Is the heat about to go on Fonterra over farming on drained peat?
by Eloise Gibson · RNZ* Correction: This story has been updated to correct the percentage of Fonterra's emissions from peat
Government officials have been quietly exploring how much carbon dioxide could be saved if the country reflooded its peat soils.
The answer was more than four million tonnes of carbon dioxide a year - more than Huntly's coal fired power station.
Keeping peat drained for dairy farming, mainly in Waikato, allows microbes into the soil where they release carbon built up over thousands of years, producing up to ten per cent of New Zealand's net greenhouse gas emissions.
Officials concluded reflooding peat bogs could cut the country's emissions at a cost of $40 per tonne of emissions - cheaper than the current market price of buying a tonne of carbon.
But that was on public conservation land. Privately owned farmland, where most emissions come from, is considered more sensitive because of lost dairy income.
Researchers says there could be scope to reflood less productive farmland, some of which is expensive to drain and not highly profitable.
It's an issue Fonterra is aware of - the government officials have also been crunching the numbers.
Fonterra reports carbon dioxide emitting from drained peat makes up 4 percent of the company's emissions in New Zealand.
Fonterra didn't want to be interviewed about its approach to peat, and didn't directly answer a question about whether international consumers were worried about its peat emissions.
The company sent a statement attributed to Global Climate Policy general manager Andrew Kempson, saying Fonterra was supporting research on how to manage peat on farms, and had supported farmers around three Waikato peat lakes (Areare, Rotomānuka and Ruatuna) to improve land management.
The dairy giant said it was the only primary sector company modelling and disclosing its peat emissions.
Only one percent of New Zealand's soil is peat, compared with 20 percent in Scotland and 25 percent in Ireland, but that one percent has an outsized impact.
According to a Manaaki Whenua report from July 2024, which RNZ obtained under the Official Information Act, the current "best guess" of over four millions tonnes a year might be an underestimate.
The report says shallower peat soils around the margins of full peat bogs might be releasing carbon dioxide at a similar rate to full peat soils, but aren't counted as sources of carbon emissions in New Zealand's official inventories.
The report said these partial peat soils could be making an extra one to 2.4 tonnes of carbon dioxide a year, on top of the over four million reported.
Those emissions would stop if the land was re-flooded.
Reflooding peat creates methane, but research has found the climate impact is more than outweighed by stopping carbon dioxide emissions.
But the suggestion of rewetting 167,000 hectares of farmed peat is sensitive.
Much of the land was drained by predecessors of today's landowners, who inherited the climate-heating emissions along with the farmland.
One recent official briefing obtained by RNZ suggested research was needed on the economics of growing biofuel crops in wet conditions or raising water buffalo.
Professor Louis Schipper of Waikato University says there could be potential to restore less productive farmland to peat wetlands, which, eventually would sequester carbon just as they did for centuries.
But work to date had been "a bit patchy" and scientists still didn't know exactly how to reestablish peatland plants on land that's been used for farming. "The experiments haven't been done".
Schipper says farmers also need better data on the exact benefits of shallower drainage (leaving the surface dry enough to keep farming cows). That could be a way to keep farming and lower emissions, if the numbers stack up.
He is starting a project with Irish scientists to study exactly that.
"People internationally are very interested in this, because it's not just a New Zealand problem."
"Very hot topic"
With European nations spending millions restoring and rewetting their own, vast peat bogs, New Zealand exporters may find their peat emissions under scrutiny.
Nestle, a major buyer of New Zealand dairy products, counts draining peatlands in the same category as 'deforestation'. It wants no deforested land in its raw material supply chain by 2025 included converted peatlands.
However a 2020 progress update by Nestle says it is concerned with land conversions after 2015, which wouldn't apply to New Zealand's peat.
Jenna Smith, a farmer and agribusiness specialist, has just returned from an overseas tour researching peat and says peat is getting hard to ignore.
"In Europe particularly, peat is a very, very hot topic," she said.
"In some parts of Europe, you could almost get the same tension from talking about draining peatlands as you would from talking about cutting down a rainforest."
"It was being looked at as that much of an issue and a problem," she said.
"It is a large ingredient to meeting their [European] carbon targets, so in Denmark for example well over 100,000 hectares has been identified as needing to be rewetted, in Ireland it's well over 80,000 hectares," said Smith.
One of the reasons peat has escaped attention in New Zealand could be that it isn't included in tallies of farming emissions, at least not the ones produced by the Government.
The statistic that farming makes up "almost half" of New Zealand's greenhouse gas emissions includes methane and nitrous oxide from livestock but not carbon emissions from peat, even though most peat is drained for dairying.
Emissions from peat soil are counted under the "land use" category in the inventory, not agriculture.
Because land use category is dominated by carbon-sucking forestry, land use comes out as a major climate positive for the country overall.
If peat was added to agriculture's tally, farming's contribution would be comfortably over 50 per cent.
"No one solution"
Smith says her research on the topic so far shows there is no one solution.
Farms she visited overseas were trying different options, from raising the water table to 20cm-30cm below the surface, (farming livestock on the top), to wet farming of niche crops such as medicinal sphagnum moss. Other land owners were doing full peat wetland restoration.
Like Schipper, Smith says a lot of New Zealand's farmed peat soil is only marginally profitable, because it wasn't really suitable for farming in the first place.
That land could be suitable for rewetting, which she says would let farmers focus on productive paddocks, rather than "trying to push the land to do something it is not designed to do."
Although European farmers get subsidies, which helps support climate-friendly projects, she said New Zealand had its own benefits.
"New Zealand has a really good advantage in that we're really immature in this process," she said.
"In the UK or Europe and parts of Asia they've been doing this for centuries, whereas we're only one century into this, so in terms of reversing the damage there is more in our favour."
Peat cheating?
Rewetting peat was listed as a possible climate action in the Government's latest Emission Reduction Plan, but it remains to be seen if it survives into the final version, at the end of this year.
Unlike planting forests, rewetting peat isn't recognised in New Zealand as a way to earn carbon credits.
Professor Schipper says re-flooding peat is not really like planting trees - it "is more like stopping chopping down trees" in terms of its climate impacts, because it stops the flow of emissions.
Restoring a living peatland to health, and coaxing it to absorb carbon dioxide, would be more like planting trees, he says, albeit with a slower absorption rate.
Both the current and former New Zealand Governments have sought advice of rewetting peat to help meet New Zealand's international climate targets, though it hasn't progressed to a plan.
But the chair of the Climate Change Commission says governments need to be careful.
"You need to think about how your budgets and targets should be reflected to include that, it's not a free ride to suddenly include new stuff [to meet your targets]," Rod Carr said.
"If you're going to give credits for rewetting wetlands, are you going to charge debits for those farming for profit on high-emitting drained wetlands?" Carr said.
Economist Suzi Kerr of US non profit the Environment Defense Fund (EDF) was also cautious. EDF looked into the global potential of different kinds of natural carbon sinks including peat bogs and other wetlands.
She said it mightn't be worth directing too much effort into alternative carbon sinks such as peatlands, if the goal was purely to meet climate targets.
Kerr said forestry generates the biggest climate gains, although restoring wetlands was still worthwhile for flood protection, biodiversity and water quality.
"The gain from wetlands, blue carbon and peat bogs is not huge [and] won't make a [major] global contribution the short term...it should be thought of in terms of co-benefits," she said.
"The opportunities from reforestation are so much bigger than for these other options, and evidence is also stronger."
"I would argue let's not get distracted by the latest fashion."
By the numbers
An initial estimate by officials (obtained under the Official Information Act) suggested the cost of rewetting farmed peat paddocks on private land would start at $158 a hectare, even on marginally profitable farm land, once lost production was factored in.
Rewetting highly productive farmland would cost more, they concluded.
But the climate benefits would be substantial.
That briefing estimated rewetting the 167,000 hectares of privately owned peat currently drained for farming could "immediately and permanently" stop emissions of four million tonnes of carbon dioxide a year.
The same briefing put the national-level impact of farmed, drained peat at 7.6 to 9.8 per cent of the country's net greenhouse gas emissions.
Top officials were told more economic studies were needed on options such as "growing biofuels or raising water buffalo".
That was in November.
More recent figures, supplied by the Ministry for the Environment, looked at how re-flooding only peat on conservation land could contribute to meeting New Zealand's carbon budgets.
That briefing estimated carbon savings would cost $40 a tonne (the figures for private land were per hectare, so aren't directly comparable).
The carbon savings were relatively small: around 6 million tonnes of potential carbon savings in total by 2050, and only 0.2 million tonnes before 2030.