Forestry in a New Zealand Emissions Trading Scheme

The forestry sector will be the first sector to be involved in the Emissions Trading Scheme (ETS).

Forestry plays a critical role in managing New Zealand's carbon footprint and helping the country adapt to climate change by reducing erosion and flooding. Trees soak up carbon dioxide while they grow - but much of that carbon is released when the trees are cut down. If the trees are not replanted or the land is converted to another use, this is called deforestation. Deforestation is a major source of greenhouse gas emissions globally and in New Zealand.

The ETS has been designed to encourage new planting and better management of our forest estate. All forest owners entering the ETS can receive emissions units which they will be able to sell through the ETS trading arrangements. They will also have obligations, depending on the type of forest - indigenous or exotic, and when it was planted. It is important that foresters understand this and carefully review the Government's proposals in the Forestry in the New Zealand Emissions Trading System and associated Forestry Questions and Answers.

Under the government's new partnership programme with the agriculture and forestry sectors (called the Sustainable Land Management and Climate Change Plan of Action) there will also be the option of cash grants to encourage new planting by land owners. Other initiatives under the Plan of Action will complement the ETS, and will include more research, technology transfer, encouraging more use of wood products, and bio-energy.

Emissions Trading: Summary of main tax changes

The introduction of the New Zealand Emissions Trading Scheme has taxation consequences. This document on the Inland Revenue website contains a summary of the main tax changes: www.taxpolicy.ird.govt.nz/publications/files/climatebill.pdf [100KB PDF]

Background Reports and Analysis

  • Indicative Forest Sequestration Tables
    The Ministry of Agriculture and Forestry (MAF) has requested estimates of carbon stocks by stand age for various tree species and tending regimes on various sites. These carbon stock tables are intended to be used as illustrative examples of carbon sequestration through afforestation.
  • Area of Forest "at risk" from deforestation
    Large-scale deforestation of planted forests is a new phenomenon. This report uses a range of methods to determine the "profitability" of switching land use from forestry to agriculture. All suggest that switching from forestry to pastoral use is commercially justifiable only if the land is capable of sustaining intensive stock production (in some cases) or dairying. Between 170,000 and 280,000 ha of forest land may be deforested over the next 15 years.
    Download the full report as a PDF [395KB PDF]
  • Deforestation Intentions Survey
    These reports provide a structured review of the deforestation intentions of large-scale forest owners (owners with more than 10 000 ha of forest), and an estimate of deforestation by smaller owners. The first survey was undertaken in December 2006 when ETS proposals were under discussion but largely undecided, and the second between November 2007 and January 2008 and after the announcement of the Emissions Trading Scheme (ETS) but before the proposed policy has become law.
  • Financial returns and forestry planting rates
    Over the last twelve years the annual rate of new plantings of commercial forestry has been trending downward and since 2004 there has been a decline in the replanting rate. "Expected" forestry financial returns over the past decade were compared with the recorded areas of new planting and total planting for each year. This showed a clear positive correlation between returns and both the new planting and total planting rates - with higher expected returns associated with higher levels of forest establishment.
    Download the full report as a PDF [75KB PDF]
  • Further Material on Pre 1990 Forests
    This paper discusses a number of issues relating to the treatment of pre 1990 forest in the NZ ETS. All sections include discussion of options that have been suggested by key stakeholder groups, especially Māori.

Contact for Enquiries

Sustainable Land Management and Climate Change
MAF
Pastoral House
25 The Terrace
PO Box 2526, Wellington
Tel: 0800 CLIMATE (254 628)
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