What Does Net-Zero Mean for the Agri Sector?

As the delegates depart from COP26, the activists recycle their banners and politicians return their attention to domestic agendas, Glasgow probably seems a very quiet city. But that’s not to say the focus disappears until COP27 – quite the opposite, the race to net zero has well and truly started!  In this blog we recap what is net zero, how we got here and what it means for UK farmers.

What is net-zero

Net zero refers to achieving an overall balance between emissions produced and emissions taken out of the atmosphere. Achieving net zero is required to meet the Paris Agreement which aims to keep global temperatures below a 1.5% rise against pre-industrial levels. According to the Intergovernmental Panel on Climate Change (IPCC) we have less than 12 years to contain global warming within the 1.5% target. To achieve the scale of change needed, action must be taken now to reduce emissions and lay the foundations for the longer-term transformation needed.

Governments across the UK asked the Climate Change Committee (CCC) to reassess the UK’s long-term emissions targets. Based on the latest evidence, the CCC has proposed UK scenarios for achieving net zero within current technologies and an acceptable economic forecast. The UK Government has committed to implementing the recommendations of the CCC, creating a legally binding net zero target for 2050.

How did we get here?

Britain’s Climate Change Act 2008 introduced the world’s first long-term national framework to tackle climate change, setting a legally binding target of an 80% reduction in GHG (greenhouse gasses) emissions by 2050. The comprehensive International Paris Agreement on climate change was approved in 2015. In 2018 the Intergovernmental Panel on Climate Change released a scientific report suggesting that any rise in global temperatures should be limited to 1.5C.  In 2019, Britain became the first major world economy to legislate for net zero emissions. Our domestic Environment Bill has completed its passage through the Upper House and will be another indication of the course of travel the Government intends to take,

How will this affect farming businesses?

For most agricultural sectors, last year produced some useful financial results, with the grazing livestock systems being helped considerably by increased values of beef and sheep. However, a closing valuation becomes an opening valuation for the subsequent year’s accounts and other pressures are quickly mounting. The Basic Payment Scheme payment due from December is further reduced in line with the move away from direct payments. Labour availability is still a major threat to businesses accustomed to employing non-UK Nationals, although there is a feeling that a trickle of workers is starting to return, especially from East European countries as their individual cash reserves start to dwindle and it looks unlikely they’ll be any further lockdowns due to Covid-19. Of serious concern is the increasing cost of inputs especially in feedstuffs, fuel, and fertilizer.

Net zero will add further financial pressures as farming practices will have to change, and increased levels of working capital will be required. Don’t fall into a trap of thinking this is a long way off.

The standards required to access payments through the Environmental Land Management Scheme (ELMs) makes for interesting reading! On arable land to secure the introductory level payment, 5% of the area will have to be planted with an over-wintering cover crop, and you will not be allowed to grow stubble turnips which you can graze in the spring. The area increases to 15% at the advanced payment level. Also at the advanced standard, to qualify for a higher payment, you will be required to use min-till (minimum cultivations) rather than conventional ploughing. Just two examples of policy changing practice.

What are the impacts on the agricultural industry as a whole?

Achieving net zero will require all sectors to act urgently. The UK farming and land use sector can make a significant contribution, helping to both reduce emission and as a sequester of more carbon. A report by the Green Alliance (2019 Cutting the Climate Impact on Land Use), demonstrates cutting emissions from agriculture (i.e., vehicle emissions, fertilizer use and reduced livestock numbers), restoring eco systems planting trees and protecting soils could reduce emissions from the land sector by 60% from 47 MtCO2e per year in 2016 to approximately 19.6MtCO2e per year in 2030.

Net zero greenhouse emissions from agriculture by 2040

The National Farmers Union (NFU) has set an ambitious goal of reaching net zero greenhouse emissions across the whole of agriculture in England and Wales by 2040. Current President, Minette Batters, states: “Agriculture is uniquely placed to be part of the solution, as both an emissions source and a sink.” The NFU considers emissions from UK farms currently amount to 45.6million tonnes of carbon dioxide equivalent a year-about 10% of UK GHG emissions. In stark contracts to the rest of the economy only 10% is carbon dioxide. Around 40% is nitrous dioxide and 50% is methane.

At the same time as reducing the impact on the climate, the NFU does not want to see any reduction in the domestic capacity to feed UK consumers with high quality, affordable British food.

A period of massive change

A recent report by the Committee on Climate Changes. ‘Land use; Reducing emissions and preparing for climate change’ concludes that national goals for climate change mitigation and adaption are unlikely to be met without fundamental change to the way land is used and managed.’  The changes in land use they suggest are staggering.

• 8-4.5m ha of less grassland and rough grazing
• Increase of I.5m ha of new tree plantings
• Increase of 1.2 ha of new bioenergy crops
• 7-1.1m ha of peatland restoration
• Up to1m ha taken out of cropping.

It affects you and your business

Having read through this you may be thinking ‘well it won’t bother me’; it will! It is becoming very apparent that future Government support for the farming industry will be a ‘reward’ rather than a ‘right’ and you will have to demonstrate a benefit to the environment.

The retail sector, especially food and catering, is already competing on their green trade credentials. As a primary producer, like it or not, but it will not be the supermarket funding the ‘greenness’ of their offerings, it will be you.