Carbon price too low to grow Australian forestsFriday 22 Jul 2011 The Australian federal government's carbon scheme is failing to stimulate sufficient interest for forestry properties. Industry players were hoping a price on carbon could give rise to the value of plantations. Major swathes of timber plantations remain on the market and there is a steady build-up, the receivers of the failed Willmott Forests having pushed more than 50,000 hectares of radiata and oak to sale in the past fortnight, reports The Australian Financial Review.The oversupply of forestry assets has put pressure on prices, and cuts of up to 40 per cent of book value are being realised, starting with Hancock Natural Resources' purchase of the Queensland government's plantation for $600 million last year. Many industry players were hoping a carbon price would provide an incentive for investors to plant trees, which would push up demand for forestry properties. However, the exclusion of many forestry assets from the federal government's plan and the low price per tonne of carbon of AU$23 is proving to be a disincentive for investors. In the three days after the carbon price was announced, the share price of CO2 Group – a listed company which establishes carbon sinks – lost 25 per cent of its value. The Australian Forest Products Association has also criticised the government's carbon price – as detailed in another story this week. |
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