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Banning permanent pine forests from the NZETS will at least double carbon prices

Updated: Feb 27, 2023

Commentary on MPI Policy Proposal: "Managing exotic afforestation forestry incentives"- proposal to change forestry incentives in the NZETS

Clients have asked us for comment on the new MPI policy document “Managing exotic forestry afforestation incentives” in the NZETS, released yesterday. It is proposed that pine (Pinus radiata) forest be excluded from the permanent forest category in the ETS.

We consider that it is unlikely that this policy change will happen for the following reasons:

1) Permanent carbon pine forest supplies the NZETS with over 90% of its carbon credits. The assertion in the press release that the proliferation of permanent pine forest will result in lower long-term carbon prices is simply incorrect – the laws of supply and demand will prevail. If the Government cuts off over 90% of the future supply of credits, the credit price will at least double, NZ's carbon bill to the UN will go up, and NZ will be further exposed to proposed carbon tariffs on our exports to the EU and USA.

2) The press release also asserts that “an increase in native forestry will require additional management efforts to eliminate pests that feed on native trees”. Is the Government seriously suggesting that we should stop planting native forests because we can’t control goats, possums, hares, rabbits, pigs and deer? We have seen numerous examples where native forest has been replanted and pests controlled successfully.

3) Native forest should be replanted wherever practical because of its contribution to water and soil conservation values and biodiversity, but unfortunately it doesn’t pack on substantial carbon for about 500 years, so it won’t help NZ’s carbon balance in the short term. Nevertheless, at current carbon prices, young native yields about $500 per hectare per year.

4) However, if the carbon price doubles, native forest will be worth about $1,000 per hectare per year, and exotic hardwoods even more (they store carbon at about 80% of the rate of pine), so people will plant these.

5) Pine forests are not the terrible environmental villains suggested in the policy paper, and they will not march across the land and drive us all into the sea. Negative environmental impacts happen mostly when harvesting, and that is due to poor logging practice by the people, not by the trees. NZ’s carbon forestry estate is only about 350,000 hectares, 3% of rural land area. It is being added to at a rate of about 12,000 hectares per year. At that rate it would take 833 years for carbon forest to occupy all the farm land in NZ. However 88% of ETS forest is on hard country – Class 6-8, which produces very little any other way. Obviously farm owners are not bent on converting their entire farms to carbon forestry holus bolus. Our advice is to plant your hard country in carbon forest – and this is what farmers are doing. It is entirely specious and misleading to claim carbon forestry is seriously threatening the agricultural industry in NZ.

6) If pine trees really are the terrible environmental villains as suggested, then to be consistent the Government should ban all replanting and establishment of old and new commercial pine forests as well. This would put 35,000 people out of work, reduce NZ’s export sales by $6.2 billion, and we’d have to import almost all of our wood products for building and construction. We have no estimate of what that would do to house prices. Others may have.

7) If farms are being sold to overseas buyers for carbon farming or commercial forestry, that is not the NZETS’s fault. The policy settings for such purchases are a matter for the Overseas Investment Office, not MPI or the NZEPA. As an aside, foreign forest companies are NZ’s biggest landowners, so the horse has already bolted. Changes to OIO policy are the solution here, not changes to the NZETS.

8) The social impacts of carbon forest allegedly depopulating rural areas are vastly overstated. The Ministry of Education has informed us that they have never closed a rural school because carbon pine tree establishment has caused rural depopulation. School closures, and openings, occur according to a group of socio-economic factors, not just one.

9) Carbon forestry is a godsend particularly for hill country farmers who, up until recently, haven’t been able to earn a living off their hard country. We have seen farmers finally getting a decent return for their work, with retirement looking a lot brighter. We have also seen carbon revenue being used to buy more beef stock and a new dairy unit. Paying for the daughter’s wedding is also a lot easier.

10) This policy will hit Maoridom the hardest. Every single one of our iwi clients has substantial hard hill country resource which has effectively produced nothing for over 100 years. There are very large areas where carbon forestry using the right mixture of pines and native forest re-establishment will literally lift whole whanau out of practical poverty. Practical poverty is where you can afford your Weetbix, but you have no money to offer your tamariki a university education or your kaumatua and kuia decent housing in their old age. More funding should be put into iwi-based carbon farming. Currently Te Puni Kokiri will fund carbon farming feasibility reports, but it won’t fund planting or carbon farm management. So there’s no point doing the feasibility report. Instead, iwi with large carbon farming potential but who lack development funding and management skills are exposed to unscrupulous operators who will place a contractual liability on the land and take the lion’s share of the carbon revenue.

Hopefully this proposed policy will be consigned to the dust bin of history where it belongs. This is the 21st Century, not the 19th Century. We need to pursue carbon negative futures for our country and our whanau, and take the opportunity that trees (of all species) offer to make that happen.

GreenXperts Blog 04.03.2022

Note: The policy proposal was abandoned.

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