The Government has put forward three proposed changes to the permanent category of the ETS that would place requirements on participants, especially those with exotic forests. Proposals could also change the way that carbon is earned for ‘transition’ forests – i.e., going from exotic plantings to native regeneration over time.
The further review of the permanent forestry category will be welcomed by many. The options outlined will likely take a few years; we need policies sooner to curb the level of current whole-farm land-use change (40% of farm sales in the last three years have been to ‘carbon only’ businesses). Changes to the permanent forest category are a key way to do that.
It’s likely a combination of the options being consulted on will be required, as well as additional changes to the NZ ETS, the Resource Management Act, and the National Environmental Standard for Plantation Forestry.
Design choice 1
Deciding on what type of exotics would qualify for entry into the permanent forest category. Note that all types of currently eligible indigenous forest could still be entered into the scheme. The options only look at restricting exotics.
This option would put conditions on what kind of exotic forest can be entered into the permanent forest category. The ‘type’ of exotic forest is determined by the species (preferably longer-lived), and/or the characteristics of the land where it is planted. Examples of land characteristics that could be considered include whether the land was Māori-owned, or whether the forest would be planted within and alongside a farm system.
Design choice 2
Change how exotic forests that are going to ‘transition’ to natives have their carbon recognised
This option would create a new and specific carbon accounting method for exotic forests intending to transition to native forest. This is because Indigenous forests and exotic forests store carbon at different rates. Under the current settings, transition forests need to return some of the carbon they gain as large exotic trees are replaced by smaller, slower growing indigenous species (since this reduces the total carbon stored in the forest at that time).
The proposal won’t change the overall number of units that participants end up with in the long-run (after the forest has transitioned to indigenous forest) but it would help reduce the financial risk facing participants.
This option would reduce the incentive to plant large-scale farm conversions. It would also make it easier for farmers to manage the carbon accumulation and loss risks of exotics transitioning into natives.
Design choice 3
Require some, or all, forests in the permanent forest category to meet certain standards.
This option would introduce new rules to ensure on-going management of permanent forests so people can’t just ‘plant and walk away’.
There could be rules for all forests in the permanent category or just those that intend to transition from exotic to indigenous forests. Conditions could include the need for a management plan to ensure that the owner is doing as much as they can to prevent forest decline and carbon loss from pests, fire, or disease.
It is unclear how these new rules would dovetail with the proposed changes to the National Environmental Standards for Plantation Forestry which would require carbon forestry face the same rules as plantation forestry.
Farmers who are already in the permanent category, or wanting to enter vegetation into the category, will need to complete additional management requirements and show how these are being implemented.
This option will increase the burden and cost of participation in the permanent category of the NZ ETS. However, it could ensure that areas of carbon forestry that are currently unmanaged don’t cause problems down the track. It could also provide job opportunities as part of pest and plant management.
The fact that the Permanent Forest Category of the ETS is under review with changes likely, is a step in the right direction to protect New Zealand food production, rural communities and the all important export dollar.
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Angus Kebbell is the Producer at Tailwind Media. You can contact him here.
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