Carbon Border Adjustments — Industry Killer Or Opportunity To Make A Killing?

hat will kill New Zealand Agriculture? Believe it or not, it could be re-branded export tariffs in the form of carbon border adjustments (CBA). That’s the opinion of international climate policy expert Byron Fay.

In the latest SuperTilt podcast, Byron made it abundantly clear that CBA legislation being proposed out of the EU, UK, and Japan will be one of the biggest threats to the NZ agriculture industry in the short to medium term. The NZIR report reinforces this opinion suggesting “there remain some longer-term risks to our exporters from the increased global focus on the environmental impacts of trade”.

For those not aware of CBA, they are a tax mechanism imposed on imported goods based on their carbon footprint. The aim of governments looking to implement CBA policies is to level the playing field for domestic industries that produce goods with lower carbon footprints but that may have higher costs than imports that may be cheaper but have higher carbon footprints.

Whilst cynics might suggest the CBA proposals are simply a palatable re-branding of an import tariff designed to protect local markets, it doesn’t change the impact such a policy may have on our dairy and meat exports. International CBA policies certainly seem to be a big looming threat to NZ’s agriculture, both financially and to our green branding and market positioning.

Every good threat, however, is usually mediated by an equal and opposite opportunity, and this is where tech can play its part. A world with robust and prevalent CBA frameworks provides an interesting economic opportunity for local innovation.

With a small yet world-leading agriculture-based economy, New Zealand is somewhat positioned to lead the world in carbon-reducing agriculture IP; IP that can be leveraged in markets implementing carbon border adjustments, like the US. There is potentially a lot of money to be made in helping dairy and meat maintain its place at the dinner table by being at the forefront of its ecological transformation.

From my point of view, however, this will quickly open up a new can of worms for those interested in leading this transformation. The intersection between AgriTech and agricultural carbon emissions is genetics. In particular, the research, creation, distribution, and management of GMO’s and the technology(ies) behind them.

I have always held the opinion that NZ’s GMO legislation is the biggest handbrake on creating a sustainable agriculture sector. This is because genetic modification techniques are the biggest potential weapon in helping the agriculture sector become carbon sustainable within the time frames needed, and yet they are (for all intents and purposes) illegal.

The advancements in both genetic techniques and our understanding of genetic models, especially in food production, are exponentially more advanced than when we last had this discussion as a nation. But, are we as a society prepared to accept the positive role that such technology can play in our decarbonisation efforts? I suspect not. I still have conversations with well-healed ‘experts’ that believe eating a tomato with an insect gene spliced into it will result in them growing a penis out of their head. I, of course, made that last bit up; such people tend to transform into dick heads when their beliefs are challenged with science, not by the sciences itself, but that’s beside the point.

If we as a society aren’t prepared to sunset our agriculture sector then we are by default agreeing that we need to start re-litigate our stance on GMO and the technologies adjacent to the subject, in order to keep agriculture globally competitive in the time frames required. Whilst I personally believe genetic technologies could play a positive role in decarbonising agriculture, GMO legislation is simply another political hot potato that our government has to weigh up, alongside the economic realities of CBA legislation, in the increasingly complicated conversation about how to decarbonise agriculture whilst keeping it economically viable.

We discuss this and a lot more as we dissect the role public policy plays in guiding big tech in climate change. For the full discussion and previous episodes check out Spotify (link) and Apple (link).

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