Planting pine has become a goldmine

Friday 13 May 2022

“Insanely high” profits can be made by planting exotic trees and selling the carbon emissions they store, experts say. The profit margins from carbon farming were highlighted in the recent debate on a proposal that would make permanent exotic forests ineligible for New Zealand’s Emissions Trading Scheme (or ETS).

Native forests are costly to establish, absorb carbon slowly and require more maintenance, so could take decades to earn a profit. In contrast, exotic forests are cheap to plant, absorb carbon more quickly and require less upkeep, potentially allowing owners to bank decades of profit.

Right now, both types of forest can sell the emissions they store for the same sum: today’s carbon price, which is about $76 a tonne. This set-up is incentivising exotics and disincentivising native trees, although the Government wants to do the opposite.

The profits that exotic trees can earn from sucking carbon dioxide is so high that many landowners would, in theory, make more money from a permanent exotic forest than a plantation. Harvested forests are able to sell logs every few decades on top of selling units for the carbon that’s stored – on average – in the forest, under the ETS.

But the carbon units earned by a new harvested forest will be subject to a cap: balancing the carbon gains while the trees are growing and carbon losses after harvest. Under standard harvest conditions, a pine forest would be able to earn carbon units for the first 16 years of its life.

Yet permanent exotic forest wouldn’t have this cap. According to forestry expert Keith Woodford, exotic forests could theoretically still be absorbing carbon, and therefore selling units for at least 80 years – and in the black for the vast majority of this time.

The carbon price is so high that a pine forest might pay for its planting costs within the first few years, so current landowners would profit from this point onwards.

Meanwhile, the Government is concerned about the long-term consequences of permanent exotic forests. Without routine harvests, these forestry blocks could be left untended. Climate Change Minister James Shaw worries the move could hand future generations an “ecological problem”. Forestry experts disagreed with him on this.

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Source: Stuff

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