Research and development, not taxation, offers the best prospects for reducing methane emissions from sheep and cattle, says Pete Hodgson, Convenor of the Ministerial Group on Climate Change.

Mr Hodgson said the Government was committed to increasing funding in Thursday's Budget to accelerate research currently under way to reduce methane emissions from livestock.

Methane emissions from sheep and cattle account for about half of New Zealand's total greenhouse gas emissions.

"Research into livestock digestion and pasture composition may deliver the double benefit of reducing emissions while improving the efficiency of the animals' conversion of food to bodyweight," Mr Hodgson said. "This is the most promising avenue for tackling greenhouse gas emissions from farming and we are looking for partnership funding for such research from the farming community.

"Besides offering productivity gains, investment in this science offers the agricultural sector a way of responding directly to the threat that global warming poses to farming. Climate change impacts such as extreme weather events and the spread of new pests and diseases will have a dispropotionate impact on the primary sector in New Zealand if nothing is done."

Mr Hodgson said calculations of the costs and benefits of a wide range of policy options had been done in the course of developing a national policy response to climate change, including some work on pricing agricultural greenhouse gas emissions. This had been shared with farming sector representatives as part of an open policy process, but may have been misinterpreted.

"The Government has no plans to introduce a tax on farm production," Mr Hodgson said. "That would be quite the wrong approach strategically, when the best prospects for an effective solution to emissions from farming lie in increased investment in research and development."

"My hope is that the Government's increased investment in this area will be more than matched by the primary production sector. Methane reduction and improved food conversion efficiency go hand in hand. Current research is promising. If it is successful there will be good money to be made."