A farmer’s friend in NZ’s greenhouse gas countdown
BDO’s Charles Rau FCA says CAs are well placed to help NZ’s farmers calculate greenhouse emissions by the 2022 deadline.
- He Waka Eke Noa aims to develop cost-effective methods to reduce on-farm greenhouse gas emissions.
- Emissions data gathered by December 2022 will help determine how much farmers will pay for their carbon footprint.
- Accountants can assist farmers to calculate carbon offsets and reduce costs.
By Deborah Tarrant
Photos Louise Savage
New Zealand farmers are in a race against time to calculate their on-farm greenhouse gas (GHG) emissions by the end of December 2022 under a world-first partnership between the farming, industry and government sectors, known as “He Waka Eke Noa”.
Spearheading efforts towards meeting that deadline is Charles Rau FCA, a sought-after advisory and tax partner at BDO Gisborne, and dedicated deer, sheep and cattle farmer.
Accountants can be major contributors in helping some 28,000 New Zealand farmers to determine the future of the nation’s agricultural sector, says Rau, whose client base spans from small mum-and-dad operations to sizeable agribusinesses, along with domestic and international commercial enterprises.
Earlier this year, Rau set out to show what can be done by using his 810ha Matawai Deer Park, on the East Cape in the north island’s Raukumara Range between Gisborne and Opotiki, as a proof of concept for how farmers calculate and mitigate emissions.
Agriculture is by far New Zealand’s largest GHG-emitting sector and is yet to be subject to a carbon price under the country’s emission trading system (ETS). He Waka Eke Noa kicked off in 2019 with the aim of building a framework and developing cost-effective methods, including accounting and reporting systems, to reduce on-farm emissions.
Progress in gathering emissions data by December next year will help determine how much farmers will pay as part of an alternative pricing mechanism running in conjunction with the New Zealand ETS. If insufficient progress has been made, the government has said agriculture may be brought directly into the ETS with livestock emissions priced at the processor level and emissions from fertiliser likely covered at the importer/manufacturer level.
Will farmers be taxed on emissions?
Such outcomes would have dire financial consequences and may affect the viability of many farms, predicts Rau.
“[The ETS] is a blunt instrument designed for fossil fuel-based industries, not methane and nitrous oxide-based industries such as agriculture. Taxing farmers via the ETS at the processor level will not recognise what’s happening on farms, the difference between high-emitting and low-emitting farms or any farm offsets,” he explains. “It won’t reward good behaviour or penalise bad.”
Picture: Charles Rau FCA sees carbon sequestration through new tree plantings as a major carbon mitigation tool for NZ farmers.
“[The ETS] is a blunt instrument designed for fossil fuel-based industries, not methane and nitrous oxide-based industries such as agriculture.”
Rau is a committee member of the Chartered Accountants Australia and New Zealand Rural Advisory Group, which is closely monitoring GHG regulatory requirements from He Waka Eke Noa, offering a clear example to others of what can be done and urging action.
Calculating farm greenhouse emissions
Rau used the Ministry for the Environment Excel GHG worksheet, but now plumps for the industry-specific calculator launched by Beef + Lamb New Zealand in July to show that reporting on emissions can be surprisingly straightforward.
Rau says promoting carbon sequestration through planting vegetation is also a major mitigating opportunity.
“On our farm we managed to get government funding to plant wetland, riparian [riverbank] and erosion-prone areas,” he says. “Some 10,000 native trees went in during July and we’ve used some of that in our calculation for emissions offsetting... So we’re offsetting on the farm without it having a significant effect on what we do. Most farms in our area have woody vegetation, trees, they are not being credited for. Now is the ideal time to plan for new tree plantings.”
Picture: Deer on Rau's 810ha farm, the Matawai Deer Park, between Gisborne and Opotiki.
Rau, whose specialisation in sustainability accounting kicked off with the NZ ETS in 2008, says He Waka Eke Noa is a major opportunity for accountants to help farmers plan ahead.
“I see accountants having a potentially huge impact in advising and helping clients with He Waka Eke Noa, and particularly with the emissions calculator because typically they already hold 80% of the data needed – the livestock and fertiliser numbers,” he says. “The only numbers we don’t hold are the on-farm offsets, the hectares of trees, which the clients can estimate.”
What’s more, it’s a fairly simple process, Rau notes. “To fill the calculator out, you’re probably looking at 20 minutes once you have all the data on hand.”
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