Carbon price is key to forestry worth billionsFriday 22 Apr 2016
On the other hand, if the Government gets the review of the ETS right, the export of New Zealand forestry carbon credits could become a major industry - so major, that an investment of NZ$1.5 billion could produce a profit of NZ$6.7 billion a year, says Christchurch forestry consultant Owen Springford. “One million hectares of forest, producing 50 NZUs/ha per year (easily achievable), and a potential future price of, say, the average of NZ$90 to NZ$178 equals NZ$134 mentioned in the (Ministry for the Environment’s ETS Review) discussion document, could produce a profit of NZ$6.7 billion per year for an investment of NZ$1.5 billion,” he says in a sharply worded submission on the ETS review. But first, he says, the Government needs to make sure that the owners of existing ETS forests don’t pull out of the scheme and harvest their forests, turning what was a net store of carbon into an emissions liability. “The only way New Zealand can reduce its net emissions in the near-term is for post-89 forest owners to delay harvest,” he says. “For this to happen, a price of over $35/NZU will need to be in place by 2017 before those forest owners exit the ETS and surrender their rights to 10 years of sequestration.” Spot NZUs are currently around NZ$13.50. Springford says that 2017 is a critical date for the owners of post-1989 forests. “Those owners with more than 100 hectares of forest need to decide whether to fund the next round of mandatory forest measurement or to quit the ETS,” he said. “Many post-89 forests are approaching optimal harvest age. My own calculation suggests that an NZU price of over $35/NZU will be necessary for forest owners to consider deferring harvest and therefore remaining in the ETS. Otherwise, they will be better off to quit the ETS and proceed with harvest planning.” Carbon sequestration in plantation forests is an important part of the Government’s strategy to meet New Zealand’s commitment to cut greenhouse gas emissions by five per cent on 1990 levels by 2020. When the ETS came into force in 2008, NZUs (the units given to the owners of forests planted since 1989) were worth more than $20 each, and the scheme encouraged the planting of new forests. However, collapsing prices, followed by a retrospective rule change by the Government, have led to a halt in the planting new forests. If prices had remained where they were, Springford says in his submission, New Zealand could have had an extra 500,000 hectares of new forest. “If NZU prices had remained around the NZ$20 level we could have had an additional half million hectares of new forest (both native and exotic) by now,” he said. “This would mean that that country could be producing 15 million additional NZUs by 2020.” He says that regaining the industry’s trust will be difficult. “The forestry sector has no trust in the Government, with good reason,” he said. “The sector believes that the Government will never provide a clear pathway and will continue to meddle.” Source: Carbon News 2016 | ||
Copyright 2004-2026 © Innovatek Ltd. All rights reserved. |
