17 October 2010
Land owners planting carbon forests have been assured that the emission trading scheme (ETS) will survive when the Kyoto Protocol ends in 2012.Environment Minister Nick Smith, Agriculture Minister David Carter and Prime Minister John Key speaking at forest industry conferences last week emphasised the importance of new forest plantings to New Zealand’s future. They also went out of their way to reassure would-be tree planters about the future of the ETS.
“Forestry is a long-term investment and land owners need certainty about the ETS rules. The government has got that message,” said Dr Smith, who was the most explicit with his assurances.
“The preference of the government is that there is a post-Kyoto agreement. But if it doesn’t happen you can have a high level of confidence that an ETS framework will remain in place, as will the treatment of forestry within it.”
He said he couldn’t speak for future governments, but emphasised the fact that all the major political parties support an ETS.
“Any political debate will not be about the role of forestry in an ETS. It is going to be around how fast you bring in other sectors and how fast you phase out protection for emitters.”
Dr Smith said it was hugely difficult to get a read on the long-term prospects for an international agreement to replace Kyoto. This may become clearer at the next round of United Nations climate change talks which are being convened in Cancun, Mexico, later this year.
If a replacement for the Protocol was not agreed upon, he said the world may end up with something less prescriptive, along the lines of the Copenhagen Declaration.
If this happened, the government would consider making changes to some of the problematic rules that apply to forest emissions under Kyoto – like the conversion of trees to carbon dioxide at harvest – which are reflected in the ETS. But its first preference was not to make changes without international agreement.
Forest Owners Association chief executive David Rhodes said he welcomed the ministers’ assurances.
“Some forest owners have been concerned that the failure of world leaders to agree on a replacement for the Kyoto Protocol might mean an end to the ETS and with it, the ability to earn an income from selling carbon credits. There was even the concern expressed that forest owners might have to refund their credits.
“The statements by Dr Smith in particular, backed by supporting comments by the prime minister and the minister of forestry, have allayed many of those fears.
“At present land, log and carbon prices, forestry is a sound investment, especially on marginal hill country. But once you’ve planted your trees you have to wait at least 10 election cycles before harvest – that’s a long time when a large part of your income depends on something as politically charged as carbon pricing.”
Mr Rhodes said the FOA will be working closely with the NZ negotiators in Cancun and beyond.
He also emphasised that the message from the ministers needs to be heard “loud and clear” by energy companies. Some have been hoping that their obligation to buy carbon credits might disappear once Kyoto expires in 2012.
“Clearly that won’t happen. Many countries now have emission trading schemes and New Zealand will continue have one for the foreseeable future.
“As the prime minister said, the ETS is an important part of the under-pinning to Brand New Zealand. It’s not going away any time soon.”
For more information, please contact David Rhodes, Tel 027 495 5525