New Zealand’s Forest Owners Association wants the government to put an immediate hold on a reform of the Emissions Trading Scheme to restore stability to the carbon market and certainty for forest planning. Source: Timberbiz
FOA President, Grant Dodson, says the reform options announced by the government have collapsed the confidence of potential forest investors, and the subsequent announcement of an improved carbon auction floor price has not helped much to restore that confidence.
“This is because options 3 and 4 in the ETS consultation document directly threaten the value of forestry NZ Units through government manipulation, bordering on nationalisation of private property,” he said.
“Foresters have invested in the ETS in good faith and the NZUs have been vested to foresters who can sell them on a free market to offset emissions.
“They all knew they were taking a market risk on prices, which is absolutely fair. But what is not fair is a government pulling the rug out from under the free market, which is what two of these ETS reform options are about.
“This mistake has cost Iwi, New Zealand forest investors, farmers and mum and dad Kiwis about NZ$3 billion in lost value.
“This is unacceptable. The government should realise this has crossed the line and withdraw that consultation.
“For many reasons the timing of this reform is bad. It was announced in the middle of the planting period and is now only a few weeks from forest nurseries sowing pines for the following season. There will be a planting gap for at least three years
“That causes a downstream uncertainty for timber processors who make their plant investment plans on a security of timber supply well into the future. Scale of future log supply is critical, and the Forestry and Wood Pro-cessing Industry Transformation Plan is in jeopardy.”
Mr Dodson said that before reforming the ETS to make forestry less attractive, the government should establish that there is actually a real ‘overcooking’ of planting rates in response to the price of carbon units.
“We know there has been recent significant plantings, but forestry has yet to establish even a fraction of the Climate Change Commission’s recommended new forest area,” he said.
“The modelling used to make these decisions does not represent the latest data and includes many flawed assumptions. We know this from the consultation discussions we’ve had with officials.
“It’s been only recently that the planting rates have increased. We hardly even know if the in-crease is short term or not, and with the options presented in the ETS consultation document, investor confidence has been smashed.”
Mr Dodson said that options had been taken away from farmers many of whom wanted to invest in trees in response to the continued slide of sheep numbers which have been steadily going down since the early 1980s.
“It would be a huge mistake for any government to now force unwilling farmers to continue to farm, when it should be a right for them to decide on which land use is the best option for them – including planting trees,” he said.
“There’s also too much uncertainty about actual climate targets for the area the government wants to see established in trees.
“Various estimates and figures are provided by different authorities. The Productivity Commission wanted up to 2.8 million hectares planted in forests to get to zero carbon by 2050.”
The Climate Change Commission more recently estimated that it would take 380,000 hectares of pine plantations to get there.
“Now it’s changed its mind, and we don’t know what areas and what planting timetable is, the minimum required to get to the targets. And then the government ignores the advice of the Commission anyhow,” Mr Dodson said.
He said last Monday was the 20th anniversary of the commencement of New Zealand’s first climate legislation, the Climate Change Response Act.
In the intervening two decades of this act and lots of amendments and additions to it, New Zealand’s national greenhouse gas gross emissions hadn’t altered one bit.
“They are the same at they were in 2003,” Mr Dodson said.
“We are pinning lots of hopes on yet more unproven plans and intentions to do immeasurably better to get to 2030 and 2050 emissions reductions targets.
“Plantation forests, on the other hand, are proven to work to get net emissions down. They are the only part of the climate change action plan that is working and currently absorb more than 21 million tonnes of carbon dioxide from the atmosphere – more than half the national total emissions.
“It is true that we can’t totally rely on planting our way to successfully get to our emissions targets. But it is equally true that without more planting we won’t get anywhere near those targets in the next seven years to 2030 and 27 years to 2050 either.”
