Today’s Budget will include a new tax on the carbon content of fossil fuels.

The rationale is to set up a means of sending price signals to consumers to conserve energy and to electricity generators to invest in renewables (or geological sequestration).

But in the area where a price signal would do most good, forestry, the silence is deafening. Climate-change policy in that key sector is a shambles.

The forestry industry is in the glum position of someone who has lost a dollar but found a cent.

The cent is the foreshadowed promise that the Budget will give the industry $20 million over the next five years.

Grandly entitled the Forestry Industry Development Agenda, it includes funding for such "industry good" purposes as market access and development, skills and training, bio-energy and encouraging excellence in wood design in the construction industry.

It will require the industry to contribute an extra $3.8 million.

The dollar lost is the value of forests as carbon sinks under the Kyoto Protocol.

Thanks largely to New Zealand negotiators at Kyoto in 1997, the climate-change treaty recognises that a change in land use from grass to trees takes carbon dioxide out of the atmosphere.

It allows credits for forests established since 1990 on land not previously forested. It also imposes liabilities if forests are harvested but not replanted.

Forest sink credits could be worth in the order of $1 billion to $2 billion during Kyoto’s first commitment period, 2008 to 2102, the Ministry of Agriculture and Forestry estimated in a briefing to its new Forestry Minister, Jim Anderton, last December.

Kyoto forests, as those which give rise to credits under the treaty are commonly called, represent about a third of New Zealand’s plantation forest estate.

It is a long-standing sore point among the owners of those forests that the Government has opted to retain ownership of the sink credits - or nationalise them without compensation as the Kyoto forest owners call it.

The Government has doled out 10 million carbon credits, worth upwards of $100 million on the international market, to give incentives to projects like wind farms that will reduce greenhouse gas emissions.

There is also is a scheme to reward the establishment of permanent, non-commercial forests. But there is no taxpayer-funded incentive to establish new commercial Kyoto forests, the kind you are allowed to harvest.