Emissions trading full of pitfalls
We’re told the Emissions Trading Scheme is an essential part of ‘‘brand New Zealand’’ but it’s not.
Otago University’s Associate Marketing Professor John Knight surveyed 515 first-time arrivals at Auckland Airport, finding only three who would be put off coming here if we had genetic modification. I doubt our scheme even registers on the consumer’s radar. Yet everyone is paying more to enrich largely foreign-owned carbon foresters.
Under current legislation, farmers in a few years will be pay- ing even more, meaning less will be spent in town.
The Agriculture and Forestry Ministry has spent $55 million over the last two years on Emissions Trading Scheme policy advice. While the process for forests of less than 100 hectares is simple, it involves paperwork. The process for registering a post1989 forest of more than 100ha is more involved and costly.
Federated Farmers’ advice to landowners is to take independent financial advice before registering a forest. You need to go into this with your eyes wide open.
Not every planted area qualifies as a Kyoto forest. Previously forested pre-1990 land is compulsorily enrolled into the scheme whereas, for post-1989 forests, it remains voluntary. Applying for the pre-1990 allocation means surrendering any ability to seek exemptions for deforestation of less than 50ha and that includes tree weeds. With post-1989 forests, every unit claimed attaches a contingent liability to land title for the same number of units, so here is a caution. If there is a possibility the land could be used for something else in the future farmers need to think twice for, once registered, it will carry an enduring financial liability for the units claimed.
If you want to use that land in the future you will have to reimburse the Government for the units received.
A forest fire or a landslide will see a landowner reimbursing Government for all the emissions units earned.
The sting is that the current price of emissions units will apply rather than the original price. Even with permanent forests, this demands astute risk management and appropriate insurance cover. It also has to be remembered that post-1989 forests won’t deliver an endless supply of emissions units either. They will run out over time. Confused? It’s no wonder. Get a range of advice and crunch the numbers for yourself.