ETS reminder to hundreds of forest owners

Waikato Regional Council is writing to hundreds of forest owners in the region reminding them they need to register their forests by 31 March if they want to qualify for and claim Emissions Trading Scheme (ETS) New Zealand units under the first five-year sequestration period of the Kyoto Protocol.

The letters will go to owners of more than 600 parcels of forest planted on some 39,000 hectares after 1989.

“These Waikato plantings, if registered for credits, represent a significant potential income stream for forest owners under the Government’s emission trading scheme,” said biosecurity and heritage group manager John Simmons, himself a shareholder of a company registered under the ETS,

The forests can be registered with the NZ Emissions Unit Registry by 31 March 2012 for credit claims back to January 2008. The last opportunity to register and claim NZ units or credits for the first Kyoto commitment period is 31 December 2012.

The letters about the deadline, and the general push to raise awareness of the economic benefits and obligations involved in participating in the ETS, are actions stemming from the council’s regional carbon forestry principles and framework report.

“The ETS presents opportunities for wealth generation in our region and can be an incentive for land use changes that benefit the environment,” said Mr Simmons.

“Planting trees, besides helping soak up carbon dioxide, can help conserve soils, prevent erosion and protect water quality by reducing sediment and nutrients getting into waterways.”

Currently the forestry, fishing, transport, energy and stationary engines sectors are participating in the ETS, with agriculture expected to become part of the scheme in 2015.

Emitters currently have to pay the government $25 per tonne or buy carbon credits if they emit above certain levels of greenhouse gases. Forest owners with credits have the ability to sell them to emitters. The current price of around $7 to $8 per NZ unit has been depressed by the European market situation but will rise and fall in response to market demand. Forest owners participating in the ETS do face obligations to pay for their own “emissions” when they harvest trees.

“So forest owners need to get independent advice about whether taking part in the ETS will work for them,” said Mr Simmons.

He said one option was leasing credits to others who would meet and settle any ETS obligations created prior to harvest. “This can enable people to get annual cash payments for the credits accumulating in their forests, without having to take on the complications of being part of the scheme.” The current lease payment ranges from $200 to $250 per hectare per year (NZ Forest Leasing Ltd quote).

An initiative that may interest landowners with smaller forest areas (under 50 hectares) is the concept of aggregating smaller parcels of forest into consortia for the purposes of entering into carbon credit leasing arrangements. This is promoted as a low risk option for landowners not wanting to enter the carbon market on their own account.

The council is also encouraging landowners with marginal pastoral land to consider the advantages of carbon forestry to provide both land use change benefits and another cash flow from carbon credits. “While the carbon price is depressed at the moment the outlook is good and Government has stated the ETS is here to stay – it is a good time to plant and there are a number of options to be considered,” Mr. Simmons suggested.