Neil Cullen, New Zealand Tree Grower May 2019.
The government has important decisions to make this year on how the country will meet its commitments for reducing our greenhouse gas emissions. It is getting advice on achieving carbon neutrality by 2050 from many different sources including the Interim Climate Change Committee, the Productivity Commission, the Parliamentary Commissioner for the Environment and the group considering changes to the EmissionsTrading Scheme. All this advice has to be channelled into legislation, in particular the Zero Carbon Bill, which to last longer than the election cycle will need to receive cross party support − a challenging assignment.
For our members who are farmers and foresters this will bring costs and benefits. The Interim Climate Change Committee is recommending that livestock owners pay for five per cent of their greenhouse gas emissions from 2025 through a levy. In the interim, from next year the levy would be paid by processors and fertiliser companies. The Parliamentary Commissioner for the Environment, Simon Upton, in his recently released report argued that only biological emissions should be able to be offset by planting trees. The users of fossil fuels should not be able to buy units from forest owners, but either reduce their carbon dioxide emissions or get units elsewhere. This concept of two parallel Emissions Trading Schemes operating separately, although well based in science, does not seem likely to be adopted by the government as it would delay the introduction of legislation by months.
The benefits for our members and land owners generally will be the increased ability to earn income from carbon by planting new forests. New plantings in 2019 and 2020 will have the option to enter the Emissions Trading Scheme under the averaging system which means participants will get paid out the average carbon storage of that forest and will not have to repay any units at harvest. They will, however, have to replant and will not receive any New Zealand Units for subsequent rotations. More details on how this system will work and the options for existing participants are still to be announced but it is safe to assume that averaging will mean increased returns from carbon and lower liability risk.
When this is combined with the grants available under the Billion Trees Programme the returns on new plantings are very attractive. Although radiata pine planted under the grant scheme are not eligible for the Emissions Trading Scheme for six years, all other species can get the grants and the carbon units from day one, a small incentive for diversity.
Among the decisions to be made by the government or the Climate Change Commission is whether to lift the lid on the carbon price and if so to what level it is allowed to rise to. In the land market there is already anticipation of an increased carbon price being shown by some corporate buyers. Therefore, land owners need to be aware that there are many different options for afforestation available including undertaking the planting themselves with assistance from Te Uru Rakau.
At a recent meeting in the Beehive, forestry leaders met with the four ministers responsible for an update on the status of the fumigant methyl bromide. This chemical is used at ports to treat logs bound for China and India and is supposed to be phased out by October 2020 unless there is 100 per cent recovery of the gas. This is not possible in practice so an application to the Environmental Protection Authority has been made to allow a lower recovery rate until alternative treatment methods are approved. This is of importance to small-scale growers as they are likely to be the worst affected if methyl bromide use is no longer an option from next year.