Foresters need positive signals in ETS reform

Forest Owners Association

20 JUNE 2023

The Forest Owners Association (FOA) says the just announced reform options for revising the Emissions Trading Scheme (ETS) will cause a shortfall of plantation forests for sequestering carbon in New Zealand and make meeting our 2050 emissions target impossible.

FOA president, Grant Dodson, says it’s important to realise that both the 2030 and 2050 targets are net emission targets and that’s what matters.

“Gross emissions have flatlined for the past decade, but net is what counts in the end and that is where forestry is the contributor,” Grant Dodson says.

“More than half of the nation’s carbon emissions are reabsorbed by plantation forests. They are an essential element in most, if not all, viable projections in carbon accounting; even more so if agricultural emissions are addressed in some way.”

“If gross emission costs are to be completely removed from forest incentives, New Zealand will fail to meet its climate targets.”

“One of the proposals included in the reform options talks about having a forestry generated NZU at a lower value than an emission reduction NZU. Deeming forestry-generated NZUs to be of a lower or differential value to an emissions reduction NZU will only compound an already complicated ETS framework and its implementation. A NZU is a NZU, just like a dollar is a dollar.”

“The uncertainty of the ETS framework has already seen the market for forest NZUs diminish,” says Grant Dodson. “Who will buy NZUs knowing they may be made worthless by the government?”

Grant says foresters need greater certainty to invest in forest planting.

“The changes announced since last year have already had widespread implications for our industry. Planting programmes are in disarray and there will be very little planting occurring after 2023.”

“Further actions from the Climate Change Commission, or the government, to reduce tree planting and in turn, reduce the supply of forestry credits, will knock all confidence in forest investment, setting New Zealand on a clear path of failure to meet its climate targets of net zero.”

“The result will be billions of dollars of taxpayer money spent on overseas carbon credits, instead of government solving the problem collaboratively, with New Zealand’s domestic forestry industry.”

“That money could be better spent on New Zealand jobs and profitable forest investments that add to the local economy.”

“Anyone who invests in forestry is making a big investment that lasts eight to ten terms of government, whether it is a farm forester, or a bigger company,” says Grant Dodson.

“They are doing it for the long term and need certainty, which has been taken away on multiple fronts.”

Grant Dodson says that investor confidence has been hammered by the myriad of proposed changes of late, including this latest announcement and, once destroyed, it will be a difficult and lengthy process to restore it.

“We don’t have that sort of time to play with.”

“Ministers keep reiterating there is a continuing need to incentivise forestry and they have just stated that current climate change policy settings require between 0.97 million hectares and 1.44 million hectares of new forests by 2050 to meet climate change targets.”

“Proposals in this latest ETS announcement set out to achieve the opposite.”

“This is an issue far too important to play politics with. By the time politicians discover they have put forestry into reverse, it will be too late. Climate change will not wait for us to catch up.”

Grant Dodson
Forest Owners Association President