Clayton of the week last week was surely the ETS announcement…

There were two big changes, both of which will lead to more emissions and higher bills for taxpayers. First, industry pays for half of its emissions (until 2013 at this point but with strong hints of further Claytoning down the track). The taxpayer will be charged for the other half.

Second, the “changes in allocation support for trade-exposed, emissions-intensive industry will encourage increased efficiency without penalising production increases.” Translation: expand as much as you want, and you’ll pay no more provided your average emissions per unit of output don’t increase. Again, the kind taxpayer will pick up the tab.

So, here’s cheers to the Claytons ETS.

I am puzzled about why we should worry about methane emissions, given that they result from a circular process whereby carbon in grass is converted into methane by cows, but then carbon is reabsorbed from the atmosphere to re-grow the grass.

BK Drinkwater, I think correctly, pointed to fertiliser extracted from the ground and used to grow grass which (once eaten by cows) generates extra methane emissions; this is not part of a closed carbon cycle. But Seamus then observed that

my memory from high-school science and geography is an important source of New Zealand’s advantage in agrigculture is that we don’t have need for nitrogen fertilisers (something to do with clover), just for superphosphate. And a quick Wikipedia search confirmed that while Carbon is present in urea (a typical nitrogen fertiliser), it is not present in super phosphate.

It is true that clover is a nitrogen fixer, so we can & do get nitrogen from including it in the pasture mix (the salad bar). Also cow piss is unbelievably high in nitrogen, so we also get lots like that (too much actually, but that’s another story). However the key point is that, notwithstanding these facts, it still makes economic sense to apply urea because doing so accelerates grass growth and at current prices the value of the resulting milk is worth the cost of the urea.

So (in my current state of ignorance) it seems that the policy implication may be to tax urea.