A Guide to Forestry in the Emissions Trading Scheme
22 October 2009
4 Additional Information
Key Dates
| Date | Action |
|---|---|
| 1 November 2002 | Date at which ownership of pre-1990 forest land for eligibility of highest allocation of units under the Forestry Allocation Plan is determined. |
| 1 September 2007 | Date at which ownership for eligibility of land under the "less than 50 hectares" exemption is determined. |
| 1 January 2008 | Forestry sector enters the Emissions Trading Scheme.
Post-1989 forest land starts earning NZUs for net increases in carbon stocks. |
| 26 September 2008 | Climate Change Response (Emissions Trading) Amendment Act 2008 brings the ETS into force. |
| 2009 | |
| 30 March 2009 | Deadline for registered post-1989 forest landowners to voluntarily file an emissions return for the 2008 calendar year. |
| 1 July 2009 | Climate Change (Emissions Trading Forestry Sector) Amendment Act 2009 introduces changes to Pre-1990 provisions. |
| 22 November 2009 | Submissions on the Pre-1990 Forest Land Allocation Plan (Consultation Draft) closed. |
| 8 December 2009 | Climate Change (Moderated Emissions Trading Scheme) Amendment Act 2009 introduces changes to the pre-1990 forestry allocation plan, removal of the deadline for less than pre-1990 forest 50 hectare exemptions, introduction of unincorporated bodies, changes to consolidated groups, and many other technical amendments. |
| 31 December 2009 | End of initial (two year) compliance period for pre-1990 forest landowners’ mandatory entry into the ETS. |
| 2010 | |
| 1 January 2010 | Pre-1990 participants who deforested in 2008 and/or 2009 can commence filing emissions returns (using the look-up table approach).
Post-1989 participants can commence filing emissions returns for changes in carbon stocks to the end of 2009. |
| 31 January 2010 | Deadline for pre-1990 forest landowners to notify MAF that they are mandatory ETS participants as a result of deforestation carried out between 1 January 2008 and 31 December 2009. |
| 31 March 2010 | Final date for filing pre-1990 and post-1989 emissions returns in 2010. |
| 2011 | |
| 1 January 2011 | First date from which pre-1990 participants are required to surrender NZUs to meet deforestation liabilities quantified in an emissions return filed by them by 31 March 2010.
Forestry participants who deforested in 2010 can commence filing emissions returns (using the look up table approach). |
| 31 March 2011 | Final date for filing emissions returns in 2011. All pre-1990 participants who deforested in 2010, and those post-1989 participants voluntarily choosing to, must file their emissions returns by this date. |
| 31 May 2011 | Final date for pre-1990 participants to surrender NZUs to meet deforestation liabilities detailed in an emissions return filed by 31 March 2010 and/or 31 March 2011. |
| 2012 | |
| 31 December 2012 | Final date for applications to join the ETS and be eligible to claim units for 2008-2012. |
| 2013 | |
| 31 March 2013 | Final date for post-1989 participants to file a mandatory emissions return for the five-year period 1 January 2008 – 31 December 2012. This return includes a reconciliation which takes account of any emissions returns voluntarily filed earlier during the five-year period, and any units credited/surrendered as a result of those returns. |
Other Sustainable Forestry Programmes
MAF offers a suite of sustainable forestry programmes in addition to the ETS, including:
- the Afforestation Grant Scheme (AGS);
- the East Coast Forestry Project (ECFP);
- the Permanent Forest Sink Initiative (PFSI).
Guides and further information on each of these schemes are available at www.maf.govt.nz/sustainable-forestry.
In some cases forests are able to participate in more than one forestry programme, as shown in the following table.
Compatibility of Sustainable Forestry Programmes
| AGS | PFSI | ECFP | ETS | |
| AGS | No | No | No | |
| PFSI | No | Yes | No | |
| ECFP | No | Yes | Yes* | |
| ETS | No | No | Yes* |
* ECFP grant rates are lower for forests also entering the ETS.
Compliance
MAF will encourage and monitor compliance with the provisions of the Climate Change Response Act 2002. This will be achieved through:
- a nationwide communications programme to promote understanding of entitlements and obligations;
- publishing guides, information and frequently asked questions;
- placing programmes advisers in regions to provide a face-to-face information and guidance service;
- reviewing registration applications and emissions returns to ensure they comply with the legislation. This may involve follow-up contact by MAF with the forest landowner or other parties;
- a programme of spot checks and detailed site audits.
Penalties
There are both civil penalties and criminal offences for non-compliance with obligations under the ETS (in the Act), as detailed below:
Civil Penalties
The civil penalties are aimed at supporting the obligations under the ETS of calculating emissions and surrendering units equal to emissions. Key points are:
- If a Participant fails to surrender units by the due date, is found to have submitted an incorrect emissions return or failed to submit a return at all they must surrender the outstanding units and will be subject to an excess emissions penalty of $30 per outstanding unit (called the “excess emissions penalty”). This is designed to create an incentive for people to pay due caution. In certain circumstances the penalty may be reduced by up to 100 percent. This is a discretion that can be applied where the person voluntarily discloses their failure to comply, or MAF is satisfied the person formed a view on the information to be included in an emissions return which, while incorrect, was reasonable. Therefore, if a person is considered to have made a genuine mistake then there is the ability to reduce the penalty. This could also be used in circumstances where Participants cannot comply through no fault of their own, while still requiring them to ultimately surrender units.
- If a Participant knowingly fails to comply with their obligations or provides false information, they may be liable to surrender double the number of units they are assessed as owing and a further penalty of $30 for each of those units.
- Interest accrues on the amount of a penalty until it has been paid in full, and any associated units required to be surrendered have been surrendered.
Criminal Offences
The criminal offences are for when people without good reason, knowingly or with intent to deceive, fail to collect information, register as a Participant, submit an emissions return or keep information in relation to an activity. The penalties increase in relation to the severity of the offence and comprise:
- A graduation of fines for failure to collect information, register as a Participant, submit an emissions return or keep information in relation to an activity, if there is no reasonable excuse. There are fines of $8000 for a first offence, $16 000 for a second offence and $24 000 for each subsequent offence.
- Failure to provide information or documents, or failure to appear before the chief executive or an enforcement officer when required may incur a fine of up to $12 000 for an individual and $24 000 for a body corporate, if there is no reasonable excuse.
- Wilful failure to comply with parts of the Act, providing false information and obstruction of officers may lead to a fine of up to $25 000 for an individual and $50 000 for a body corporate.
- Similarly to the Tax Administration Act 1994 offence of evasion, a separate offence is provided for evasion – namely, failure to comply with the Act with intent to deceive and obtain a material benefit or avoid a material detriment. This offence has a fine of up to $50 000 and/or a term of imprisonment of up to five years.
Where a body corporate is convicted of an offence under the Act, directors and others concerned in management of the body corporate may also be guilty of the offence and subject to a penalty.
Further Information and Contact Details
For information on forestry and agriculture in the Emissions Trading Scheme contact the Ministry of Agriculture and Forestry:
Website:
www.maf.govt.nz/sustainable-forestry
Email: climatechange@maf.govt.nz
Telephone: 0800 CLIMATE (254 628)
For all other sectors in the Emissions Trading Scheme and climate change in general, contact the Ministry for the Environment:
Website: www.climatechange.govt.nz
Email: info@climatechange.govt.nz
Telephone: 0800 CLIMATE (254 628)
For holding accounts and matters relating to emissions units contact the New Zealand Emissions Unit Register:
Website: www.eur.govt.nz
Telephone: 0800 CLIMATE (254 628)
Glossary
Assigned Amount Unit
The emissions units allocated to Annex 1 countries (see www.unfcc.int) under the Kyoto Protocol on the basis of their quantified emission target for the first commitment period, 2008–2012. One AAU is equal to one tonne of carbon dioxide.
Associated Person
A person is an associated person in relation to one or more other persons if:
- each person is a body corporate and each of the bodies corporate:
- consist substantially of the same members or shareholders; or
- are under the control of the same persons.
- any of the bodies corporate:
- has the power, directly or indirectly, to exercise, or control the exercise of, 25 percent or more of the voting power at a meeting of the other; or
- is able to appoint or control 25 percent or more of the governing body of the other.
Carbon Accounting Area (CAA)
An area of post-1989 forest land determined by the Participant during the ETS registration process that is the basic unit for which accounting of carbon gains and losses is performed. A CAA can be any size; there are no limits on the number of CAAs a Participant may specify; and they do not need to comprise contiguous forest areas.
Carbon Accounting Record (CAR)
A permanent record kept by MAF of the change in carbon stocks over time, and of the NZUs issued or surrendered to match that change, for a CAA.
Carbon Dioxide (CO2)
A naturally occurring gas, which is also a by-product of burning and breakdown of fossil fuels and biomass, land-use changes and other industrial processes. It is the principal human-induced greenhouse gas that contributes to global warming.
Carbon Dioxide Equivalent (CO2-e)
The quantity of a given greenhouse gas multiplied by its global warming potential, which equates to its global warming impact relative to carbon dioxide. This is the standard unit for comparing the degree of warming that can be caused by emissions of different greenhouse gases.
Carbon stocks
The total carbon in a forest, including that in stem wood, bark, branch, leaves, litter, woody debris, stumps and roots.
Chief Executive
Means the chief executive of the department that is, with the authority of the Prime Minister, responsible for administering a particular part of the Climate Change Response Act 2002.
In the case of the ETS (Forestry), the responsibilities regarding administering forestry and the ETS have been delegated to MAF so reference to the “chief executive” in this guide is simply referred to as “MAF”.
Clearing
Clearing means in relation to a tree and includes:
- the felling, harvesting, burning, removing by mechanical means, spraying with herbicide intended to kill the tree, or undertaking any other form of human activity that kills the tree; and
- the felling, burning, killing, uprooting, or destroying by a natural cause or event; but
- does not include pruning or thinning.
Consolidated Group
A group of entities may elect to form a consolidated group in relation to any pre-1990 deforestation or post-1989 forest land activity. In relation to this provision, an entity means a reporting entity or reporting entity’s subsidiary, within the meaning of the Financial Reporting Act 1993 that is, a company or an issuer. The term “issuer” has a specific meaning in the Financial Reporting Act 1993.
Entities electing to form a group must notify the Ministry of Economic Development in a prescribed form and must nominate one of its entities as the agent of the group. The entities must agree to be jointly and severally liable for any obligations under the Act, and to the allocation to the nominated entity of any units to which any member of the group may become entitled.
Crown Conservation Contract
Crown conservation contract means a written agreement with the Crown (including a concession granted in accordance with Part 3B of the Conservation Act 1987) for the removal and storage of greenhouse gases on post-1989 forest land that is Crown land managed or administered under the Conservation Act 1987 or any of the Acts listed in Schedule 1 of that Act.
Deforestation
Deforest, in relation to forest land means:
- to convert forest land to land that is not forest land; and
- includes clearing land, where the following applies:
- four years after clearing, a given hectare has not been replanted with at least 500 stems of forest species or has not naturally established a covering of at least 500 stems of forest species; or
- 10 years after clearing, predominantly exotic forest species are growing, but a given hectare does not have tree crown cover of at least 30 percent from trees that have reached five metres in height; or
- 20 years after clearing, predominantly indigenous forest species are growing, but a given hectare does not have tree crown cover of at least 30 percent from trees that have reached five metres in height.
Deforestation does not include forest land that is replanted or allowed to regenerate after harvesting has occurred. Deforestation is generally treated as occurring on the date the hectare is cleared as part of the deforestation process. The only exceptions are where deforestation is deemed to have occurred four, 10 or 20 years after clearance in the circumstances outlined above; however, in these circumstances any liabilities associated with deforestation are calculated as at four, 10 or 20 years earlier, respectively.
Exotic Forest
An exotic forest is a forest in which the predominant species does not occur naturally in New Zealand – that is, it is not an indigenous species.
Forest Land
- means an area of land of at least 1 hectare that has, or is likely when the forest species reach maturity to have, tree crown cover from forest species of more than 30 percent in each hectare; and
- includes an area of land that temporarily does not meet the requirements specified in paragraph (a) because of human intervention or natural causes but that is likely to revert to land that meets the requirements specified in paragraph (a);
- does not include –
- a shelter belt of forest species, where the tree crown cover at maturity has, or is likely to have, an average width of less than 30 metres; or
- an area of land where the forest species have, or are likely to have, a tree crown cover at maturity of an average width of less than 30 metres, unless the area is contiguous with land that meets the requirements specified in paragraph (a) or (b).
If an area of land temporarily does not meet the forest species and crown cover requirements because of human action or natural events (it may have just been harvested, or trees may have been blown over by strong winds), but is likely to meet these requirements again in the future, it is still considered to be forest land as per paragraph (b) above. Such areas are termed “temporarily unstocked”.
Forest Species
Tree species capable of reaching at least five metres in height at maturity in the place that it is located.
For the purposes of the Forestry ETS, any woody vegetation (and including tree ferns) capable of reaching five metres in the place it is growing is considered to be a “tree”.
Harvesting
Harvesting is when the forest species are cleared from the land, and new forest species seedlings are either planted or naturally regenerate. In this case, there is no land use change involved when the trees are harvested. The harvested area remains forest land, and is referred to as being temporarily unstocked.
Indigenous Forest
A forest that comprises tree species that occur naturally in New Zealand or have arrived in New Zealand without human assistance. Strict definitions may relate to the original method of forest establishment (and the direct involvement of people in the process), the mixture of flora and fauna, and the conditions believed to have been present prior to human intervention.
Kyoto Protocol
A protocol to the United Nations Framework Convention on Climate Change that includes emissions limitation or reduction commitments for ratifying countries listed in its Annex B (developed countries and Economies in Transition) (see http://unfccc.int/resource/docs/convkp/kpeng.html for further information).
Landowner
The legal owner, or owners from time to time, of the freehold estate in the land. Note, a holder of a registered forestry right; leaseholder with a registered lease; or party to a Crown conservation contract are also eligible to participate in the ETS.
New Zealand Emissions Unit Register (NZEUR)
See www.eur.govt.nz.
New Zealand Unit (NZU)
A greenhouse gas emissions unit specific to the New Zealand Emissions Trading Scheme.
Orthographically Corrected Aerial Photograph
An aerial photograph that has had all the distortions due to camera tilt and surface relief removed. An orthophotograph has the advantages of a photograph in that all the visible features are displayed. It also has the constant scale and accuracy of a map.
Participant
A person becomes a mandatory Participant if they undertake certain activities covered by Schedule 3 of the ETS (for example, deforesting pre-1990 forest land). Other people may become participants by voluntarily registering in respect of activities listed in Schedule 4 (for example, post-1989 forest land).
Post-1989 Forest Land
Forest land that:
- was not in forest land on 31 December 1989; or
- was forest land on 31 December 1989 but was deforested (that is, converted to another land use) between 1 January 1990 and 31 December 2007; or
- was pre-1990 forest land, other than exempt land:
- that was deforested on or after 1 January 2008; and
- in respect of which any liability to surrender units arising in relation to deforestation has been satisfied; or
- was exempt land:
- that has been deforested; and
- in respect of which the number of units that would have been required to be surrendered in relation to deforestation, had the land not been exempt land, have been surrendered.
Both exotic and indigenous forest species are eligible to participate in the ETS as post-1989 forest land.
Pre-1990 Forest Land
Forest land that:
- was forest land on 31 December 1989;
- remained as forest land on 31 December 2007; and
- where the forest species on the forest land on 31 December 2007 consisted predominantly of exotic forest species.
But does not include any forest land that meets the definition above but also:
- has been deforested and any liability arising from that deforestation has been satisfied;
- was declared to be exempt land, has been deforested and the New Zealand Units that would have been required to be surrendered had the land not been exempt, have been surrendered.
Only forests comprising predominately exotic forest species are subject to the ETS as pre-1990 forest land (noting that the definition above prevents exotic forest from being converted to indigenous forest after 31 December 2007 then deforesting the indigenous forest without obligations).
Registered Forestry Right
Registered forestry right means a forestry right registered under the Forestry Rights Registration Act 1983.
Registered Lease
Registered lease:
- in relation to a lease in respect of land registered under the Land Transfer
Act 1952:
- o means a lease registered under that Act; and
- o includes a lease registered under the Land Transfer (Computer Registers and Electronic Lodgement) Amendment Act 2002.
- in relation to a lease in respect of land that is not registered under the Land Transfer Act 1952, means a lease registered under the Deeds Registration Act 1908.
Removals
The amount of greenhouse gases removed from, or not released into, the atmosphere due to an activity (expressed in CO2 equivalents, CO2-e).
Shapefile
An electronic file that is used for digital mapping and is a standard mapping format used within the New Zealand forest industry. The Climate Change (Forestry Sector) Regulations 2008 use the term “geospatial mapping information” to refer to what is commonly known as a shapefile. Schedule 5 of the Regulations provides more detail on when a shapefile must be provided. For people who do not have access to the software necessary to create a shapefile, MAF provides an online mapping tool for landowners to meet this requirement.
Woody Species
Shrubs or trees that have woody stems, as opposed to grass, bracken or similar vegetation which do not have woody stems.
Contact for Enquiries
Emissions Trading Scheme
Ministry of Agriculture and Forestry
PO Box 1127
Wellington
Or call us on 0800 CLIMATE (254 628)
