The Government has moved away from radically reforming the way the farming sector could pay for emissions - but is celebrating what it calls a "world-first" partnership with farming leaders in its attempt to reduce agricultural greenhouse gases, methane and nitrous oxide.
The primary sector is still set to pay for emissions, but not until 2025 - with farmers getting off seemingly lightly in the interim.
The sector would work with Government to come up with its own on-farm pricing scheme, aiming to reduce emissions in the meantime.
A review in 2022 would develop the alternative pricing scheme, access the sector's progress in reducing emissions and barriers it faces.
"If the review finds there isn’t enough progress the Government can put the agriculture sector into the Emissions Trading Scheme (ETS) at processor level earlier than 2025," a statement by the Government said.
The proposed Emissions Trading Reform Bill also includes pulling agriculture into the ETS in 2025 for livestock emissions and some fertiliser emissions - if the alternative emissions pricing scheme is not developed. In line with the NZ First-Labour coalition agreement, farmers would only pay for five per cent of livestock emissions.
Farmers have continuously pushed back from being included in the ETS, with Federated Farmers previously saying it "failed to reduce carbon dioxide emissions from transport... Universal pricing of methane will be similarly unsuccessful".
The current ETS puts price on greenhouse gas emissions, intended to create a financial incentive for businesses that emit greenhouse gases, to invest in technologies and practices that reduce emissions, according to the Ministry for the Environment.
The Government's announcement today acknowledged the ETS "was originally developed for a small number of big companies, not tens of thousands of individuals".
Prime Minister Jacinda Ardern said she was "proud that we have a world-first agreement as part of our plan to tackle the long-term challenge of climate change and we've done that by reaching an historic consensus with our primary sector".
"For too long politicians have passed the buck and caused uncertainty for everyone while the need for climate action was clear."
It was a key climate change policy by the Labour Party in 2017 to "restore the ETS, including bringing agriculture into the ETS by the end of our first term, with 90 per cent of emissions free".
Greenpeace immediately branded the Government as "sellouts" today for not pulling agriculture emissions into the ETS.
"The Government has buckled to lobbying pressure from the dairy industry and big agri-business," campaigner Gen Toop said.
"An ETS without the sector in it is a joke… The Government is protecting the short term profits of a few in the dairy and agricultural sector at the expense of the rest of us and the future of our entire planet.
"It is unjust that this Government is allowing the dairy and agriculture industry to carry on with business as usual. The climate science is clear, this is not business as usual."
Climate Change Minister James Shaw said additional reforms to the ETS announced today, including a cap on industrial energy and transport emissions, would "help keep our planet safe for future generations".
"Changes also align the purpose of the ETS with the Zero Carbon Act and the Paris Agreement, so that New Zealand doing its bit to limit global warming to 1.5C."
A statement by the primary sector that included Federated Farmers, Horticulture New Zealand and DairyNZ, said it welcomed the decision and that it was pleased the Government would not be bringing agriculture into the ETS.
"Through a joint action plan – with the primary sector, Government and Māori and iwi – farmers and growers by 2025 will be able to calculate their emissions and offsets at the farm gate, have greater confidence in assessing options to reduce or mitigate their emissions, and know that there is ongoing investment to expand the emissions reduction tool box available to them."
It was committing $25 million a year at least to work towards the five-year timeframe.
The Interim Climate Change Committee recommended in July a two-stage pricing process - first through the ETS and then by 2025 have a farm-level emissions price through a levy or rebate scheme integrated with the ETS.
Another proposal put forward by the sector, which the Government has leaned towards, was to see an agreement between the farming sector and the Government to support reductions in farm emissions and progress farm-level pricing, until 2025.
Deputy Prime Minister Winston Peters told TVNZ1's Q+A on Monday the farming sector would have to demonstrate by 2022 it was ready to "handle this issue".
"Every encouragement will be made to make sure that it happens.
"Farming, in 2025, will only then come into the ETS but under this situation – 95 per cent of the cost covered by the New Zealand taxpayers, from Invercargill to Kaitaia, street, town, country and city, and the other 5 per cent of incentivisation will handle that as well."
He said pricing agriculture emissions was the reason New Zealand opened an embassy in Stockholm last year.
"Farmers can be relaxed and be assured that their industry will long-term survive and be highly profitable."
Climate Change Research Institute director Dave Frame said the announcement was a "very promising start".
"For too long we have circled the drain on agricultural climate change issues so it is great to see a sensible, practical, scientifically-defensible deal being worked out," he told the Science Media Centre.
"The Government deserves credit for listening to good scientific and policy advice, and for being prepared to reject outdated approaches. Farming leaders deserve credit for listening to the science and developing practical plans that put their sector on a path to a healthier planetary future."