Christchurch Emissions Trading Workshop
Stream A: Forestry and Agriculture
5 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:
• Pleased entry delayed to 2013 and the sector is part of consultation before decisions are made.
• Points of obligation:
• Sector is keen to discuss.
• Some interest in farm level point of obligation so the costs and benefits are felt there.
• As point of obligation - meat processors are not able to control on-farm practices like Fonterra does for dairy.
• Processors could receive the liabilities, but the free allocation of units may go directly to farmers.
• Need to be able to change farmer behaviour, not just 'tax' them.
• Allocation decisions:
• Interest in how they will be determined.
• Practical difficulties to be resolved.
• Farmers should receive credit for offsetting emissions on farms.
• Concern about costs:
• Inflationary effect of emission liability if agriculture sector does not reduce emissions prior 2013.
• Effects on NZ's competitiveness internationally/ competitiveness at risk issues.
• Note that additional costs result from elsewhere as well, e.g. transport.
• Note different emissions levels from sub-sectors such as horticulture and arable.
• Interest in making available existing research and technology, and not duplicating it.
• Emissions from nitrogen fertiliser may be less than projected, due to reductions made.
• Concern that until the allocation method is determined, there is a disincentive to reduce emissions before 2013.
• Equity issues:
• Between forestry and agriculture.
• Need support for sheep industry.
• Don't forget about sub-sectors.
• Methodologies must align with those of competitors.
• Post 2013 measures must align internationally.
• 2005 emissions level needs to be determined on basis of total energy use. A participant added that the basis of 'total energy use' should be used in forestry too.
• Peak Group - desire for arable sector to be represented.
• Frustration that there is not a lot pastoral farmers can DO about emissions at the moment.
Forestry in the ETS:
• Questions about the extent of credits/liabilities with respect to:
• Carbon remaining in the forest after harvest.
• Recognition of carbon retained in harvested wood products.
• Severe financial impact of a catastrophic event, e.g. fire.
• Future commitment periods' rules.
• Joint ventures with provisions about replanting (or not).
• Concern about harvest emissions bulge in 2020.
• Risks:
• Possible extent of future liability = no incentive to trade.
• Inflexibility with respect to future land use change if go into forestry.
• Point of obligation:
• View that liability should not be at harvest, but when carbon is actually released.
• Free allocations:
• Are they negotiable?
• Issues about timing and amount (private landowners vs Crown).
• View that pre 1990 forest provisions are:
• Theft of capital value of land. One participant likened the scale of the effect of the financial impact to that occurring in Zimbabwe.
• Inequitable cf agriculture sector with respect to land use change.
• Concern about the effect of post 1989 forest penalties on land use flexibility and land value.
• Could be perverse outcome - more bare land which should be in forestry.
• Desire for Kyoto Protocol rules to relate to flows of emissions (e.g. be able to harvest one area but plant elsewhere).
• Discourage deforestation with positive not punitive measures.
• Desire for encouraging afforestation. RMA/district plan compliance is presently a disincentive to plant trees/ undertake forestry in some regions.
• Questions about.
• Tax implications.
• Costs of monitoring and compliance.
• Definition of 'forest.'
• Including indigenous forests in the ETS.
• The treatment of Crown Forest Licences and forestry rights.
ETS:
• Concern about costs:
• ETS bureaucracy.
• Inflationary impact.
• Effect on asset value.
• Desire for modelling of economic effects on industries. Some want this across all sectors including critical risk points for carbon leakage. Some want modelling of specific unit costs (e.g. one sheep) so that a farmer can see what the ETS costs them.
• Concerns about competitors not facing such regimes.
• Important that future regulations consider offsetting.
• Question about whether international trading will reduce global emissions.
• Unit/ carbon prices:
• Effect of Commitment Period Reserve (cap).
• Are just guesses until a market exists.
• Will depend on demand. What guarantees?
• Appears to be general acceptance of ETS approach vs regulation.
• More detail and certainty is sought.
• A lot of work is required.
General:
• There may be Treaty of Waitangi implications.
• Importance of land use flexibility and efficiency.
• Request for practical scenarios/ risks/ benefits of various options, to help people make decisions about actions to take.
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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