The rules applying to deforestation exemptions
Allan Laurie, New Zealand Tree Grower August 2009.
I have received a number of calls from clients, particularly those owning land that contains trees planted pre-1990, anticipating or perhaps considering applying for a deforestation exemption. Below is a review of the pre-1990 provisions along with a summary of new deadlines that now apply.
- At present a most important rule, applying to deforestation exemptions on pre-1990 land, is that a landowner can only apply where the act of deforestation has been completed.
- The act of deforestation means, for example, that the land has been cleared of trees, cleared of debris and planted in grass with stock actively grazing on it.
- The act of deforestation does not mean the trees are cut down and the land left idle. Deforestation is the act of actively doing something else with the land other than growing trees on it – changing the land use. Evidence of this must be included in the exemption application.
- Eligibility to apply for a deforestation exemption is limited to where the pre-1990 land, as at 1 September 2007, was owned by a person who, along with any associated persons, owned less than 50 hectares of pre-1990 forest land. It is the ownership in September 2007 that is important. For example, the current landowner at July 2009 may own more than 50 hectares of pre-1990 forest land.
- The current landowner needs to be absolutely sure that the landowner, as at 1 September 2007, did not own more than 50 hectares of pre-1990 forest land. This means, for example, not being a part owner or a controlling shareholder in a land-owning forestry partnership.
- A landowner who has completed the act of deforestation of pre-1990 forest land in 2008 and 2009, and wants to apply for a less than 50 hectare exemption, needs to have applied by a date yet to be set by the government but will be no later than 1 July 2010.
- The new deadline for a less than 50 hectare exemption will be prescribed by regulation or public notice in the future.
- Landowners who, from 1 January 2010, begin deforestation of an area greater than two hectares, and who either choose not to apply for an exemption or do not qualify for an exemption, have 20 working days to notify MAF that they have commenced deforestation.
- Landowners owning more than 50 hectares of pre-1990 forest land at 1 September 2007 are not eligible to apply for a deforestation exemption.
- Cutting down less than two hectares of pre-1990 trees within a Kyoto Commitment Period – the current period is 1 January 2008 to 31 December 2012 – does not have to be reported, nor does it require a deforestation exemption, nor does it imply any future liability.
The Forestry Allocation Plan
The government is working on what is known as the Forestry Allocation Plan. This plan will include dealing with how landowners can apply for their free allocation of compensatory credits for their pre-1990 trees. The draft Allocation Plan has been published, submissions have been called for and these are now closed. The government is now considering the draft in tandem with the Emissions Trading Scheme (ETS).
- There is no ability at present to apply for a deforestation exemption where the act of deforestation has not occurred. This includes where there is a clear intent in the future not to replant an area of pre-1990 trees. Less than 50 hectare exemptions where deforestation has not occurred will only be available once the Forestry Allocation Plan has been issued.
- Once a landowner has applied for, and been given, a deforestation exemption, they cannot then change their mind and apply for pre-1990 credits. It has to be one or the other. This is why the government does not want to see landowners applying for exemptions until after they have seen the Allocation Plan.
- Once the Allocation Plan is confirmed it may be possible to apply for a deforestation exemption in anticipation of carrying out the act of deforestation. However the rules on this are not absolutely set in stone at present and will not be until the Allocation Plan is confirmed in law.
The rules applying to those not eligible for pre-1990 exemptions
- If a landowner has deforested an area greater than two hectares of pre-1990 land in 2008 or 2009 and is not eligible to apply for exemption, they must notify MAF of the deforestation by 31 January 2010. The act of notifying means they will be recorded as a participant in the ETS.
- Having made that notification, a participant must file an emissions return quantifying their deforestation liability for the previous 12 month period and they must do this between 1 January and 31 March each year. The first emissions return covering the period 2008/2009 is due between 1 January and 31 March 2010.
- The liability is the amount of carbon dioxide equivalents expressed in tonnes, not the cost of a tonne of carbon dioxide. By implication, if you do not have the carbon credits in your account you will have to go out and buy them.
- Having determined their liability, presumably confirmed by the Crown, participants must then surrender the equivalent emissions units (carbon credits) between 1 January 2011 and 30 April 2011.
- Participants have any time between 1 January 2011 and 30 April 2011 to surrender emissions. In essence this means the landowner will have to have carbon credits in their carbon account from claiming for the credits in the post- 1989 forests they own. Alternatively they will have to go out to the market and buy carbon credits and have them in their accounts by due date.
- In earlier media information you may have seen comments about how it was going to cost around $13,000 per hectare to cut trees down and not replace them. This was an estimate at the time. You can now see from the above how the process of determining how the actual cost will be calculated.
As with all matters surrounding ETS there is a layer of complexity which initially must seem to be unnecessarily complicated. However there are many complex issues to be determined in applying rules which are fair and able to be quantified.
The MAF website www.maf.govt.nz/sustainable-forestry continues to be a good place for information. A quick search in the top right hand box on the home page is a good way of narrowing down to the information you require.
Allan Laurie is a Registered Forestry Consultant