RICHARD PREBBLE: The Climate Commission Wants More Government

"New Zealand now at risk of missing all its climate targets," declared the headlines after the Climate Change Commission released its latest monitoring report.

The Commission says New Zealand is no longer on track to meet its 2030 methane target. Prime Minister Christopher Luxon disagrees, saying he is confident the Government will meet its commitments.

Both cannot be right.

The Commission's report is carefully researched. It reminds us that agriculture produces more than half of New Zealand's emissions, making farming central to achieving our climate targets.

It also records remarkable progress in methane-reducing technologies, including feed additives, vaccines, probiotics, selective breeding, the Ruminant Biotech bolus and EcoPond technology that dramatically reduces methane emissions from dairy effluent ponds.

The report also makes another important observation. It notes that New Zealand's trade agreements with Britain and the European Union contain climate obligations, that almost 70 percent of our exports go to countries requiring or proposing climate disclosures, and that major overseas customers, including British supermarkets, are demanding lower emissions from their suppliers.

If that is not a market incentive, what is?

Yet after setting out this evidence, the Commission concludes that market incentives alone are unlikely to persuade farmers to adopt these technologies. Instead, it recommends stronger government intervention.

Why does the Commission place so little weight on those market incentives?

As a boy I spent my school holidays on a family friend's farm. He bought his dairy farm because it had one of the country's first herringbone milking sheds. He believed it would revolutionise dairying. Farmers came from miles around to inspect it.

It taught me that New Zealand farmers do not wait for the Government to tell them to adopt better technology. They watch. They compare. And when they are convinced that an innovation will make them better farmers, they adopt it quickly.

That is how New Zealand became one of the world's leading pastoral farming nations.

Farmers respond to prices, costs and customers. If Britain's supermarkets, Nestlé, Fonterra and other international buyers increasingly reward lower-emissions production, those commercial incentives are likely to prove far more powerful than government regulation.

Of course, not every promising technology will succeed. Some will disappoint. The Commission is right to warn against assuming every scientific breakthrough will become commercially viable.

But it is even more dangerous to make recommendations assuming there will be no commercially viable innovations.

History is full of forecasts that underestimated technological progress. The Productivity Commission cited research suggesting artificial intelligence had reached a plateau. Within three years ChatGPT was transforming offices, universities and businesses around the world.

Forecasting technological change is difficult. But that is not a reason to assume technology will stand still. We are living through the fastest period of technological change in human history. We cannot know which innovations will succeed but given the number of methane inhibitors now being trialled and the promising early results, it would be extraordinary if none did.

There is another reason official forecasts often err on the side of pessimism. If the Climate Change Commission produced an optimistic report it would be savagely criticised. If that optimism proved misplaced, the report would be remembered for decades. Yet who now remembers that the Productivity Commission dismissed AI?

The Climate Commission may prove right. New Zealand may still miss its 2030 methane target.

The more important question is whether New Zealand will achieve net zero by 2050.

Ironically, a careful reading of the Commission's own report gives grounds for confidence. Technology is advancing rapidly, and international markets increasingly reward lower emissions.

Before we retire productive farmland, shrink our national herd or assume farmers cannot adapt quickly enough, we should remember what has made New Zealand agriculture successful for generations.

Innovation is in New Zealand farming's DNA. Farming has overcome seemingly impossible obstacles before, including producing competitively for markets on the opposite side of the world.

I would not bet against our farmers getting to net zero.

The Honourable Richard Prebble CBE is a former member of the New Zealand Parliament. Initially a member of the Labour Party, he joined the newly formed ACT New Zealand party under Roger Douglas in 1996, becoming its leader from 1996 to 2004.