Kyoto forest planting depends on more than carbon priceFriday 17 Jul 2009 There will be big changes in the New Zealand landscape if the government follows the logical course and uses tree planting to help reduce the country's greenhouse gas emissions. Referring to the Infometrics study released last week, the NZ Forest Owners Association says it would be profitable to plant new forests on hill country even at the lowest carbon prices they modelled. Association president Peter Berg says the key is to have an active and open market supported by the right government policy mix.The government plans to use carbon pricing as the main way to reduce the country's greenhouse gas emissions. It is now getting public feedback on the size of the reduction commitment it should be announcing at United Nations climate change talks later this year. The larger the commitment, the higher the carbon price will need to be to get people to make the necessary changes to their businesses and lifestyles. The International Panel on Climate Change says developed countries need to reduce their emissions to 25-40% below 1990 levels by 2020. "With New Zealand tracking on a "business as usual" basis to be 40% above 1990 emission levels by 2020, even a modest commitment of 20% below 1990 will be a major challenge," says Mr Berg. "Infometrics figures suggest that to achieve that sort of reduction in emission activity requires a carbon price of more than $200 a tonne. Even at $100 a tonne, a typical radiata forest would generate an average of $2000 or more in carbon credit income per hectare per year for 30 years. That compares with a gross annual income of $530 a hectare on a typical hill country sheep and beef operation." But before anyone gets too excited at the possibilities, he says there are major barriers to forestry investment, regardless of the carbon price. "Everyone is scared of making long-term investments in the current economic climate, especially in something as speculative as the carbon price at harvest. It's a lottery - will $200 a tonne in 2012 become $500 a tonne in 30 years time, or only $5 a tonne?", he asks. "Also carbon credits accrue quite slowly in the first 10 years of a forest's life, which is the main period of expenditure. For a farmer converting part of a farm, it means forgoing livestock income during this period. There's also the need for force majeure protection to cover the owner if a Kyoto forest is destroyed by fire, pests or volcanic eruption." Mr Berg says the answer probably lies in the NZ Government offering land owners a scheme that smoothes the flow of credits through the life of the forest and removes the obligation for repaying the credits, so long as the forest is replanted. |
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