Auckland Emissions Trading Workshop
Stream A: Forestry and Agriculture
9 October 2007
Key Themes
Introduction: These key themes are a record of points raised by participants at the workshop – they are not the consensus of the participants.
Agriculture in the ETS:
• Questions about date of entry into the ETS.
• Interest in the earliest practical date.
• Interest in the status of agriculture if post 2013 rules change.
• A view from one participant that the measures proposed do not honour a commitment to waive agriculture liabilities until 2013.
• Impacts will be more immediate than 2013. Farmers will also bear cost increases from elsewhere, e.g. increased fuel and electricity prices.
• Points of obligation:
• Need uptake of mitigation technology, and reporting at farm level.
• At the farm level, few would understand what is suggested.
• Obligation at the company level may not incentivise farmers to change behaviour.
• Concern re effect on returns if companies have to buy units.
• Who pays for the bureaucracy?
• Free Allocation decisions:
• Concern about retrospectively penalising investment decisions.
• Questions about cut off dates and how allocation relates to farms already converted from forestry prior 2005, or intensified after 2005.
• Need measures to prevent gaming.
• Desire for ability to offset farm emissions and gain credits for tree planting on farms and the use of other measures like nitrification inhibitors.
• Interest in how mitigation (emissions reductions) will be credited.
• Plan of Action
• The partnership approach is welcomed.
• Agreement that there is a need for more research and technology transfer.
• Concern about liabilities:
• Interest in the quantum/value of agriculture liabilities.
• Very scary outlook to 2025, given the current lack of mitigation technology.
• Agriculture is already operating at world's best practice. Desire for better framework for agriculture post 2012.
• Dairy is at high point in commodity cycle now. Concern about future situation, when the sector is fully exposed to the price of carbon.
• Equity issues:
• A view that hill country farmers are unfairly treated. They get liabilities not credit for the benefits of reducing stock numbers and planting trees.
• Competitiveness at risk issues - concern that international competitors may not be exposed to the price of carbon.
• Treatment of lime vs nitrous oxide regarding timing issue.
• Interest in whether agriculture can trade its NZUs internationally.
• Need certainty and further information about claiming credits for mitigation from new technology.
• Appeal for more forums to debate mitigation technologies.
Forestry in the ETS:
• Questions about the extent of credits/liabilities with respect to:
• Current harvesting or deforestation occurring across 2007/8.
• Managing liability across an estate.
• Carbon retained in harvested wood products.
• No credits for carbon built up between 1990 and 2008.
• Concern about what government will do with unclaimed credits. If they are sold, they may not be available to cover the harvesting liability later. Can future governments be trusted to allow the harvest and continue to cover the liability?
• Need certainty for post-1989 forests. Need risks quantified.
• Risks and costs:
• Of selling units and not having them available/affordable when want to harvest.
• Concern about on-going costs of participating in the scheme, actively or not.
• Interfering with land use flexibility potentially constrains NZ's economic growth.
• Free allocations:
• Questions about tax and gst issues.
• Questions about qualifying pre-1990 forest land if it has been harvested.
• Available for Nga Whenua Rahui?
• Desire to extend the opt-in timeframe.
• A view that the ETS creates 2 classes of forestry, with 2 different cost structures, and inequitable treatment between the two.
• View of most that pre-1990 forest provisions are unfair and retrospective, and that Kyoto rules do not have to be replicated domestically.
• A suggestion that deforestation of pre-1990 forests should be treated as carbon neutral, due to recent sequestration.
• Avoided deforestation:
• Some prefer rewarding avoided deforestation rather than penalising deforestation.
• Question about how other countries will treat forests, e.g. Indonesia, and whether they will be paid to avoid deforestation.
• Measuring and verifying carbon in forests:
• Questions about methods and reliability.
• Desire for assistance regarding aerial photography and accuracy of mapping.
• View that Afforestation Grant Scheme won't incentivise the scale of planting desired.
• Implications for Maori land which is leased on basis of land value.
• Questions about:
• Definition of post-1989 forest.
• Definition of deforestation/ 'removal' of merchantable timber.
• Potential for offset planting on other sites than that deforested.
• Indigenous forests in the ETS, and liability for conversion to exotic.
• Exemptions.
ETS in general:
• NZU/ carbon prices/ trading:
• Questions about international trading and whether NZUs will trade at a discount internationally.
• What happens to units resulting from overseas capital invested for carbon farming?
• Dairy industry expressed a preference for an intensity-based model because of carbon leakage/ global emissions reduction issues, and competitiveness at risk issues.
• Concern about penalties for genuine mistakes.
• Concern that the electricity price impact could be greater than projected.
• Appears to be general acceptance of ETS approach vs regulatory approach. Its flexibility is supported.
• Lot of work to be done.
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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