The Labour Government’s Minister of Forestry, Stuart Nash has proposed, along with Green Party co-leader James Shaw, to make changes to the Emissions Trading Scheme in relation to carbon farming of forests. (The proposed change is to exclude future permanent plantings of exotic forests like radiata pine from the ETS.)
According to their public statements, the changes will be implemented by January 2023.
The change would not affect pine forestry for logging, which is managed under a different category.
This is another case of the government picking winners and losers with their decision making. There is no reason for the government to be deciding what can happen on private land and if they feel that they need to have a say in that decision then this should come about through the setting of standards across the board rather than direct intervention.
The government’s job is to set the direction by the imposition of standards to achieve a shift in direction, but the landowner should be able to make a decision on what they wish to do on that land.
In the case of exotic forest planting for purposes of carbon farming the government should remove the subsidies on planting of these forests if they want to change the direction rather than try to legislate what the private landowners can do on their property.
A rising price for carbon offsets has made converting to carbon farming attractive on less profitable sheep and beef farmland.
Increased plantings of exotic forests are being driven by rising carbon prices as landowners and investors seek higher returns. The [carbon unit] price has more than doubled over the past year, from around $35 in late 2020 to over $80 in February 2022.
Rising carbon prices means that the average forest could earn more from staying permanently in pine trees than from selling logs.
Because establishing native trees costs considerably more than planting pine monoculture; pine trees are more lucrative for carbon farming than planting indigenous forest. Pine also grows faster than tall native forest, meaning it earns cash quicker under the Emissions Trading Scheme.
A new category of permanent forest is due to enter the Emissions Trading Scheme next year, in a bid to make it easier for landowners who plant forests for their carbon-sequestration powers.
The Climate Change Commission’s draft path to carbon zero requires at least 16,000 hectares of new native forests to be planted a year by 2025, and 25,000 hectares a year by 2030. On top, over the next nine years, the path requires another 25,000 hectares a year of new exotic forest, such as pine.
Long-term, the commission’s blueprint favours planting more native forests and winding down the planting of pine.
Currently, the scheme doesn’t formally differentiate between species – but the financial incentives tend to favour pine, because it often grows faster and therefore earns more credits more quickly.
The question of what to plant is pressing; not only due to climate change, but because the Government is well under way with their plan to get a billion trees planted by 2027.
A new tree-boosting agency, Te Uru Rakau, was allocated $120 million from the Provincial Growth Fund to give grants to landowners who plant trees, and a goal of funding two-thirds natives. Native trees are paid for at a higher rate than pines and other exotics, reflecting their higher planting costs.
Yet, almost immediately, the programme was accused of subsidising too much Radiata pine.
Forestry Minister Stuart Nash and Climate Change Minister James Shaw have released a public discussion document proposing that from the first day of 2023; only native forest would be eligible for carbon credits under the permanent forest category.
“The government wants to encourage afforestation to help meet our climate change targets, offset carbon emissions, and also help farmers, landowners and investors diversify their income streams,” said a statement from Nash.
We want to balance the risks created by new permanent exotic forests which are not intended for harvest. Nash said permanent pine was more at risk from pests and fire compared with native forest.
Increased plantings of exotic forests are being driven by rising carbon prices as landowners and investors seek higher returns. The [carbon unit] price has more than doubled over the past year, from around $35 in late 2020 to over $80 in February 2022.
The Labour government has since the inception of its billion trees programme, spent millions subsidising the planting of exotic forests for carbon farming yet now they want to prevent this from carrying on and there is a huge cry from Iwi that this will prevent them from being able to gain income from their land in a commercially rational way.
Penetaui Kleskovic the commercial operations manager for Tai Tokerau iwi Te Aupouri was scathing in his opposition to this proposal on behalf of his Iwi, in an opinion piece published on the Stuff website 29th March 2022.
“What is the point of an agency designed to assist the Crown to work collaboratively with Māori, if our land aspirations are a mere afterthought; he said. What has become of the recipe, “right tree, right place”?
According to Nash, he wants us to plant our land in indigenous flora. He obviously has not been north, given we have loads of such cover – it is called scrub. It provides an abundance of habitat for pests and virtually nil income for the thousands of owners.
The Labour Government dis-established the Maori Affairs Department about when I was born. It formerly provided development putea for multiple-owner whenua. Our matua, however, were left to cope as best they could.
It is ironic that it is this current Labour Forestry Minister who is cheating our generation from using our land.”
Trust Tairāwhiti, the East Coast region’s economic development agency, paid for an independent report by BDO Gisborne, into permanent pine plantation carbon farming.
According to the latest report, almost all the employment from carbon forestry was during the first year, when the trees were planted.
Production forestry and livestock farming in the region each employed more people per hectare, at higher wages, it said.
Yet rising carbon prices meant the average East Coast forest could earn more from staying permanently in pine trees than from selling logs, the report concluded.
Because establishing native trees costs considerably more than planting pine monoculture; pine trees are more lucrative for carbon farming than planting indigenous forest. Pine also grows faster than tall native forest, meaning it earns cash quicker under the Emissions Trading Scheme.
The BDO report warned that, if land is left in unharvested pine, “once the forest matures the forests will have negative returns for future generations”.
The unprofitable forest could not be chopped down without repaying the carbon credits, the report said.
“The land would be worthless on sale as the ETS liability attached to the land would far exceed the land value.”
The report also cast doubt on claims by some carbon farmers that they would transition permanent pine forests to permanent native forests over the course of centuries, citing the intensive, long-term pest culling and skilled management needed to make that happen.
On the other hand, the report acknowledged some environmental benefits of carbon farming: permanent pine forests are better for water quality than either farmland or production forest.