NZ ETS consultation underwayFriday 4 May 2012 In NZ over the last couple of weeks, a series of regional meetings on the future of New Zealand's ETS were held by the Ministry for Agriculture and Forestry. The consultation period closes on 11 May. Click here to download the consultation document.Proposed changes include restricting the number of international credits that can be used in the scheme, allowing pre-1990 forest land to be cleared and replanted in other places without incurring a carbon liability, extending provisions like the allocation of free credits to industrial emitters and the $25-per-tonne price cap on carbon, and possibly further delaying the entry of agriculture into the scheme. One of the most controversial aspects in the consultation is the proposal by Government to reduce or cancel altogether the second tranche of compensatory NZUs that were to be allocated to owners of pre-1990 forests, which are now permanently locked into forest use, but which are not able to earn NZUs on an on-going basis. The rationale for the claw back is that because it looks likely that the Government will now introduce a pre-1990 forest "offsetting" option, land-use flexibility (and hence value) may not been affected to the same extent as originally anticipated. Under the new proposal owners of pre-1990 forests can change land-use and avoid the liability for carbon loss by planting out new forest elsewhere. However critics rightly note that this is not a costless exercise. For the New Zealand carbon industry, the biggest item on the agenda should be to get a clear signal from Government on the likely "cap" which will determine the supply to be auctioned, and what this will mean for demand for forest carbon abatement. Currently we're all working in a black hole. Source: Carbon Match, www.carbonmatch.co.nz
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