Professor Alan Matthews:

I thank the Chair and members of the committee for the opportunity to speak to them today about the challenges facing the agricultural sector as the country charts a course to meet its very ambitious target to reduce overall emissions by 51% by 2030 compared with 2018. My focus, as an economist interested in agricultural policy, is how to incentivise the changes that will be necessary to meet this target. We are all aware that agricultural emissions make up 35% of total territorial emissions, excluding emissions from the land use, land-use change, and forestry, LULUCF, sector. Agricultural emissions were 21.2 million tonnes of carbon dioxide equivalent, MtCO2e, in 2019, which is the latest year for which we have data, compared with 19.3 MtCO2e in 1990 and the low point of 18.5 MtCO2e in 2011. The Environmental Protection Agency, EPA, expects emissions to further increase by 2.5% by 2030 compared with 2019 levels if we continue with existing measures. Agricultural emissions are going in the wrong direction.

At the same time, there are significant net emissions from the LULUCF sector, mainly from drained organic soils and wetlands, of around 8 MtCO2e, only partially offset by net removals by the forest sector and harvested wood products of 4.5 MtCO2e. Agricultural emissions consist almost entirely of methane and nitrous oxide, driven mainly by ruminant animal numbers, manure management and the use of chemical nitrogen. There are some technical and management solutions available and in use that can help to reduce use of chemical nitrogen and emissions of nitrous oxide, but their uptake needs to be greatly accelerated. At this point in time, there are few technical or management options available to farmers to reduce methane emissions, which implies that a reduction in animal numbers will be necessary to meet the 51% target. This can be achieved by incentivising farmers to switch grassland to alternative land uses, or by encouraging more extensive systems of production on remaining grassland.

When designing its strategy to reduce greenhouse gas emissions, the Climate Action and Low Carbon Development (Amendment) Bill 2021 requires that the Government take account of the special economic and social role of agriculture, including with regard to the distinct characteristics of biogenic methane. Methane is a powerful greenhouse gas and its concentration in the atmosphere must be reduced if we are to achieve the Paris Agreement’s temperature targets. However, it does not have to be reduced to zero. Rising methane emissions add significantly to global warming. By 2019, methane emissions in Ireland had risen by 17% from their lowest recent point in 2011. Continued emissions of methane at a broadly stable level of around 3% reduction per decade would not add to global warming, although they would sustain warming that has already occurred. Sustained reductions in methane emissions reverse global warming and effectively cool the planet from existing levels, so reducing methane emissions represents an important mitigation opportunity.

Against this background, I have three messages for the committee. First, we need to invest in measuring and monitoring farm level emissions and removals. All farmers need to know what their greenhouse gas emissions are and how these are affected when they change their farm output and farming practices. Every member of this committee will be aware that if something cannot be measured, it cannot be improved. Second, we need to catch up and invest properly in innovation that addresses the climate challenge in agriculture. Members do not need to be reminded of the billions of euro being invested in the development of alternative proteins by private equity funds at the present time.

We need to focus innovation in three directions. Our efforts to improve the sustainability of ruminant grass-based agriculture are puny by comparison and relatively recent. There is great potential in learning how to manage microbes in the rumen, in manure and in the soil to minimise emissions. Second, we must invest much more in nature-based solutions to understand the contribution our soils, wetlands and peatlands as well as agroforestry, hedgerows and forests can make to offset agricultural emissions. We have to invest much more in potential alternative land uses that are suited to Irish agri-ecological conditions and attractive to farmers. Existing efforts looking at the potential for renewable energy and biomass, as well as conventional and unconventional land uses, have to be stepped up.

Third, measurement and innovation alone will not get us to where we need to be unless we incentivise action across tens of thousands of farms. This will only happen if we put a price on emissions and removals and pay for performance. We know that farmers respond to incentives. The European Commission in its farm to fork strategy has introduced the idea of carbon farming as a new business model for farmers. The intention is to create direct incentives for land managers and farmers to increase and protect carbon sinks in the land sector. A similar model should also be applied to agricultural emissions consisting of methane and nitrous oxide.

Considerable funding can be made available for climate action through the new Common Agricultural Policy, CAP, strategic plan, and the Government has earmarked a further €1.5 billion in proceeds from the carbon tax to encourage and incentivise farmers to farm in a greener and more sustainable way. Previous agri-environment climate schemes such as the green, low-carbon, agri-environment scheme, GLAS, may have had benefits for biodiversity, but have had no impact on emissions reduction. We also need innovation in policy design. We must have measures that explicitly focus on reducing the absolute level of net emissions, accompanied by reduction targets, not the rather diffuse measures that have characterised climate action in agriculture to date. One could imagine, for example, inviting bids, using a reverse auction process, from groups of farmers who commit to reducing emissions below a baseline level, whether through stock reduction, nature-based offsets or changes in land use. Once farm-level greenhouse gas budgets are rolled out to most farms, one could envisage introducing a cap-and-trade system where an overall emissions ceiling would be set for Irish agriculture and farms could trade emissions permits among themselves. Perverse subsidies such as the VAT exemption for fertilisers and the double income tax relief on the use of agricultural diesel should be removed and the savings recycled to promote more climate-friendly farming.

To incentivise agriculture to step up and address the climate crisis requires new and innovative approaches. Business as usual is no longer an option. I look forward to any questions that members of the committee may have.