Nelson Mail

Good reason to be nervous about the ETS

- Campbell Stewart Campbell Stewart is a partner at law firm Tompkins Wake and a specialist in overseas investment, property, and the Emissions Trading Scheme.

As consultati­on by He Waka Eke Noa (HWEN, the primary sector climate action partnershi­p) has rounded up, farmers are nervous, confused and angry about what the future for managing agricultur­al emissions in New Zealand might look like.

The fast pace of law-making in recent years is unsettling, the rural community and a range of sectors, including participan­ts in New Zealand’s Emissions Trading Scheme.

Farmers are grappling with HWEN’s two options for managing agricultur­al emissions – an on-farm levy or a processor levy. But the alternativ­e of a blanket inclusion of agricultur­e in the ETS – the option if HWENcannot convince the Government to adopt its suggested approach – is particular­ly frightenin­g.

The ETS isn’t working well, particular­ly for foresters. Adding complexity and workload for officials by including agricultur­e would be a disaster.

There are already huge delays in every part of the process, such as the time it takes for the administra­tor, Te Uru Rākau (the New Zealand Forestry Service), to deal with registrati­ons, emissions returns and amendments to returns.

New Zealand has had the ETS for 13 years, yet many of the rules surroundin­g forestry remain untested and the recent reforms have done little to clarify problem areas.

If agricultur­e was to enter the ETS, farmers are worried that the carbon price could be inflated by institutio­nal investors wanting a slice of the action. The result of this is that even substantia­l improvemen­ts made on farms to reduce emissions may not benefit those farmers if the carbon price keeps climbing.

Farmers feel like the goal posts are constantly shifting and as they deal with the day-to-day running of their businesses, unravellin­g what a range of new regulation­s will mean for them is an overwhelmi­ng prospect they pay for on two fronts.

They pay to become compliant with whatever the eventual outcome is, and the complexity of the regulatory framework means they’ll pay for advice to navigate its many ambiguitie­s. These costs are significan­t.

The anomalies within the ETS have been destructiv­e. We have seen clients make simple administra­tive errors, like doing something out of order. The regulator can see that there are no environmen­tal consequenc­es of the error but believe the rules leave no room for discretion. Others have planted an ‘‘offsetting forest’’ before the offsetting applicatio­n has been approved. The planting is deemed ineligible as offsetting forest land because the offsetting trees are already in the ground.

In another case a large area of offsetting planting was not accepted because a tiny area (around 1.5ha) was not planted by the contractor because of power lines.

Practition­ers have also discovered that once filed, a voluntary emissions return can’t be amended or corrected, only Te Uru Rākau can do that.

A participan­t realised they’d made a mistake moments after submitting their return and tried to withdraw it. They were not allowed to do so, and they were fined tens of thousands of dollars for filing an incorrect return.

Forestry consultant­s and lawyers have battled to have cutover land, or land that is unstocked but earmarked for forestry, recognised as forest land, based on the plain words in the Climate Change Response Act.

They have also been bogged down with paperwork trying to transfer participat­ion in the scheme following death or change of a land-owning trustee.

Te Uru Rākau seems to be struggling to appropriat­ely resource for their substantia­l workload, and with steady competitio­n from the private sector, experience­d staff are hard to retain. Participan­ts still regularly experience delays of more than 18 months to have their matters progressed.

Recent moves like proposing further amendments to overseas investment criteria for forestry and seeking consultati­on around excluding permanent planting of exotic forests from the ETS are further evidence of the ‘‘legislate first, consider consequenc­es later’’ approach we seem to be taking. It’s no wonder farmers are nervous, confused, and angry.

 ?? DOMINICO ZAPATA/STUFF ?? The experience of managing forestry through the Emissions Trading Scheme has highlighte­d numerous problems.
DOMINICO ZAPATA/STUFF The experience of managing forestry through the Emissions Trading Scheme has highlighte­d numerous problems.

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