Forestry carbon trading in limbo as prices plunge
ONE of the biggest potential influences in forestry’s future is the carbon credit regime.
It aims to slow down deforestation by giving foresters credits for their trees and demanding credits back if they harvest without replanting.
Some foresters are reported to have sold their credits for a lucrative sum.
But at the moment, things are in limbo.
Carbon prices have plummeted, due partly to the global downturn and to cheap credits from overseas driving down the local price.
New Zealand is committed
to reducing its net greenhouse emissions to 1990 levels by this year, so the Government is look- ing hard Emissions working.
An announcement is due soon and forestry bodies hope it will address the price issue.
‘‘Forestry is going to be a key part of New Zealand meeting its targets, so that means you’ve got to get the Emissions Trading Scheme right so that it sufficiently encourages new planting,’’ said David Rhodes, chief executive of the Forest Owners Association.
‘‘I would say carbon rules have got the potential to make quite a difference for forestry.’’
The scheme puts forests at how well the Trading Scheme is
into two camps.
Owners of exotic forests established before 1990 are liable for the tax, but have been compensated with a one-off payment of credits.
They can sell them but may have to buy credits back when harvest rolls around.
More than two-thirds of the total forest estate falls into the pre-1990 camp and some forest owners claim the compensation falls well short of their eventual liability.
Those with newer forests are not required to join the Emissions Trading Scheme, but about 50 per cent of them have, giving them credits for every year of growth.
However, with the carbon price falling from $21 in April last year to less than $8 today, the trading scheme has all but ground to a halt.
David Rhodes says that needs addressing.
‘‘We will be hoping they ... will alter the rules sufficiently where we end up in a situation where the carbon price is not as volatile as it has been and investors have a much more secure basis for deciding whether they’re going to get in,’’ he said.
‘‘Because at the moment, participation by forestry is not what anybody wants really.’’