Market Morsel: Farmers to pay for their emissions?

Market Morsel

Australian farmers are not mandated to account for their emissions. This means that farmers are not required to measure their greenhouse gas emissions or offset these emissions.

In New Zealand, nearly half of all emissions originate from agriculture, mainly through methane.

In a world first, the New Zealand government are proposing the introduction of a scheme which will require farmers to pay for their greenhouse gas emissions from 2025.

The proposed scheme includes:

• Farmers pay for emissions.
• Business owners have a legal responsibility to report and pay for emissions annually.
• Separate levy prices for long-lived gases and biogenic methane.
• Incentive payments for emission reduction technologies.

There is no current expectation that a similar approach will be taken within Australia. Yet there is always the potential for policy change.

What does it mean for Australian farmers?

The prospect of policy change in relation to farmer compliance with emissions targets is a potential risk.

Farmers who are currently generating carbon credits within their enterprises must consider carefully whether they trade these credits or retain them for on-farm carbon neutrality.

An enterprise selling carbon credits at present, in theory, could be mandated to purchase back carbon credits at a later date in order to meet changing policy obligations.

It is important to note that farmers in Australia are not obligated to account for emissions, but there is a risk of policy change.