A Government proposal to better manage carbon farming could see future permanent plantings of exotic forests like radiata pine excluded from the Emissions Trading Scheme (ETS).
Forestry Minister Stuart Nash said the Government wanted to encourage afforestation to help meet New Zealand's climate change targets, offset carbon emissions, and also help farmers, landowners and investors diversify their income streams.
"We want to balance the risks created by new permanent exotic forests which are not intended for harvest," Nash said in releasing a consultation document.
"We have a window to build safeguards into the system, prior to a new ETS framework coming into force on January 1, 2023."
From 2023, under current rules, a new permanent forest category of the ETS would allow both exotic and indigenous forests to be registered in the ETS and to earn New Zealand Units (NZU).
The Government is now proposing to exclude exotic species from the permanent forest category.
Pastoral farmers have long complained that the high price of carbon in the ETS had incentivised landowners to plant pine trees on productive pastoral farm land purely for the purpose of claiming carbon credits.
As forestry is seen as being less labour-intensive than pastoral farming, farm leaders say it drains workers from rural communities and erodes social services as a result.
Nash said the Government wanted to encourage planting "the right tree, in the right place, for the right reason".
"We intend to balance the need for afforestation with wider needs of local communities, regional economies, and the environment," he said.
"Increased plantings of exotic forests are being driven by rising carbon prices as landowners and investors seek higher returns."
The NZU price has more than doubled over the past year, from around $35 in late 2020 to over $80 last month.
Nash said permanent exotic forests like radiata pine have potential environmental and ecological risks.
These included pests, fire, damaged habitats for native species, biodiversity threats, and a relatively short lifespan compared to well-managed mixed indigenous forests.
Matt Walsh, a director of NZ Carbon Farming - New Zealand's biggest carbon farmer - said: "We are reviewing the Government's consultation document and expect to be making a submission."
Federated Farmers president Andrew Hoggard said the Government's proposals were "great steps in the right direction".
"The big driver is still the ETS and how it functions," he said on NZME's The Country radio show.
Gary Taylor, chief executive of the Environmental Defence Society, also welcomed the proposals.
"It is gratifying to see Government taking climate and biodiversity out of their respective silos and promoting an integrated approach," Taylor said.
Taylor said native forests have dual benefits for carbon fixing and biodiversity enhancement.
"I expect there'll be strong support for this change to the ETS from the wider community," Taylor said.
"However I'd like Government to go further and look at other policy changes that might actually halt the proliferation of more pine plantations whether for timber or for carbon," he said.
Taylor said New Zealand had already reached "peak pine".