Smith Lockwood: Climate Change Response (Emissions Trading) Amendment Bill Electricity (Renewable Preference) Amendment Bill — Third Readings 
Smith Lockwood: Climate Change Response (Emissions Trading) Amendment Bill Electricity (Renewable Preference) Amendment Bill — Third Readings 
[Volume:650;Page:18730] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 We now head towards the end of the third reading of this hugely important legislation and the passage of what I would go as far to suggest is probably the most important legislation to go through this House since the GST legislation was passed in the mid-1980s. It will have a very profound impact on all households in New Zealand and on all businesses. It has been estimated for example that households face in just their electricity prices an increase of 20 percent at a carbon unit price of $25 but recently prices have gone higher than that and estimates suggest that the price of carbon could go up to $100 a tonne by 2012. That could increase the price of electricity by anything up to 40 percent. 
Hon David Parker 
: Rubbish! 
Dr the Hon LOCKWOOD SMITH 
: I hear the Minister saying “rubbish” but these are not my figures. These figures have been estimated by other people trying to get a grip on what is likely to happen to households’ electricity prices. Businesses will all face significantly higher costs of production. Food which has already gone up in price partly because of the biofuels interest and production will of course go up very significantly again. One of the worries is whether the public of New Zealand understands this. Does the public understand what we are passing through this House right now? And although there has not been a lot of research on this it is interesting to note a Stuff poll that came out just recently—one should not give too much credence to those but it did have almost 7000 votes recorded on it. Of those 7000 votes 12.4 percent said they did understand what the emissions trading scheme legislation was all about 62 percent said they did not understand what it was about and a further 25 percent did not even know what the question was about—they did not know what the scheme law was actually about. A total of 87 percent of people did not even understand what on earth we are doing with this legislation. That is a worry when it will have such a profound impact on their lives. 
My colleague David Carter has already expressed concerns about the fact that this legislation leads the world in involving all sectors. We want to make it very clear that National supports an emissions trading scheme—we have always made that clear. But our concern is that this legislation is getting out so far ahead of the rest of the world and ignoring so much representation from New Zealand businesses that drive our economy—ignoring what they are saying this will do to them. 
One of the reasons why it is so unwise to get out so far ahead from the rest of the world is that technically it is very difficult to do what this legislation will require of New Zealand businesses. Let me take the technical aspects of it with which I am most familiar—those relating to agriculture. One of the reasons it is unwise to get out ahead of the rest of the world bringing agriculture into such legislation is that one cannot measure the special emissions from agriculture. Sure agriculture’s energy utilisation and all that will be included in the scheme and no one argues about that—the use of electricity the use of energy in agriculture of course that is the same as for anyone else. But agriculture has special emissions like methane and nitrous oxide. One of the challenges with this kind of legislation—and I want members of this House to understand this—is that the scheme does not propose that one measure methane emissions from ruminant animals because one cannot easily do it. It is technically extraordinarily difficult to do it and the Minister acknowledges that. 
So what we do with this legislation is that we estimate the emissions and if that could be done reasonably well that would be fine. But we need to understand how the Government proposes to estimate those emissions. The way it proposes to do this is to take the number of relevant ruminant animals—sheep beef and dairy cattle and deer—apply the feed intake measured in terms of dry matter intake per head of those animals and then apply a conversion rate from that dry matter intake to methane. In the case of cattle for example that methane conversion rate is 6.5 percent of gross energy intake. 
That is how it is proposed to estimate the methane emissions; it is by the number of animals multiplied by the feed intake—the dry matter intake per animal—and then the methane conversion factor is applied. The next problem is that one cannot measure the dry matter intake of our ruminant animals in New Zealand. It cannot be done here. It could perhaps be done in some countries where they feed animals in stalls but in New Zealand we cannot do it. Can you imagine trying to measure the actual dry matter intake of pasture of 10000 sheep grazing out on a farm or 1000 dairy cows grazing on a farm somewhere? How does one actually measure that dry matter intake? It cannot be done. So what does the Government propose? It says that one estimates how much dry matter intake there is under this legislation by looking at how much is produced. So we take the number of dairy cows we have got and look at the amount of milk or meat that has been produced. From that amount of milk meat or wool that has been produced one works back to how much dry matter must have been consumed. That is how one works out how much dry matter animals must have consumed. From the amount of milk produced and the number of animals one can work out in theory how much dry matter has been consumed. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Dr the Hon LOCKWOOD SMITH 
: Prior to the dinner break I was emphasising the concerns we have about Labour getting ahead of the rest of the world by passing this legislation. I was focusing particularly on the problems the legislation will cause for the agricultural sector in terms of the measurement of methane emissions that are a very large part of the problem for New Zealand. The Minister responsible for Climate Change Issues David Parker acknowledged that we cannot at the moment measure methane emissions so the Labour-led Government’s proposal is that they should be estimated. The emissions are estimated by calculating the number of animals and their dry matter intake then applying a conversion factor for methane from the gross energy intake. But as I was pointing out a further problem is that we cannot measure dry matter intake either—it has to be estimated as well. So we now have two estimations. 
And the problem with that is that it is proposed that dry matter intake be estimated from what sheep cattle and deer actually produce—so from the amount of milk meat or wool they produce we would work back and estimate the amount of dry matter they had consumed. But I want the Labour Green and New Zealand First members who are supporting this bill to understand that there will be a variable percentage of digestibility in the dry matter intake an animal consumes depending on the quality of feed the farmer uses. The calculation does not recognise that. 
What is more once that feed is digested an animal of high genetic worth will utilise the metabolisable energy differently. An animal that has produced more milk or meat for argument’s sake could be an animal of higher genetic worth to which a farmer has also fed a more digestible diet. So we could have a situation whereby less methane has been released into the atmosphere for the production of meat or milk. But the system will not allow for that. The system will punish the efficient farmer and the animals of high genetic worth that produce more for a given amount of metabolisable energy being utilised. It will punish the farmer who feeds the more highly digestible diet. So we will see the exact opposite from what is intended. Because intake is based on production it will punish those who feed higher-quality diets and have animals of higher genetic worth. That is the first problem. 
The second problem is that because all the figures are estimated the variability—the error within those estimates—is so high. I am running out of time but for example a farmer who has been estimated to produce 1000 units of methane and therefore should purchase carbon units to cover those may well have produced 500 rather than 1000 and the accuracy of those two figures would be equally likely. We could not be certain that the figure of 1000 was any more accurate than the figure of 500 yet we would expect the farmer to purchase the carbon units to cover those 1000 units. That is simply unworkable. I predict that if this scheme goes ahead as it is then unless we get the scientific breakthroughs—and this is where the research effort should go—there will be civil disobedience. Labour is sacrificing New Zealand’s future to its political ends and that is bad for New Zealand.