New Zealand Logger - - Contents -

DANA’s an­nual con­fer­ence in Ro­torua was an op­por­tu­nity for foresters to get to­gether to be up­dated on the lat­est de­vel­op­ments tak­ing place in the in­dus­try and hear from some of the politi­cians stand­ing for this month’s elec­tion.

The forestry sec­tor could re­ceive a wel­come in­come boost from higher car­bon prices in the com­ing years.

That’s the pre­dic­tion from Nigel Brunel, whose com­pany OMF Fi­nan­cial Mar­kets has been deal­ing in car­bon trad­ing since the Emis­sions Trad­ing Scheme (ETS) was in­tro­duced ten years ago.

Mr Brunel told the 2017 DANA Forestry Con­fer­ence in Ro­torua last month that forestry is set to play a big­ger role in help­ing New Zealand meet its com­mit­ments un­der the Paris Ac­cord on Cli­mate Change.

Un­der the Paris agree­ment, New Zealand has pledged to re­duce emis­sions by 30% below 2005 lev­els by 2030 and he says that is a big ask for this coun­try given much of our power is al­ready gen­er­ated by hy­dro, wind or geo­ther­mal. Other re­duc­tions would be more dif­fi­cult, so the op­tions are to pur­chase car­bon cred­its from off­shore – at a cost of around $1.4bil­lion an­nu­ally – to make up for the short-fall or plant a lot more trees to soak up the car­bon.

De­scrib­ing forestry as the “print­ing press” of the ETS, Mr Brunel says there is plenty of gov­ern­ment and Maori owned land that could be planted in mass num­bers of trees and de­liver the 50 mil­lion tonnes of car­bon se­ques­tra­tion needed an­nu­ally. Farm­ers could also plant trees on their mar­ginal land – and this may be­come a nec­es­sary op­tion if a fu­ture gov­ern­ment de­cides to bring agri­cul­ture into the ETS.

Mr Brunel says the re­cent an­nounce­ment by the Na­tional gov­ern­ment that it would re­move the $25 per tonne price ceil­ing could kick-start in­ter­est in new plant­ing. He be­lieves the car­bon price could climb to $35 per tonne within the next decade and may go higher (cur­rently it sits around $18) as the in­ter­na­tional de­mand for car­bon cred­its is ex­pected to in­crease.

“Given the changes com­ing into ef­fect it’s hard to be bear­ish on the price of car­bon in any way – and as in­ter­na­tional car­bon prices de­velop it is quite likely that car­bon prices will be sig­nif­i­cantly higher than where they are now,” he says.

Mr Brunel pre­dicts that New Zealand for­est car­bon units are likely to be in de­mand through to 2030 and that will put for­est own­ers in the box seat.

This is good news for those who al­ready own forests that can be in­cluded in the ETS or have land that can be planted with trees. But the price of car­bon will have to more than dou­ble for any­one con­sid­er­ing the pur­chase of new land to con­vert to forestry – some­where north of $50, he sug­gests.

Mr Brunel says there is an op­por­tu­nity for for­est own­ers to en­ter long-term con­tracts with emit­ters to pro­vide cer­tainty of in­come.



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