Losing sight of the forest for the trees [NZ]Friday 7 Aug 2026
Unfortunately, in this season, an idea that always gets floated by at least one party is ‘let’s fix the Emissions Trading Scheme (ETS) by removing forestry’. It’s simple to pitch and punchy, but ultimately a flawed idea. Regardless of whether the intention is to dismantle the ETS entirely or just remove exotic forestry from the scheme, these actions will fundamentally undermine New Zealand’s climate response and the wider economy. Forestry is currently the only sector in the NZ ETS that removes carbon dioxide emissions from the atmosphere. Inherently, removing access to forestry offsets will mean a higher cost of meeting New Zealand’s climate targets. The removal of forestry would also cut off the generation of NZUs for emitters. Maybe then you could auction units to offset that loss, but fundamentally you would no longer have units backed by any real climate action. It could also cause massive price spikes on the market depending on how it’s done, which would have flow on effects to fuel and electricity prices that are already elevated. It would absolutely collapse land value for post-89 forests and create stranded investments for landowners who established forests based on long-term ETS settings. This would have significant implications for Māori landowners in particular, given the extent of Māori participation in forestry and the long-term nature of many investments in whenua. I suspect that many of the people pitching the removal of forestry from the ETS support the economic development rights of indigenous peoples as recognised in the United Nations’ Declaration on the Rights of Indigenous Peoples and simply haven’t thought through the repercussions properly - not to mention the Treaty Settlement implications. I haven’t found any data on exactly how many Māori entities hold carbon credits but based on the fact that a quarter of the New Zealand Forest Owners Associations’ membership are Māori and the proportion of businesses we work with that are in partnership with Māori landowners, it’s safe to assume that the implications would be significant. We are already seeing the impact of greater uncertainty around the ETS. The latest ETS registration figures show that the number of forests being entered into the scheme has slowed markedly since the introduction of the LUC restrictions last year, with monthly applications falling from more than 280 per month in 2025 to around 10 per month in 2026. Nurseries are reporting a significant reduction in orders, reflecting declining confidence in new planting. This will have flow on effects for our wood processing capacity and carbon sequestration, especially with the parallel impacts of the windthrow events decreasing standing timber volumes. Rather than reaching for the simple sound bite of removing forestry from the ETS, we should be having a more constructive debate about how the scheme can work better – including what complementary measures could drive greater gross emissions reductions while maintaining the role of forestry in removing carbon from the atmosphere. That would deliver better climate outcomes while providing greater certainty for forest owners and the rural communities and businesses that depend on forestry investment. Source: Dr Elizabeth Heeg, New Zealand Forest Owners Association (NZFOA) | ||
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