ETS report shows NZ ‘at odds with rest of world’ on carbon offsetting says Beef + Lamb NZ

A Beef + Lamb NZ report has found NZ and Kazakhstan are the only countries that allow 100 per cent offsetting in their carbon pricing mechanism. Photo / Alan Gibson

New research has found New Zealand’s policy of allowing fossil fuel emitters to offset all their greenhouse gas (GHG) emissions by planting trees is at odds with the rest of the world, and it’s having a damaging impact on the agricultural sector and rural communities, says Beef + Lamb New Zealand.

It commissioned the International emissions trading schemes and forestry report to explore the relationship between emissions pricing and forestry in other countries.

The study focuses on how other countries use “offsets” within an Emissions Trading Scheme (ETS) as they transition to using fewer fossil fuels.

A key finding was that New Zealand and Kazakhstan are the only countries that allow 100 per cent offsetting in their carbon pricing mechanism.

While Kazakhstan theoretically allows 100 per cent offsetting, individual companies must apply to offset on a project-by-project basis - and no instances of forestry offsetting happening in practice could be found.

Beef + Lamb New Zealand said that because New Zealand allowed for 100 per cent offsetting and full participation of forests in the NZ ETS, the carbon market and forestry sectors were intricately linked - with each having the ability to vastly impact the other.

The European Union and the UK do not allow carbon offsetting in their ETS, while China, South Korea, and US states, Washington, North Carolina and California allow for below 5 per cent.

Meanwhile, Mexico and Taiwan, along with the Canadian province Quebec, allow for 10 per cent and other areas like Tokyo permit up to 33 per cent offsetting.

While other countries enforce strict limits and requirements to ensure offsets deliver a variety of benefits, New Zealand has no set targets to reduce emissions from fossil fuel use or any limits on how much offsetting can happen through the ETS to meet climate change targets.

Beef + Lamb New Zealand chief executive Sam McIvor said this meant there were no limits on how much land could be converted into forestry to create carbon credits for sale.

Using forestry to offset fossil fuel emissions was a short-term fix creating long-term problems, McIvor said.

“We are absolutely not anti-forestry and there is a place for some carbon offsetting, but we are very concerned about the volume of carbon offsetting.”

McIvor said some limits were needed to slow the “rapidly increasing” number of sheep and beef farmland purchased for forestry conversion, as a result of the increasing carbon price.

“Multiple schemes internationally have managed the risks posed by carbon forests by limiting their use in carbon markets, requiring additional social benefits to be demonstrated along with emissions removals, and seeking Ministerial approval for exotic forest projects, among other actions,” he said.

“New Zealand’s lack of conditions mean fossil fuel polluters can keep avoiding the need to cut back on fossil fuel use and instead offset their pollution by using carbon credits generated on our farms through the wholesale planting of pine trees.”

McIvor said sheep and beef farm purchases had risen from 7000 hectares in 2017 to 52,000 hectares in 2021 (for a total of 175,000 hectares over the five-year period).

“We estimate this equates to one million fewer stock units, 1600 fewer jobs a year, $170 million less spent in communities annually and $245 million less in export revenue annually.”

Environmental groups, the Parliamentary Commissioner for the Environment and the Climate Change Commission have all recently called for limits on forestry.

McIvor said farmers could also be part of the solution by planting the exotic and native trees needed, but they must receive greater recognition for the carbon removals on their farms.

Beef + Lamb New Zealand believed much of New Zealand’s need for sequestration from forest offsets could come from the integration of trees on sheep and beef farms, he said.

“This allows food production to continue, maintains rural employment and ensures export revenue.”

There was also significant Māori agribusiness interest in forestry and carbon farming, McIvor said.

“It’s important that any potential changes to the NZ ETS are made in partnership with key stakeholders and industry groups like Beef + Lamb New Zealand as well as Māori landowners and iwi or hapū.”