Taking pines out of ETS could cost $64b

A Government proposal to exclude permanent forests of exotic trees, such as pines, from the Emissions Trading Scheme (ETS) could cost the economy $64 billion in the coming 15 years, a new report says.

The report, produced by economic consultants Infometrics for carbon-farming lobby group the Climate Forestry Association, has claimed the possible cost of allowing only permanent forests of native trees for carbon credits could amount to $870 per household, per year.

‘‘A ban would have significant implications for how New Zealand might meet its emissions reduction targets,’’ the Infometrics report said.

The Government last month proposed excluding exotic trees from a new category for permanent forests due to enter the ETS in 2023, due to concern that – with carbon credit prices rising – the opening of a new forest category could lead to ‘‘large areas of land nationwide’’ being planted in pines.

The conversion of productive farm land to forestry has been a contentious issue for rural communities in recent years. Representative of the angst was an event in Pongaroa, Tararua on Tuesday evening, where Agriculture Minister Damien O’Connor heard the concerns of farmers who feared the incoming ETS changes would destroy their community.

The Government was also concerned that a greater supply of exotic forests could dampen the price of carbon credits, which in turn disincentives the uptake of lower carbon technologies.

Forests of exotic trees that will be harvested will still be able to earn carbon credits.

‘‘The problem is not caused by the species. It’s not caused by exotic trees. It’s caused by the lack of management requirements on these forests,’’ said Climate Forestry Association spokesperson Dr Sean Weaver.

‘‘I don’t think they’re fully taking account of the detrimental impacts of basically replacing one blunt instrument with another.’’

The report modelled two scenarios for the years to 2035: the purchase of international carbon credits to replace the projected planting of exotic forests, and the planting of native forests to sequester the carbon that projected exotic forests would have.

The purchasing of the international carbon credits required would amount to a cost of $870 per household, per year, the report said. The required planting of native trees was ‘‘probably totally unrealistic’’ because it would require 3.6 times as much land as exotic trees. This scenario would cost the economy through the inefficient use of land, the report said.