lost as nitrous oxide.

Unless technologies are developed that

can change these relationships,

reducing agricultural emissions from a

farm relies on reducing total feed

being produced and consumed, and/or

reducing nitrogen applied to or

deposited on land.

Some broad ways to reduce on-farm

emissions include:

1. Reducing stocking rates while

maintaining production

Some farmers can optimise their farm

system by focusing on how much

energy goes into producing product as

opposed to maintaining animals.

If farmers reduce their stocking rate,

for example in conjunction with

improving animal reproductive

performance and removing non-

productive animals, they can reduce

total emissions. However, the impact

on emissions depends on how the

farmer chooses to use adjust other

farm inputs to match the reduced

stocking rate. However, the key here is

that feed consumed on a whole-farm

basis needs to reduce, or total green-

house gas emission won’t reduce.

34

2. Reducing production and

reducing inputs

Some farmers could reduce emissions

and maintain profitability by reducing

production, while reducing inputs such

as fertiliser and supplementary feeds.

3. Using fertiliser more efficiently

Some farmers can reduce nitrous oxide

emissions by using less nitrogen

fertiliser or using fertilisers coated with

a urease inhibitor.

4. Using low-emissions feeds

There are feeds that can, in some

circumstances, reduce methane or

nitrous oxide emissions from livestock.

Examples include forage rape, maize

silage and fodder beet. The size of any

reduction is highly farm-specific.

5. Better manure management

Manure is a minor source of

agricultural emissions, mostly from

methane produced during anaerobic

storage.

Farmers could reduce emissions by

changing how manure is stored.

Farmers could use bio-digesters to

capture the methane emitted from

anaerobic ponds, but it is unlikely to be

cost-effective on most New Zealand

farms.

In total, the Biological Emissions

Reference Group (BERG) estimated that

these mitigation options could reduce

emissions by up to 10% across the

pastoral sector.

kg CO2-equiv/kg milk solids

Animal enteric methane 7.46 65%

Dung & Farm Dairy Effluent methane 0.12 1%

Urine, dung & Farm Dairy Effluent nitrous oxide 1.62 14%

N fertiliser nitrous oxide 0.46 4%

On-farm crop residue nitrous oxide 0.04

Carbon dioxide from N fertiliser 0.51 4%

Carbon dioxide from other fertilisers 0.09

Carbon dioxide from lime 0.10

Carbon dioxide from supplementary feeds 0.89 8%

Carbon dioxide from fuel & electricity 0.22 2%

Carbon dioxide from other 0.02

TOTAL 11.53

Greenhouse gas emissions for an average New Zealand dairy farm

35

Note – there is no similar table for sheep & beef due to difficulties determining an ‘average’ farm.

Mitigation options applicable to dairy, beef and sheep farms

Existing practices

Emerging practices

Novel/new practices

Potential to reduce absolute agricultural emissions

36

Emissions can be

reduced by:

• land use change/

diversification

• changes to on-farm

practices

What is the relationship between mitigation of

greenhouse gases and other environmental goals?

Carbon and nitrogen are the main players in the

production-environment story, and they are linked.

Activities that reduce nitrous oxide emissions also have the

potential to reduce nitrate loss and methane emissions.

Nitrogen that leaves the farm as animal protein does not

enter waterways or enter the atmosphere as nitrous oxide.

Similarly, carbon that leaves in animal products has not re-

entered the atmosphere as methane, but nor does it stay in

the soil in the form of soil organic matter.

The BERG report (see URL to the report on last page)

estimates that Freshwater National Policy Statement

policies already implemented (or likely to be implemented)

by regional councils and unitary authorities have the

potential to reduce agricultural emissions by 0.5–4%,

through changes in farming practices such as reduced

fertiliser use and tree planting. The report estimates up to

800,000ha of trees could be planted as a direct result of

the Freshwater National Policy Statement, sequestering up

to 5.4 million tonnes per annum of carbon dioxide

equivalent (19 Mt CO2e per annum). This is equivalent to

14% of current annual agricultural greenhouse gas

emissions. The reduced stock numbers due to this land-use

change could reduce biological emissions by another 1.2

Mt CO2e.

37

Re-balancing animal

performance and stocking rate

This is an example of how an increase in animal

performance reduces greenhouse gas emissions per unit of

product. In other words, producing the same amount of

product from fewer animals reduces greenhouse gas

emissions.

Low nitrous oxide feeds: early results

3.9 kg N2O-N/ha 6.4 kg N2O-N/ha 2.2 kg N2O-N/ha1.6 kg N2O-N/ha

Fodder beet

39% lower emissions than kale.

Plantain monocultures

28% lower emissions than ryegrass monocultures

38

Di et al. 2016 (https://link.springer.com/article/10.1007/s11368-016-1442-1);

Luo et al. 2018 (https://www.sciencedirect.com/science/article/pii/S0048969717321824?via%3Dihub)

39

Plantain: early results

Simon, de Klein et al. 2019 (https://www.sciencedirect.com/science/article/pii/S0048969719332541)

Recent studies with animals on different plantain diets (0, 15, 30, or 45% plantain in DM) found that:

• N concentration in urine decreased with an increasing percentage of plantain in the diet

• Total urinary N excretion was significantly lower with 30 or 45% of plantain in the diet

• Nitrous oxide emissions were significantly reduced due to 1) reduced N2O loading in urine patch; and 2) plant effect.

40

What new technologies are being developed?

Technology When available Maximum efficacy

Low CH4 emitting sheep 2-3 years 10%?

Low CH4 emitting cattle >5 years 10%?

Low N excreting cattle Now in theory ??

CH4 vaccine 5-10 years 30%?

CH4 inhibitors 2-5 years 30+%

Low emitting feeds

(e.g. GM ryegrass, seaweed)? ?

See www.agmatters.nz/farming-matters/how-do-i-reduce-emissions-on-farm/ for more information.

ECONOMICS

41

42

How does the Emissions Trading Scheme (ETS) work?

All industries in New Zealand, except agriculture, must report greenhouse gas emissions to the Government.

The Government provides Carbon Credits (1 NZ Unit (NZU) = 1 tonne CO2e) to entities sequestering carbon. Those entities then

sell the credits to industries emitting greenhouse gases, who then, in turn, surrender the credits back to the Government.

Currently agricultural processors pay for processing emissions, but on-farm emissions are exempt from having to buy NZUs to

offset emissions.

Average farm emissions (from farm-level modelling)

Average dairy farm: 9.6 tonnes biological GHG/ha/year

Range: 3.1 – 18.8 tonnes/ha/year

Average sheep and beef farm: 2.8 tonnes biological GHG/ha/year

Range: 0.4 – 6.5 tonnes/ha/year

These figures are considered very good by international standards. The wide ranges suggest

there is room to improve on some farms.

The table below shows the intensity of emissions – the amount of kg CO2e emitted per kg of

product produced.

Intensity of emissions: kg CO2e/kg product:

43

Milk solids Beef Sheep meat Goat meat Venison

8.76 14.2 23.57 19.56 30.7

Farm-level modelling

44

Farm modelling was undertaken

using a combination of Farmax to

investigate the farm system and

farm profitability, Overseer to

determine the level of greenhouse

gas emissions, and spreadsheeting

to determine the impact on

profitability of forestry, and to

collate the results of the different

models.

The spreadsheet also enabled a

price for carbon to be included.

These Overseer screengrabs

indicate the different tabs to click

on to get to the greenhouse gas

results. A total farm CO2-e

emissions/ha is shown at the top

right of the Overseer window. Do

not use this figure, as it includes

CO2, which is not a biological

emission.

Modelling – spreadsheet summary

45

The modelling results from the various models were pulled together into an Excel spreadsheet, enabling analysis of the results at

a whole-farm level - comparing changes in greenhouse gas emissions and farm profitability, and across the various scenarios.

This is illustrated on this and the following three pages.

Pastoral

Area

Forest

Area

Manuka

Area

Native

Forest Area

Non

Effective

Total

property

Stocking rate

(pastoral

area)

Total Milk

solids

Production

Milk

solids/pastora

l ha

ha ha ha ha ha ha Cows/ha kgMS kgMS

Base model 219 2.0 38.0 0.0 8.0 267 2.7 193,100 882

Lower SR 10, no PK 219 2.0 38.0 0.0 8.0 267 2.5 175,790 803

100kgN/ha 219 2.0 38.0 0.0 8.0 267 2.7 193,230 882

400kgMS/cow 219 2.0 38.0 0.0 8.0 267 2.3 199,190 910

Base - Grow maize 219 2.0 38.0 0.0 8.0 267 2.7 193,215 882

Lower SR 10 + maize 219 2.0 38.0 0.0 8.0 267 2.5 200,789 917

Modelling – spreadsheet summary

46

CH4

emissions

OVERSEER

CH₄

emissions

N₂O emissions

(annual emission factor)

CO₂

emissionsTotal

Pasture Only Biological Emissions

Total

CO2

sequestered/ha by forestry

CO2

sequestered/ha by manuka

Net CO2 Net CO2

(CO₂ equivalents kg/ha) kg/ha kg/haTotal

property net CO2 (kg)

Total property net CO2

(T/ha)

% change from Base

model

Base model 5,911 2,363 1,235 9,509 10,087 5,821 8,600 1,870,716 7.0

Lower SR 10, no PK

5,495 2,317 803 8,615 9,524 5,821 8,600 1,747,362 6.5 -7%

100kgN/ha 5,817 2,119 1,233 9,169 9,675 5,821 8,600 1,780,470 6.7 -5%

400kgMS/cow

5,624 2,225 1,207 9,056 9,569 5,821 8,600 1,757,241 6.6 -6%

Base - Grow maize

5,808 2,176 1,225 9,209 9,734 5,821 8,600 1,793,286 6.7 -4%

Lower SR 10 + maize

5,755 2,228 813 8,796 9,733 5,821 8,600 1,793,019 6.7 -4%

Modelling – spreadsheet summary

47

OVERSEER FARMAX PRO

Emission Intensity N loss to water P loss to water Pastoral

Total CO₂ equivalents (kg)

Kg of product sold (milk solids/meat

etc kg/yr)

Emission Intensity (kg CO2

equivalent/kg product)

(kg N/ha/yr) (kg P/ha/yr)EBIT ($ total

farm/yr)EBIT ($ pastoral farm

ha/yr)

Carbon Cost of Mitigation ($/T)

(Change in profit/Change in CO2)

Base model 2,209,158 193,100 11.4 44 3.5 $96,246 $439

Lower SR 10, no PK 2,085,804 175,790 11.9 44 3.5 $123,443 $564 -$220

100kgN/ha 2,118,912 193,230 11.0 42 3.5 $83,555 $382 $141

400kgMS/cow 2,095,683 199,190 10.5 41 3.5 $211,145 $964 -$1,013

Base - Grow maize 2,131,728 193,215 11.0 42 3.4 $96,022 $438 $3

Lower SR 10 +

maize2,131,461 200,789 10.6 42 3.4 $183,701 $839 -$1,126

Modelling – spreadsheet summary

48

FORESTRY WHOLE PROPERTY

Forestry Manuka

Total

forestry

carbon

return

Total enterprise

net profit

including

forestry

Per ha net

profit including

forestry

Total enterprise net profit

(including GHG costs)

Per ha net

profit incl

CO2 costs

or

revenues

Carbon

Value

(CO2 $/t)

Annuity

($/ha/yr)

(excludes

carbon)

Annuity

($/ha/yr)

(excludes

carbon)

$/ha/yrEBIT + Annuity

($/yr)

EBIT + Annuity

($ ha/yr)

EBIT +

Annuity

($/yr)

CO2 cost

($/

property)

CO2

revenue

($/

property)

EBIT ($

effective

ha/yr)

% change

from Base

model

$0

Base model 217 240 0 $105,800 $479 $105,800 $0 $0 $479

Lower SR 10, no PK 217 240 0 $132,997 $602 $132,997 $0 $0 $602 26%

100kgN/ha 217 240 0 $93,109 $421 $93,109 $0 $0 $421 -12%

400kgMS/cow 217 240 0 $220,699 $999 $220,699 $0 $0 $999 109%

Base - Grow maize 217 240 0 $105,576 $478 $105,576 $0 $0 $478 0%

Lower SR 10 + maize 217 240 0 $193,255 $874 $193,255 $0 $0 $874 83%

CASE STUDIES

49

Scenarios in these case studies were modelled in Farmax and Overseer, to determine the impact of mitigation

strategies on both greenhouse gas emissions and profitability.

Dairy case study 1

Farm statistics

Total area (ha) 71

Effective area (ha) 67.5

Cows milked 175

Heifers grazed off -

Farm system 2

Milk solids/ha 1,146

Cows/ha 2.6

N Fertiliser applied (kg/ha) 128

Scenarios modelled were:

1. Nil imported feed - all imported

supplement removed.

2. Less N fertiliser - reduce N fertiliser

use from 138 kg N/ha /yr to 58 kg

N/ha/year.

3. Less N fertiliser and nil imported

feed (a combination of 1 and 2

above).

4. Rear less replacements - currently

the farm rears 32% replacements,

of which 22% enter the herd and

10% are sold. This scenario is based

on 15% heifers reared.

5. Plant sidelings in pines - 4 ha of

low-producing pasture on sidelings

could be planted in forestry. The

effective area of the farm was

reduced to 63.5 ha; stocking rate

unchanged with 11 fewer cows

milked at peak.

Soil type: Deep Taupo sand

Average annual rainfall: 1598mm

Average N leaching: 55kgN/ha/year

The base farm was emitting 8,500kg CO2e/ha of methane and 3,230kg CO2e/ha of

nitrous oxide, giving a gross emission total of 11.7 tonnes CO2e/effective ha/year.

50

Dairy case study 1: results of scenario modelling

Methane

(TCO2e/ha)

Nitrous oxide

(TCO2e/ha)

Gross

emission

(T/eff ha)

Change in GHG

emissions relative to

base

Change in Farm

EBIT relative to

base

N Leaching

(kgN/ha/yr)

Base 8.5 3.23 11.7 56

Nil imported feed 7.65 3.01 10.66 -12% -5% 51

Less N fertiliser 8.07 2.7 10.77 -8% -8% 45

Less N fertiliser & nil imported feed 7.21 2.48 9.69 -20% -10% 40

Rear fewer replacements 8.18 3.13 11.31 -3% 5% 55

Plant sidelings in pines 7.97 3.03 11.00 -6% -12% 53

51

This can be summarised as:

0

2

4

6

8

10

12

Nil Imported Feed Less N Fertiliser Less N Fertiliser & Nil

Imported Feed

Rear Less Replacements Plant Sidelings in Pines

To

nnes

CO

2e/h

a

CH4 N2O Gross emission (T/eff ha)

Dairy case study 1: results of scenario modelling

The change in greenhouse gas emissions relative to changes in Earnings Before Interest and Tax, relative to the base scenario are:

:

52

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Nil Imported Feed Less N Fertiliser Less N Fertiliser & Nil

Imported Feed

Rear Less Replacements Plant Sidelings in Pines

Change in GHG emissions Change in Farm EBIT

Notes

53

Dairy case study 2

Farm statistics

Total area (ha) 273

Effective milking platform area (ha) 217

Cows milked (peak) 763

Purchased feed + grazing off (t DM/ha) 3.1

Farm system 2/3

Milk solids/ha 1,652

Milk solids/cow 470

Cows/effective milking ha 3.5

N Fertiliser applied (kg/ha) 221

Soils – heavy, PAW (60cm) 135

• Earlier culling in autumn (March/April).

• Increase the effluent area from 115 ha

to 216 ha by injecting effluent into the

third pivot (has little impact on N

leached but simplifies fertiliser

applications).

Scenario 2 – Builds on Scenario 1 and

adopts many of the principles

highlighted in the P21 research trials

• Total feed is reduced further in this

strategy – a 3.6% reduction.

• Improved pasture management.

• 6-week in-calf rate improved (+13%).

• Herd genetic improvement (+20 $BW

& $PW).

• Lower herd replacement rate (-5%).

• Further reduction in N fertiliser (-86 kg

N/ha or - 36%).

54

Scenarios modelled were:

Scenario 1- focus on efficiency

• Less N Fertiliser - reduce N Fertiliser

use from 195 kg N/ha /yr to 175 kg

N/ha/year.

• Increase total crop area by 9 ha (9.1

ha spring wheat; barley 6.2 to 9 ha;

fodder beet 6.4 to 4.5 ha).

• Reducing stocking rate by 0.1

cow/ha from 2015-16, a reduction of

20 cows.

55

Dairy case study 2: results of scenario modelling

Methane

(TCO2e/ha)

Nitrous

oxide

(TCO2e/ha)

Gross

emission

(T/eff ha)

Change in GHG

emissions relative to

base

Change in

Farm EBIT

relative to

base

N Leaching

(kgN/ha/yr)

Change in N

leaching

Base 8.46 3.46 13.76 22

Scenario 1 – focus on efficiency 8.21 3.15 13.00 -5% -5% 21 -5%

Scenario 2 – optimised system 8.14 2.90 12.54 -9% +13% 19 -10.5%

Notes

Sheep and beef case study 1

56

Farm statistics

Total area (ha) 1,079

Effective area (ha) 765

Pines (ha) 38

Native bush (ha) 140

Wetlands (ha) 136

Sheep SUs 2,163

Cattle SUs 4,388

SU/ha 8.6

Scenarios modelled were:

1. Developing a 100ha techno beef system, whereby a portion of the beef herd

would be run more intensively.

2. Planting 30ha of marginal land into forestry (pines or manuka).

3. Developing a 200ha techno beef system + plant 30ha forestry.

Sheep

Methane

(kg/ha)

Nitrous

oxide

(kg/ha)

Gross

emission

(T/eff ha)

Net emissions

including forestry

sequestration (T/ha)

Change in

Emissions

relative to base

Change in

Farm EBIT

relative to base

N leaching

(kgN/ha/yr)

Base farm 1,965 614 2.6 1.9 8

Farm + 100ha Techno beef system 2,079 667 2.75 2.1 11% +33% 9

Farm + 30ha forestry 1,917 599 2.5 1.2 -37% +1.7% 8

Farm + 200ha techno beef + 30ha

forestry2,103 716 2.8 1.5 -21% +64% 9

Sheep and beef case study 1: results of scenario modelling

0

500

1,000

1,500

2,000

2,500

3,000

Base farm Farm + 100ha

Techno beef

system

Farm + 30ha

forestry

Farm + 200ha

techno beef +

30ha forestry

kgC

O2e/h

a/y

ear

CH4 N2O Gross emission Net Emissions incluing forestry sequestration

-60%

-40%

-20%

0%

20%

40%

60%

80%

Farm + 100ha

Techno beef

system

Farm + 30ha

forestry

Farm + 200ha

techno beef +

30ha forestry

Change in Farm EBIT Change in GHG emission

57

Sheep and beef case study 2

58

Farm statistics

Total area (ha) 1,445

Effective area (ha) 1,153

Pines (ha) 37

Manuka (ha) 20

Native bush (ha) 220

Sheep SUs 6,535

Cattle SUs 3,779

SU/ha 8.9

Scenarios modelled were:

1. Keeping all male progeny as bulls, including buying 100 weaner Friesian bulls

to finish.

2. Planting 348ha of the steeper land into forestry – which would adjoin an

existing forestry block. Options for this were: 100% pine, 50% pine + 50%

manuka, or 33% in each of pine, manuka and totara.

3. A combination of both; keeping all male progeny as bulls,; planting 348ha.

Methane

(kg/ha)

Nitrous

oxide

(kg/ha)

Gross

emission

(T/eff ha)

Net emissions

including forestry

sequestration (T/ha)

Change in

Emissions

relative to base

Change in

Farm EBIT

relative to base

N leaching

(kgN/ha/yr)

Base farm 2,920 1,019 3.94 2.7 17

Farm all bulls 2,746 990 3.74 2.5 -6% 12% 16

Farm + 348ha forestry 3,267 1,231 4.50 -1.2 -145% -19% 15

Farm all bulls + 348ha forestry 3,278 1,192 4.47 -1.2 -146% -16% 15

Sheep and beef case study 2: results of scenario modelling

59

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

CH4 N2O Gross emission Net Emissions

incluing forestry

sequestration

kgC

O2e/h

a/y

ear

Base farm Farm all bulls

Farm + 348ha forestry Farm all bulls + 348ha forestry

-200%

-150%

-100%

-50%

0%

50%

Farm all bulls Farm + 348ha

forestry

Farm all bulls +

348ha forestry

Change in Farm EBIT Change in GHG emission

Dairy mitigation modelling

60

Change in GHG Change in EBIT

Reduce stocking rate by 10% Farm 1 -6% 12%

Farm 2 -7% -4%

Farm 3 -8% -3%

Farm 4 -3% 14%

Replace N fertiliser with bought-in feed -11% -18%

In-shed feeding with increased cow numbers 11% 12%

In-shed feeding, no increase in cows 10% 9%

Grow maize instead of buying in PK -4% 0%

Limit N fertiliser to 100kgN/ha -5% -12%

Shift to once-a-day milking 3% 21%

Sheep and beef mitigation modelling

Change in GHG Change in EBIT

All male progeny as bulls -6% 12%

Convert to deer (finishing weaners) 0% -19%

Shift to 50:50 sheep: beef -10% 13%

Increase sheep : cattle ratio Farm 1 -1% 0%

Farm 2 1% 10%

Farm 3 -1% -20%

Farm 4 0% 19%

Intensive lamb finishing 7% 22%

Increase lambing % (135 to 160) 0% 12%

Develop 100 ha techno beef unit 9% 33%

Replace breeding cows with finishing bulls & heifers -8% 78%

Convert to dairy sheep 17% 68%

61

Overall, the modelling has shown that

changes in farm systems can reduce

greenhouse gas emissions, but the

impact is relatively limited to 2–10%.

While the impact on profitability can

vary, in most cases it is negative.

A key finding of the modelling is that

every farm is different. The impacts of

the mitigation strategies will vary,

depending on the original intensity of

the farm system and the management

system being operated.

62

Farm modelling

63

Arable – maize cropping

For cropping farms, the main greenhouse gas

emission is nitrous oxide from nitrogen fertiliser

use. While there are also carbon dioxide emissions,

these are mainly from fuel and imbedded fertiliser

– which are covered elsewhere under the ETS. If

the farm is also running livestock, then obviously it

will also emit methane.

N P K S

Fertiliser Input

(kg/ha)154 84 75 19

0

500

1,000

1,500

2,000

2,500

kg C

O2e/h

a

Greenhouse Gas Output (kgCO2e/ha)

Methane 0

Nitrous oxide 701

Carbon dioxide 2162

Nitrous oxide sourced mostly from N fertiliser

Carbon dioxide sources:

Fuel 10%

Nitrogen fertiliser 17%

Fertiliser/lime 61%

Methane Nitrous oxide Carbon dioxide

Photo: MPI

Price of carbon ($/t CO2e)

% Liability $25 $30 $50 $100

5% $0.01 $0.01 $0.02 $0.04

10% $0.02 $0.03 $0.04 $0.09

50% $0.11 $0.13 $0.22 $0.44

100% $0.22 $0.26 $0.44 $0.88

Processors

Currently, under the Emissions

Trading Scheme (and Zero Carbon

Bill) the point of obligation for

trading NZUs lies with processors.

If agriculture comes into the ETS

with the point of obligation at the

processor level, this would mean

that dairy and meat companies will

be obliged to buy NZUs to offset

their portion of product processed,

and then pass this cost onto

farmers in the form of lower

payouts and schedules.

These tables show the impact,

depending on the price of NZUs,

and the percentage liability the

sector will face.

Currently, the Government is

proposing that the sector pay for

5% of its emissions.

Price of carbon ($/t CO2e)

% Liability $25 $30 $50 $100

5% $0.02 $0.02 $0.04 $0.07

10% $0.04 $0.04 $0.07 $0.14

50% $0.18 $0.21 $0.36 $0.71

100% $0.36 $0.43 $0.71 $1.42

Price of carbon ($/t CO2e)

% Liability $25 $30 $50 $100

5% $0.03 $0.04 $0.06 $0.12

10% $0.06 $0.07 $0.12 $0.14

50% $0.30 $0.35 $0.59 $1.18

100% $0.59 $0.71 $1.18 $2.36

Impact on beef schedule ($/kg)

Impact on sheep meat schedule ($/kg)

Impact on dairy payout ($/kgMS)

64

Point of obligation

65

Farms

If the point of obligation is at a

farm level, then farmers would

need to pay direct for their farm

emissions.

These tables show the impact of

this, depending on the NZU price

and percentage liability.

These costs are based on the

average emissions outlined on

page 43.

Cost for the average dairy farm ($/ha)

Price of carbon ($/t CO2e)

% Liability $25 $30 $50 $100

5% $12 $14 $24 $48

10% $24 $29 $48 $96

50% $120 $144 $240 $480

100% $240 $288 $480 $960

Cost for the average sheep & beef farm ($/ha)

Price of carbon ($/t CO2e)

% Liability $25 $30 $50 $100

5% $3.6 $4.3 $7 $14

10% $7 $9 $14 $29

50% $36 $43 $71 $143

100% $71 $86 $143 $286

Nitrogen fertiliser will also attract a carbon tax, which will be paid for by the manufacturers/importers and passed onto farmers. For

nitrogen fertilisers, the cost will vary depending on the type of fertiliser and the amount of nitrogen within the fertiliser. Potentially

lime will also be taxed, as it releases carbon dioxide when applied.

Carbon Price ($/NZU)

% Liability $25 $50 $75 $100 $250

5% $3 $6 $9 $12 $29

10% $6 $12 $17 $23 $58

25% $15 $29 $44 $58 $146

50% $29 $58 $87 $117 $292

100% $58 $117 $175 $233 $583

Carbon Price ($/NZU)

% Liability $25 $50 $75 $100 $250

5% $0.55 $1.10 $1.65 $2.20 $5.50

10% $1.10 $2.20 $3.30 $4.40 $11.00

25% $2.75 $5.50 $8.25 $11.00 $27.50

50% $5.50 $11.00 $16.50 $22.00 $55.00

100% $11.00 $22.00 $33.00 $44.00 $110.00

Fertiliser tax ($/tonne)

Urea

Lime

66

67

Reducing stocking rates

Reducing stocking rate/production has an impact on

greenhouse gas emissions, particularly methane. However,

the effectiveness of this strategy depends on the starting

position of the farm (i.e. stocking rate/per-animal

production) and grazing management.

A number of farms are operating beyond their optimum

level. If they reduce stocking rates and/or feed inputs, they

can effectively move back up the profitability curve, thereby

improving profitability and reducing greenhouse gas

emissions in tandem. In the top graph, this is illustrated by

moving from point A, where marginal costs (MC) are greater

than marginal revenue (MR), to point B, where MC = MR.

The issue in achieving this is that the optimum “sweet spot”.

i.e. point B, will vary both within and between years as costs

and prices received vary. This means the profitability curve

moves about, making it very difficult to optimise at any one

point in time. Most farmers aim to operate close to

optimum most of the time, but seldom ever exactly at the

optimum point (as shown by the red circle in the graph).

68

So, what can be done now?

The most important thing a farmer can do now is begin the process of identifying their farm’s greenhouse gas emissions

and comparing that against the averages for that farm type.

Understanding the basics of what drives methane and nitrous oxide emissions is also critical as it is a precursor to

identifying strategies to reduce on-farm emissions, including changing land uses.

When identifying those strategies, a good understanding of their impact on farm profitability will be essential, especially

where trade-offs might need to be made. If mitigation strategies that improve profitability while not increasing emissions

can be identified, then these could be pursued. The interaction between strategies to reduce greenhouse gas emissions

and those to improve water quality needs to be well-understood.

Farmers interested in getting into forestry for offsetting emissions will need to understand the basics (see pages 69 - 78),

that forestry is a long-term exercise, but is not a permanent solution. Advice from someone with a technical

understanding of the NZ ETS and its forestry rules should be sought before any decisions are made.

Keeping in touch with what is happening in the wider sector will be important for understanding how the national-level

targets might translate down to the farm level. Change will be needed in the next few years if the timeframe for He Waka

Eke Noa is to be met (see page 23) and farm-level pricing is to be in place in 2025.

It’s a complex environment to be operating in and there are no quick fixes or silver bullets.

FORESTRY, CARBON

AND THE NEW ZEALAND ETS

69

Content in this section has been developed by John-Paul (JP) Praat and Peter Handford of Groundtruth

70

• If a forest existed prior to 31

December 1989, it is not eligible

for carbon credits. Full liability is

payable if the forest is

converted.

• If the forest was planted after

1 January 1990, it can be

registered with the ETS. Any

carbon credits claimed must be

repaid if the forest is converted.

• If the forest was planted after

1 January 1990, and NOT

registered with the ETS, then no

carbon liability is payable.

Forestry and the ETS Definition of a forest for the ETS

• Area greater than 1ha.

• Average of at least 30m wide.

• No gaps bigger than 15m x 15m.

• Vegetation (trees) must be able to reach 5m in height where they are

growing.

• Vegetation (tree canopy) must be able to cover at least 30% of the land.

Not included:

• Shelterbelts.

• Fruit trees and nut crops.

• A forest of native (indigenous) species which existed before 1990.

Poplar pole planting can be considered a forest if it will

achieve >30% canopy cover.

71

Magnitude of offset – by species

Radiata pine 3 x carbon accumulation rate, 1/10th? establishment cost compared with native

72

Forest and carbon management• Standardised ‘look-up’ tables to assess carbon accumulation.

• Used for up to 99.9ha of forest in the ETS.

• Can measure your own forest.

Units

• 1 tonne carbon dioxide equivalents (CO2-e) = 1 NZ Unit

• One 30-year-old pine tree ~ 2.5 NZ Units

• 1 ton CO2e = 1 NZU ~ 1 m3 of pine stem wood

Carbon management - averaging

Under the ETS, a forester can sell

carbon as it is sequestered by the

trees. This follows the pattern as

shown in the graph on page 73. When

the trees are harvested, approximately

70% of the carbon is deemed to

“vanish”, at which point the carbon

sold must be repaid. The remaining

carbon – tied up in the stump, roots,

and slash – slowly decays away, but is

replaced by the replanted forest.

Previously, foresters could claim this

later amount of carbon – called “trade

without penalty” or “safe carbon” –

provided the forest was registered

early in the first rotation, and

sell the carbon credits without having

to pay anything back at harvest. This is

illustrated in the graph on page 74.

The Government has now agreed that

foresters can claim the “average”

amount of carbon sequestered over

the life of the forest, prior to harvest,

without having to repay this at harvest,

as shown in the graph on page 75. This

applies to all forests registered from 1

January 2021. The averaging scheme will

be mandatory for all forests planted from

this point forward.

This carbon can be claimed up to the

73

around year 16-18. Key points to

remember:

• The forest has to be replanted –

otherwise the full amount of carbon

must be repaid, and

• It only applies to the first rotation.

point where the forest has sequestered

half of the total amount likely to be

sequestered prior to harvest. So, for

example, assume the forest will sequester

800 tonnes CO2e by year 28, which is the

year of harvest. The forester can claim

400 tonnes, which is usually achieved

74

Tradeable without penalty

75

Tradeable without penalty

Another important consideration when using forestry for offsetting is that:

• the area planted for offsetting must be replanted at harvest, to continue to offset the greenhouse gases emitted, and

• a similar area must be planted again, to offset continuing emissions from the farm.

For example:

Assume 100ha is sufficient for offset:

• At first harvest (28 years) – replant initial 100ha + plant further 100ha

• At second harvest – replant 200ha + plant further 100ha

• And so on…

76

If you’re considering forestry for carbon

sequestration / offsetting …

get good advice!

Forestry is not a permanent solution

Area of forestry required to offset

Note: based on national average pinus radiata data. Regions will vary.

Total – gives 28-year offset

Average – gives 16-18 year offset

This illustrates the area of forestry needed to offset the average farm’s

GHG emissions, depending on the percentage offset required, and

whether it’s the total amount of carbon sequestered being claimed, or

the (new) average amount.

77

In this case study, native planting is used

rather than pines.

The NPV and IRR are negative due to a

combination of:

• very high establishment costs for

natives

• the very long/slow sequestration of

carbon by natives.

Carbon impact on forestry profitability

Native forestry – 50 years Carbon @ $25 Carbon @$50

NPV @ 6% -$11,743 -$8,805

IRR -1.4% 0.8%

S&B farming Forest for timberForest for timber &

carbon @ $25/t

Forest for timber &

carbon @ $50/t

EBIT/annuity ($/ha) $245 $292 $744 $1,196

IRR on investment 4.5% 7.9% 14.7% 24.3%

This is a case study of a farm considering planting the property in trees (pines) for carbon farming. It shows the very good returns

that could be possible.

78

‘Plant and walk away’ approach

The ‘plant and walk away’ approach has been suggested in areas where it may be impractical to harvest trees (for example, if a

farm is a long way from a port or mill, or the cost of access is very high).

The idea is to plant pines, as they sequester carbon rapidly, but are not ‘climax trees’. Climax species are plant species that will

remain essentially unchanged in terms of species composition for as long as a site remains undisturbed. Eventually the pines will

die and natives will grow up through them. It might be necessary to plant natives to ensure that they eventually take over.

The idea is in its early stage of exploration at the moment, and needs to be modelled to assess its applicability.

Photo: NIWA (Dave Allen)

SOIL CARBON

79

80

Soil carbon: a brief introductionThere is considerable interest in the capacity of soil to store carbon and reduce the amount of carbon dioxide in the

atmosphere. Soil carbon is also considered important for maintaining soil health and resilience.

Where does soil carbon come from?

Carbon in soil is bound up as organic

matter and typically is greatest in the

topsoil. Most of the carbon in soil is

derived from plant roots rather than from

above-ground plant material. As roots

grow and die they release carbon into

the surrounding environment and

microorganisms decompose this released

carbon and convert it into forms that are

protected by the soil.

While plant photosynthesis is responsible

for the majority of carbon inputs into soil,

plant and microbial respiration converts

soil carbon back into carbon dioxide.

Consequently, the small difference

between photosynthesis and respiration

determines whether carbon accumulates

or is lost (as shown in the graphic).

Whether soil gains or loses carbon depends on the balance of photosynthesis by plants

and soil and plant respiration.

Photosynthesised carbon can also be exported in products like milk and later converted

to carbon dioxide after being consumed.

81

82

PLANT RESPIRATIONGROSS PHOTOSYNTHESIS

20 tonnes carbon/annum

from atmosphere as carbon dioxide

10 tonnes carbon/annum

to atmosphere as carbon dioxide

NET PHOTOSYNTHESIS

10 tonnes carbon

PLANT SHOOTS

5 tonnes carbon

PLANT ROOTS/LITTER

5 tonnes carbon

5 tonnes carbon /annum

to atmosphere as carbon dioxide

This example is illustrative

only. Assumptions are:

• Carbon = 50% of plant

dry matter

• 2.5 cows/ha eating 2

tonnes carbon each

• milk yield is 4000kg and

methane per animal is

85kg = 64kg carbon.

• Carbon content of milk is

approx. 5% (i.e. 5% of

10,000 = 500kg carbon).

A further assumption is that

soil carbon is in a steady

state - i.e. not accumulating

carbon.

Carbon fluxes and sinks/hectare in a grazed pasture

83

Carbon fluxes and sinks/hectare in a grazed pasture

Plant shoots eaten

5 tonnes carbon

Methane

160 kg carbon

as methane

Milk/meat500 kg carbon

Urine100 kg

carbon

Faeces1400 kg

carbon

Respiration2840 kg carbon

Global Warming Potential (GWP) = methane x 25

Carbon dioxide

This graphic shows that, of the 5

tonnes of carbon consumed, 4.84

tonnes is given off as carbon over a

short period.

The only carbon that is changed is that

absorbed as carbon dioxide and then

emitted as methane which has a

higher GWP (see page 18).

Carbon dioxide Carbon dioxide Carbon dioxide

84

Ph

oto

synth

esis

Resp

iratio

n

Light

Temperature

Moisture

Nutrients

pH

Carbon

availability

Climate

Irrigation

Fertiliser

Lime

Plant, stock type

& management

Light

Temperature

Moisture

Nutrients

pH

Carbon

dioxide

Soil stabilisation

Microbial

processing

There are many factors that

control the amount of carbon

in soil.

Many management practices

alter the flow of carbon from

the atmosphere to the soil,

as well as the flow back to

the atmosphere. So, when

one practice is changed,

rates alter in both directions

– but it is the net effect that

matters.

85

Is soil carbon accumulating

or being lost?

• Soil carbon levels under most New

Zealand pasture on flat to rolling land are

in a steady state (i.e. no change).

• However, this is not the case for peaty or

organic soils where there are large losses.

• There is some evidence of soil carbon

gains on hill country under grazing.

• Some management practices can

decrease carbon stocks (e.g., cropping).

• Protecting soil carbon can be achieved by

decreasing length of time soils remain

fallow.

86

How much carbon is there in New Zealand soils?

Left: Soil carbon stocks in New Zealand soils are relatively

high (a little over 100 tonnes per hectare) and highly

spatially variable.

Stocks are high because of young soils, a temperate climate

and lack of intensive cultivation/cropping that are seen in

other parts of the world.

Below: This graph shows the stock distribution, with an

average a bit higher than 100 t C/ha to 30cm depth.

Soil

carbon

stock

(t/ha)

New Zealand

soil carbon stock

Manaaki Whenua Landcare Research, University of Waikato

87

How does land management alter soil carbon stocks?

Research has started to explore whether the carbon content of

soils in New Zealand is changing under different pasture

management practices. On flat land, the carbon content of

most soils with high organic matter has not changed in the last

two to three decades. The main exception to this is organic or

peat soils, which can lose a significant amount of carbon for as

long as they remain drained. There is some evidence that hill

country soils have gained a small amount of carbon but it is not

clear how widely spread these gains might be.

In general, there is little evidence of grazing management

practices in New Zealand that increase carbon by much,

probably because carbon stocks in New Zealand soils are

already high (see page 84). There are some management

practices that result in carbon loss. Importation of carbon in

supplemental feed can increase carbon but this gain is probably

offset by losses at the site of intensive feed production. A new

inversion plough approach is being tested where the top 30cm

of soil is inverted to bury topsoil carbon, hopefully slowing

carbon decomposition by microbes. Subsoils are brought to the

surface exposing new sites where carbon can be stored.

However, this approach may only work in certain soil types.

Some losses might be temporary - for example, losses during

pasture renewal or use of fodder crops where soils

remain bare for a time. When soils are bare, carbon inputs from

plants stop but microorganisms remain active converting

carbon in soil to carbon dioxide. This carbon can likely be

recovered if the site then remains in pasture for a few years.

Reducing the length of time between actively growing plant

cover reduces loss of carbon – for example, using direct drill

approaches to re-establish swards or using cover crops between

continuous feed production.

Surprisingly, irrigation of pasture decreases carbon stocks

despite greatly increasing above-ground plant growth. While

the reasons for this has not been determined, it is likely that

irrigation stimulates respiration by microbes more than it

increases photosynthesis by plants.

88

How do we monitor changes in soil carbon?

Measuring stocks and small changes of carbon in soil is challenging. Typically, soil cores are taken down to about 60cm, divided

into sections, and the carbon content and the bulk density measured.

A sufficient number of cores is required to account for the spatial variability of carbon in soil. Using this approach, we can usually

measure changes in carbon of as little as 6 tonnes per hectare between sampling times.

The percentage carbon of soil is measured in the laboratory using well described techniques. It is also critical to measure soil

weight to ensure fair comparisons are made when calculating carbon stocks and changes.

Management practice Gain or loss of C Changes in carbon inputs and outputs Comments

Pasture renewal,

supplemental maize Loss

When soils are bare plant inputs of carbon stop

but microbial respiration continues

Carbon probably recovers under pasture.

Losses can be minimised by decreasing length

of time soil is bare.

Irrigation Loss

Irrigation increases above ground production but

unclear if this translates to below ground inputs.

Respiration also likely to increase.

Are there irrigation strategies that increase

production and maintains soil carbon? In very

dry environments overseas irrigation increases

soil carbon

Inversion tillage Gain

Decreases respiration in buried soil carbon and

provides new surfaces for newly photosynthesised

plant carbon to be stored

Still being tested in New Zealand to determine

appropriate soils and size of gains

Supplemental feed import GainImports carbon from off farm and if transferred to

paddock can build carbon

Site where feed is grown can have soil carbon

losses and the net effect of gains and losses

needs to be determined.

National benchmarking study

Funded by the Ministry for Primary Industries, scientists are

about to implement a long-term nationwide study

specifically designed to assess whether soil carbon stocks

on New Zealand agricultural land are increasing or

decreasing, and the role of land class, soil type and farm-

management practice.

About 500 sites (see map right) will be sampled to a depth

of 0.3m. This sampling intensity is designed to detect a

change of 2 tonnes of carbon per hectare (over the period

2019-2030), should such a change occur within the broad

land uses of cropland, perennial horticulture, dairy, flat-

rolling drystock or hill-country drystock.

The data generated will indicate to farmers where they

should focus their efforts if they want to maintain and/or

increase soil carbon stocks, and help New Zealand more

accurately meet its greenhouse gas emission reporting

obligations under international climate change agreements.

First phases of the study will benchmark stocks, while

subsequent phases will monitor changes with time.

Strict site-selection, sampling, analysis, storage and data-

management protocols will be followed to ensure results

are robust and comparable.

89

Sampling sites for national soil

carbon benchmarking study

90

Further information

Technical information

The technical papers below can be obtained by contacting either

Louis Schipper schipper@waikato.ac.nz or David Whitehead

WhiteheadD@landcareresearch.co.nz

Schipper, L.A. et al. (2017) A review of soil carbon change in

grazed New Zealand pastures. New Zealand Journal of

Agricultural Research 60(2): 93–118.

Whitehead, D. et al. (2018) Potential for improved management

practices to reduce losses or increase soil carbon stocks in New

Zealand’s grazed grasslands. Agriculture, Ecosystems and

Environment. 265:432-443.

More information on on-farm measurement can be obtained by

contacting Dr Paul Mudge at Landcare Research:

MudgeP@landcareresearch.co.nz

Web materials

Schipper, L.A et al. (2017) Looking after your carbon – benefits to

the soil and the atmosphere. DairyNZ Technical Series.

December 2017, issue 36: 7-10.

https://www.dairynz.co.nz/publications/technical-

series/technical-series-december-2017/

On-farm measurement

Quantifying farm-scale soil carbon stocks in a statistically

robust and comparable way is difficult and expensive (up to

around $10,000 per sampling round, with higher costs for

initial benchmarking), requiring statistical knowledge,

specialist tools, the engagement of a certified laboratory and

a commitment to following procedures precisely and

repeatedly. Full guidance is available if desired. Contact Paul

Mudge at Manaaki Whenua Landcare Research (see right.)

In addition, statistically robust benchmarking and monitoring

over time at the whole farm scale will not, alone, identify

individual management practices that influence soil carbon.

That is the subject of ongoing research.

It is possible for farmers to have measurements made to

estimate soil carbon levels at a single point in time, allowing

them to compare their soils to national values. One simple

way would be to get soil samples collected for fertility testing

analysed for total organic carbon. It is important to

remember that different soils naturally hold different amounts

of carbon.

Before proceeding with an estimation, or full quantification, it

is important that farmers are very clear about their objectives

for benchmarking and/or monitoring soil carbon on their

property.

TOOLS

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92

There are several tools for estimating

greenhouse gas emissions on New

Zealand farms. These vary in

complexity and cost, and

improvements to their accuracy,

usability and sensitivity are ongoing.

Which tool to use depends on the

degree of detail required. As the

illustration shows, a simple emission

figure can be estimated using tonnes

of product and/or number of animals

multiplied by an emission factor.

If greater detail is required, then the

need is to use tools designed for the

purpose, such as Overseer.

In the future, farmers will be asked to

include greenhouse gas emissions

estimates in their farm environment

plan.

Tools for estimating farm greenhouse gas emissions

Spectrum of tools

The Lincoln University Farm Carbon Footprint Calculator is available online at www.lincoln.ac.nz/carboncalculator.

This is a relatively straightforward, simple tool, and requires various inputs such as stock numbers, production, and fertiliser/feed.

93

Overseer is the most comprehensive

online greenhouse gas emissions

estimation calculator currently available.

The tool is widely used by farmers for

nutrient-management purposes.

Overseer estimates methane and

nitrous oxide emissions at the farm

level, consistent with New Zealand’s

Greenhouse Gas Inventory.

At the time of writing, different industry

groups are developing their own carbon

calculators. In addition, the next version

of Farmax will include a carbon

calculator.

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95

Notes

96

Notes

More information

The sc ience of greenhouse gases and emissions -reduction options

enquiry@nzagrc.org.nz

The economics of agricultural greenhouse gas reduct ion

phil . journeaux@agfirst .co.nz

Forestry, carbon and the New Zealand Emissions Trading Scheme

phil . journeaux@agfirst .co.nz

Soil carbon

louis.schipper@waikato.ac.nz; whiteheadd@landcareresearch.co.nz; mudgep@landcareresearch.co.nz

Web resources

www.nzagrc.org.nz

The sc ience of greenhouse gases and emissions -reduction options

www.agmatters.nz

Interim Cl imate Change Committee report: 'Action on Agriculture’

www.iccc .mfe.govt.nz/what-we-do/agriculture/agriculture-inquiry-f inal-report/act ion-agricultural-

emissions/

The New Zealand Emissions Trading Scheme

www.mpi.govt .nz/protect ion-and-response/environment-and-natural-resources/emissions-trading-

scheme/

The B iological Emissions Reference Group (BERG) report f rom December 2018

www.mpi.govt .nz/protect ion-and-response/environment-and-natural-resources/biological-emissions-

reference-group/