Warning for NZ Forestry

Dunedin Company City Forests says the NZ Government should abandon the Kyoto Protocol, rather than commit to revised rules it fears could lumber forestry companies with "massive" additional costs.

City Forests Chief Executive Grant Dodson told the Otago Daily Times this week that changes to the Kyoto Protocol, agreed last year and due to come into force next year, included the removal of the "fast forest fix" rule.

The rule allowed forestry companies to claim credits for carbon sequestered - or stored - in forests, and sell the credits, but only for carbon stored since 2008. Companies were also required to pay when those trees were harvested, but also only for credits claimed since 2008.

City Forests in 2010 sold 150,000 carbon credits accumulated in 2008 and 2009 for $3 million to an unnamed New Zealand company. It said at the time it expected to be in a position to sell more credits during the 10-year period to 2010.

Without the rule, officially called the "afforestation-reforestation debit credit" (ARDC) rule, forestry companies would be obliged to pay for all carbon stored in trees when harvesting them, meaning additional costs.

The Government was yet to decide whether to commit to the new rules but, if the decision was to sign up, companies would be left with "massive liability" that could threaten the viability of the emissions trading scheme, Mr Dodson said. "If that came to pass, we'd be stuffed, really. We'd have no choice but to pull out of the emissions trading scheme."

The bill for City Forests, a Dunedin City Council-owned company, would reach "tens of millions" of dollars, and "across the sector you're talking hundreds of millions of dollars", Mr Dodson said.

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