You are here: Home» NZFFA Library» Resource Catalogue» New Zealand Tree Grower» February 2009» Indigenous forestry options for trading in carbon credits

Indigenous forestry options for trading in carbon credits

Warwick Silvester, New Zealand Tree Grower February 2009.

The Kyoto protocol requires us to control or mitigate our carbon emissions. Trees as major carbon sinks are seen as one of the best ways to implement this. Four schemes are currently available for foresters to start trading their carbon asset and help with offsetting our national carbon deficit. These are −

  • Emissions Trading Scheme which is currently on hold until the new government adjusts the details
  • Permanent Forest Sinks Initiative
  • Afforestation Grants Scheme
  • Emissions Biodiversity Exchange.

The following is yet another summary of how these will operate and how you can take advantage of the credits or cash they offer. There are two main sources of extra information on the subject that you should consult if you are interested in taking up any of these offers. Obviously the official web sites managed by MAF will give all the detailed information necessary A recent newsletter produced by Tane’s Tree Trust provides an overview of all the schemes and allows readers to assess the relative merits of the four schemes. This newsletter is available on the web at

Emissions Trading Scheme (ETS)

The ETS was passed into law by the previous government, but the incoming government has declared it will look at the details and bring it into line with the Australian scheme. The essence of the ETS is liable to remain and this will enable participants to trade units, which are tonnes of carbon dioxide, at a price that will be determined by the market.

Owners of forest planted after 31 December 1989 will get credit for carbon removed from the atmosphere along with liability for carbon released once these same forests are harvested, but only up to the limit of any credits received. This policy assumes instant oxidation of the harvested forest − carbon is assumed to immediately be returned to the atmosphere when a tree is felled.

Units will be tradable but when the forest is felled there will be a liability, which is not instantly revoked if the area is replanted. The amount of carbon sequestered is calculated in tables that enable you to estimate the carbon credits at any stage in the development of a forest.

Permanent Forest Sinks Initiative (PFSI)

The permanent forest sinks initiative is probably the most attractive to those planning native or alternative species in smaller woodlots and who hope to manage these for the long term. The scheme allows

carbon credits to be accumulated as the forest will be managed on a sustainable harvest scheme and not clear felled.

Eligible land will be land that was not forested before 1989 and which has been converted to a productive forest asset. For example, pasture, scrubland or even radiata forest replanted into a sustainable forest, managed on a continuous cover basis, will be eligible to accumulate and trade carbon credits under this scheme. Participants will need to covenant the forest and this will attach to the title.

Afforestation Grants Scheme (AGS)

The AGS is designed to provide cash assistance for individuals and local authorities to establish new forests on land that is currently not forested. The grant goes directly to the forest owner and the government retains the carbon credits. The forest is owned by the applicant and will not then be eligible for the ETS.

Essentially it is an alternative to the ETS whereby the government gives an afforestation grant and retains all credits and liabilities. The grants are allocated by tender twice annually and there are some incentives for planting of indigenous species as well as incentives for proposals that have values such as landscape and conservation. This scheme must be weighed against the benefits of the PFSI where owners can retain and trade carbon credits which become substantial with time.

Emissions-Biodiversity Exchange EBEX21

This is a service for New Zealand land owners that enables them to sell carbon credits from naturally regenerating forests to third parties. The process is managed by Landcare CRI. They assess sites for their potential to regenerate native forests, audit the carbon and biodiversity gains during the regeneration process and market the credits from a given site to businesses or individuals that want to offset their greenhouse gas emissions. The land owner is required to commit to the long-term regeneration of the land and is required to obtain either a QEII or PFSI covenant.

Carbon credits relating to the vegetation will be assessed and sold to purchasing organisations. They need to apply through the carboNZero website for a fixed term, usually three years, through the EBEX exchange. The majority of the funds generated are passed to the land owner. Following that contact period, credits can be sold to other parties not related to EBEX. In return, EBEX21 agrees to verify the amount of carbon dioxide removed from the atmosphere by the regeneration project, to maintain an inventory of carbon and biodiversity accumulation at your site and to look for future buyers of your credits if you choose.


Farm Forestry - Headlines

Article archive »