Policy challenges for livestock emissions abatement: lessons from New Zealand

Abstract

Under the current framework embodied in the Kyoto Protocol and envisaged for future multilateral agreements, Annex I parties are obliged to limit their economy-wide GHG emissions and accept responsibility for exceeding their targets through various flexible mechanisms. The predominant sources of agricultural GHGs, which represent about 8% of total Annex I emissions, are methane and nitrous oxide from livestock. Efforts to reduce livestock emissions have so far been limited due to disagreements over the abatement potential, technical feasibility, and cost-effectiveness of the policy instruments available, including market-based measures. Two key challenges facing the application of market-based measures to livestock emissions are evaluated: first, to design a policy framework that appropriately aligns the measurement of emissions, the abatement options, and the incentives facing livestock producers; second, to address the risk of leakage and economic regrets that arise from unilateral domestic policy action. Particular attention is given to the policy developments in New Zealand and the lessons learnt from its experience. The challenges of applying market-based measures to livestock emissions are surmountable, but require innovative policy responses.

Sous le cadre actuel incarné par le protocole de Kyoto et envisagé pour de futurs accords multilatéraux, les Parties de l'annexe I sont tenues de limiter leurs émissions de GES sur l'ensemble de leur économie, et accepter la responsabilité d'avoir excédé leurs cibles à travers divers mécanismes de flexibilité. Les sources principales de GES d'origine agricole, représentant environ 8% de la totalité des émissions de l'Annexe I, sont le méthane et l'oxyde nitreux provenant de l’élevage de bétail. Les efforts visant à réduire les émissions de l’élevage ont jusqu'à présent été limités à cause des désaccords sur le potentiel d'abattement, la faisabilité technique, et l'efficacité de coût des instruments politiques disponibles, y compris les mesures fondées sur le marché. Deux défis clés à la mise en œuvre de mesures de marché pour les émissions de l’élevage sont évalués : en premier lieu, concevoir un cadre de politiques alignant de manière appropriée la mesure des émissions, les options d'abattement et les incitations aux éleveurs de bétail ; deuxièmement, aborder le risque de fuite et les regrets économiques émanant de l'action politique nationale unilatérale. Une attention particulière est donnée aux développements des politiques en Nouvelle-Zélande et les leçons tirées de cette expérience. Les défis liés à l'application de mesures de marché aux émissions de l’élevage sont surmontables, mais requièrent des réponses politiques innovantes.

Keywords:

• agricultural emissions
• Annex I
• emissions trading scheme
• livestock
• mitigation policy

Mots clés:

• émissions agricoles
• Annexe I
• système d’échange d’émissions
• élevage
• politique de mitigation

Acknowledgements

The authors gratefully acknowledge the many helpful suggestions and other valuable assistance from David Caygill, Steven Cox, Susi Kerr, Vic Lipski, Adrian Macey, Alister Newton, Andy Reisinger, Gerald Rys and Gareth Ward in the preparation of this manuscript.

Notes

The relative importance of livestock emissions depends on the metric used to compare different GHGs. The most common metric is that of CO₂-equivalence based on the 100-year Global Warming Potentials (GWPs), used in reporting under the UNFCCC and in recent IPCC assessments (IPCC, 2007). There is considerable discussion in the scientific community about the appropriateness of and potential alternatives to GWPs (e.g. Johansson et al., 2006; van Vuuren et al., 2006; IPCC, 2009; Shine, 2009; Manning and Reisinger, 2011). The relative importance of non-CO₂ emissions in GHG mitigation strategies could change significantly if there were changes to this metric. However, for near-term climate policy purposes, the use of GWPs appears likely to remain in place, even if the numerical values of some GWPs might be updated for future commitment periods (UNFCCC, 2009).

EU-15 comprises the 15 member countries of the EU following its enlargement in 1995 (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Ireland, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the UK).

Subnational governments include local, regional, provincial, and state governments.

At present, Alberta's Greenhouse Gas Reduction Program is the most ambitious offset programme for agricultural producers. It includes ten agriculture-based activities that can earn emissions offsets for sale to large industrial emitters within Alberta's emissions trading scheme. To date, only one of the ten offset activities, tillage management, has been assigned earned credits (Government of Alberta, 2011).

Livestock emissions are included within EU ETS emission caps but are not covered within its price-based mechanisms.  The EU ETS will include industrial N₂O from 2013 (http://ec.europa.eu/clima/faq/ets/index_en.htm).

Livestock production systems vary significantly across the developed world. New Zealand's livestock sector is characterized by extensive pasture grazing of dairy cattle, beef cattle, and sheep, low levels of agricultural subsidies, and export of 80–95% of livestock production (Statistics New Zealand, 2011).

Others have described and reviewed the range of potential mitigation options (see Clark et al., 2001; Clemens and Ahlgrimm, 2001; Eckard et al., 2010; Gill et al., 2010).

The focus here is on direct livestock emissions (CH₄ and N₂O) of extensively farmed animals and not on soil carbon management, offsetting emissions through afforestation, or the consumption of electricity and liquid fuels associated with agricultural production. Accordingly, the scope for, or timescales and implications of, fundamental land-use changes away from livestock agriculture resulting from market-based mitigation measures are not explored here.

These studies often assume constant levels of production within a particular livestock category. Models of abatement cost that include the potential for destocking marginally less productive land or shifting between different types of livestock production could yield different results.

The technical issues for aligning MRV and incentives may be smaller for some livestock emissions sources, particularly manure management in confined dairy and poultry operations. Non-point-source emissions such as enteric fermentation and animal excreta on soil pose more significant challenges.

The exception to this is an inventory provision to reflect use of nitrification inhibitors, an existing mitigation technology for N₂O emissions.

In this circumstance, costs are borne by different parts of society (farmers and landowners if agriculture is not protected, or taxpayers if agriculture is fully protected). The issue of economic losses that arises from environmental regulation is discussed in Jaffe et al. (1995). Kerr and Coleman (2008) provide a discussion of the issue in terms of the New Zealand ETS.

Undifferentiated between Annex I and non-Annex I countries.

For example, where cattle are grain-fed, they must consume approximately 7 kg of grain to generate 1 kg of beef (White, 2000). However, in some extensive pastoral systems with low levels of supplemental feeding, such as in New Zealand, livestock production yields protein (meat and dairy) for human consumption from land that could not efficiently produce high yields of grain or other foods (Garnett, 2011).