Changes to emissions scheme predicted

Prominent Kapiti forester Geoff Thompson is predicting the Government will change its emissions trading scheme policy early next year, to the benefit of forest owners.

Mr Thompson is a forest owner, former National MP for Horowhenua and past president of the National Party. He was a member of its 2011 emissions trading scheme (ETS) review party, most of whose recommendations were rejected.

He's not happy with the status of the scheme, and spoke to members of the Middle Districts Farm Forestry Association at Bulls on November 27.

New Zealand adopted the scheme as a flexible and efficient way to meet its commitment to reduce the emission of climate-changing gases.

The idea was to make units of conserved carbon available, so that businesses such as petrol and energy companies could buy them to offset their emissions. But in early July 2011, the Government decided suddenly, and without explanation, that businesses could surrender almost unlimited amounts of overseas units, some of which were of poor quality. That had driven down the price of units, from $20 to less than $3, Mr Thompson said.

Units priced at a steady $12 to $15 would encourage forestry planting, by providing supplementary income to foresters whose trees conserve carbon. At less than $3 a unit, new planting is predicted to come to a sudden halt next year.

That's bad news at a time when 20,000ha of new planting a year is needed in order to smooth the "wall of wood" coming onstream into a "plateau" that will attract investment in further processing and increase the value of the product.

The resulting deforestation will also make it harder for New Zealand to honour its commitment to reduce emissions, reduce the country's income from timber and carbon units, and leave eroding hillsides treeless.

If that wasn't bad enough there were three Government departments with "an army of bureaucrats" overseeing the authenticity of New Zealand carbon units, and making the process complex and expensive.

"We've got all the pain of being participants in the ETS but none of the gain at the moment," Mr Thompson said.

But the situation was not all doom and gloom. He's seeing some encouraging signs from the Government. One is a proposal to auction carbon units if there is a shortage - unlikely under the existing scenario with more than two billion overseas units available - but it could be a signal.

Another is that Climate Change Minister Tim Groser has the power to impose limits on the number of overseas units acceptable.

The limits he has imposed are not enough to make a difference, but he could go further.

Mr Thompson would like a limit of 50 per cent foreign carbon units, which is what Australia has.

Another bright spot is that New Zealand's scheme is still aligned with others such as Australia, South Korea, Japan and California, and overseas trading could push the price of units up.

The New Zealand Farm Forestry Association is proposing a co-operative for the owners of forests of less than 1000ha.

Mr Thompson said this was timely because the profile of forestry was changing, with more small producers getting involved.

Their co-operative would be comparable to those that handle the marketing of meat, wool and milk products.

It would co-ordinate the supply of timber, and the resources available to harvest it.

The idea is supported by the Wood Council of New Zealand Inc (Woodco), a pan-industry body.

The owners of big forests are mostly multinationals, and have their own Forest Owners' Association.

A separate proposal, which has the backing of the Forest Owners' Association and the New Zealand Farm Forestry Association, is to levy all forest owners a few cents for every log harvested and either milled or exported.

Proceeds from the levy would be used mainly for research, to benefit the industry as a whole.

A referendum on the subject is proposed for March next year.