AGS gives Govt best carbon credit years

15 May 2015

The rebooted Afforestation Grant Scheme gives the Government the most productive carbon credit-bearing years of a tree's life, carbon forestry promoter Ollie Belton says.

Forest owners have been offered a new version of an old scheme - a grant of $1300 per hectare for new forest planting. In return, foresters give up rights to carbon credits generated by the trees in their first 10 years.

The Government is putting $22.5m into the Afforestation Grant Scheme (AGS) over the next six years to encourage planting of an expected 15,000ha of land. Under a previous AGS that lasted from 2008 to 2013, landowners planted 12,000ha.

Belton says that if a landowner wants to trade carbon and harvest timber, the scheme had a "couple of fish hooks".

They could only earn carbon after year 10 and upon harvest they would need to repay most of the credits they had earned. The safe carbon stored in roots and soil post-harvest was attributed to government carbon. This meant landowners were exposed to unknown carbon price at harvest, Belton said.

Belton, based in the Canterbury port town of Lyttelton, helps foresters set up carbon contracts. He said by paying a forest-planting grant (AGS) in exchange for 10 years of value from carbon credits, the Government had "locked in a carbon stream".

The Government would pay a grant of $1300 per hectare for the right to carbon credits generated in a tree's first 10 years. In effect, Belton said, they were paying about $8/tonne of CO2 (discounted at 8%) versus the current price of $5.75/unit.

"But of course the price of carbon may well rise above $8 over next 10 years so it could be a good move for government."

The first 10 years of tree growth "is where really fast carbon absorption happens", Belton said. Forest owners also needed to know they were liable to pay for the value of their carbon credits at harvesting, which was usually at 28 years.

Belton said overall AGS had "merit as we need more trees". Specifically, the Government was getting more carbon to "offset" emissions liability on its books, while also acting on land erosion.

Associate primary industries minister, Jo Goodhew, said AGS applicants would not be able to register their forest in the Emissions Trading Scheme or the Permanent Forest Sink Initiative.

She said the carbon storage generated from the scheme was counted towards New Zealand's national emissions reduction targets and could add around 1.9 million tonnes to the national carbon account. This would help the country meet the emissions reduction target under the United Nations Framework Convention on Climate Change of 5 per cent below 1990 levels by 2020 "and any future climate change emission reduction commitments".

Landowners applying for AGS would get priority if they proved environmental benefits in planting, she said.

Source: Stuff News. To read the full story >>