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February, 2024

Emissions Trading Scheme fee review a relief for cost-struck foresters

The New Zealand Forest Owners Association says the review of the Emissions Trading Scheme (ETS) fees is a relief for foresters facing excessive costs and loss of climate change action. 

Announced by Forestry Minister, Hon Todd McClay, the review will re-evaluate the capital costs of the scheme’s IT system and the administrative costs of the ETS.

A second phase of the review will evaluate whether the $30 per hectare annual fee structure that forestry participants pay is fair.

New Zealand Forest Owners chief executive (NZFOA), Dr Elizabeth Heeg, says the announcement gives foresters confidence that their concerns are being taken seriously by the new Government.

“The ETS fees imposed last year saw foresters collectively landed with more than $30 million in overheads,” Dr Heeg says. “That equates to a 1600% increase on the previous ETS charges.

“Those fees were excessive, disproportionate, and unreasonable for a sector already struggling to meet the costs of operating their businesses following years of uncertainty."

Forestry does not object to paying its share of the costs for administering the ETS, however, these costs should be shared proportionately across the system given the scheme has benefits for all of New Zealand.

“Foresters were not adequately consulted with upon introduction of the fees. Some companies now face a yearly charge of over $1m just to continue in business,” Dr Heeg says. “In no other case do small or medium businesses face such extreme government fees just to participate in a business model that is of public benefit.

“For small foresters and farmers, that increase simply isn’t viable. The result is that many are being forced to exit the scheme.”

At present, New Zealand’s forests – plantation, native or otherwise – are the only credible means of achieving the Climate Change Commission’s emissions targets.

Dr Heeg says the imposition of the latest ETS fees is having the opposite effect of what’s needed for climate change action.

“The excessive cost recovery fees for the system has knocked investors’ confidence in the ETS – disincentivising businesses from entering the scheme.

“Planting intentions have diminished to a level that will be insufficient to meet our climate change commitments in 2050 and beyond.

“Halting these fees will be a crucial step for enabling forestry to fulfil its role as the primary offsetting mechanism for New Zealand.”

Forest owners look forward to fair and adequate consultation with the Minister and his team to ensure future ETS fees are reasonable, efficient, and necessary.

The independent review will commence in March, with a report expected by the end of April. 

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