How much do you think the price of a 2 litre bottle of milk will go up with the “great big new tax on everything”. 10c, 20c, 50c, a $1? As a product of ruminating cattle, emitting methane (a greenhouse with 25 times the global warming potential of carbon dioxide) each and every day, it’s one of the most greenhouse-intensive products on our grocery shelves.
According to dairy conglomerate Fonterra, there’s about 1kg CO2e in every litre of milk. (CO2e stands for CO2 equivalent, so 40g of methane emissions equates to 1kg of CO2e). Most of this comes from on-farm emissions, and the remainder things like chilling at depots and transport emissions.
So if all emissions were taxed, or charged, and the carbon price was $20/t CO2e, that’s 2c per litre of milk, or 4 cents per 2 litre bottle. That’s right 4 cents. Meaningless in the scheme of things, especially in the context of the recent dairy wars that have seen milk shelf prices drop substantially. Even if carbon goes to $50/t CO2e, that would bring it to 10c.
Also, this calculation assumes that agricultural emissions are included, which the government has ruled out, and which was also ruled out in the CPRS until a review in 2015. So if you strip out the on-farm methane emissions from cattle, the price increase would be a small fraction of the calculations above.
The Fonterra two pager also describes some of the abatement activities they and the dairy industry are researching and considering, including capturing effluent for energy generation. All of these new innovations become more economic if carbon ever gets priced (which it already is in NZ). So if we ever start paying the 4-10 cents, we can see what kind of things we’d be funding.