KYOTO FORESTRY ASSOCIATION MEDIA STATEMENT

Friday 16 February 2006 For Immediate Release

Nelson/Marlborough To Lose $1.3 Billion From Carbon Credit Grab

The Government's decision to nationalise Kyoto carbon credits legitimately owned by forest owners and forestry investors could cost the Nelson & Marlborough region at least $1.3 billion and up to $2 billion, the Kyoto Forestry Association (KFA) said today.

The association released the calculation ahead of the Government's consultation meeting at Tahuna Beach Centre, Tahunanui, at 9.45 am on Monday 19 February. It is based on official MAF forest area data by age class and territorial authority and an estimate that carbon credit values will reach between $13,000 and $20,000 per hectare during the life of a forest.

"Everyone with an interest in the forestry sector needs to get out on Monday to tell the Government that the people of Nelson & Marlborough will never accept their carbon credits or any other property being confiscated by the Government without compensation," KFA spokesman Roger Dickie said.

Kyoto carbon credits, which the Government plans to confiscate, are earned by those who sequestered carbon by planting new trees since 1990, and by those industries which have cut their carbon emissions since then.

Government officials through the 1990s made clear that forestry investors would gain financially from the credits, which are a clear property right, as confirmed by the Treasury. This fuelled a planting boom.

Through the 1990s, 30,000 ordinary New Zealanders and forestry companies put up as much as $400 million per annum of their own risk capital to invest in more than 500,000 hectares of new forest because of the benefits predicted to arise both from the sale of wood products and from carbon credits earned from carbon sequestration.

"The situation is the essence of a property right. The profits that should come to foresters from carbon trading are not windfall benefits but the results of calculated business investment decisions," Mr Dickie said.

Since the Government first indicated that it intended to confiscate the credits, tree planting in New Zealand has plunged and New Zealand is now experiencing deforestation for the first time in living memory.

Mr Dickie said the Government has previously indicated it would limit its confiscation of the credits to those associated with the First Commitment Period of the Kyoto Protocol, costing forest owners nationwide as much as $2.5 billion. However, officials are now indicating it may extend the confiscation to the Second Commitment Period, putting eventual losses nationwide up to between $8 billion and $15 billion.

"For Nelson & Marlborough - with its 100,000 hectares of post-1990 forests, according to official MAF data - the losses are estimated at $1.3 billion to $2 billion, depending on the market value of the carbon credits in future years," Mr Dickie said.

"Nelson & Marlborough is a thriving part of New Zealand, but that doesn't mean it can afford to have $1.3 billion ripped out of its economy by the Government."

The Government disputes KFA's calculations and has attacked Mr Dickie personally for releasing them, but it has not indicated what it believes is wrong with them.

Mr Dickie said the forestry industry was genuinely perplexed about why the Government was taking such an aggressive and uncompromising approach to the one industry capable of sequestering carbon in the fight against global climate change.

"Forest owners are the environmental and economic good guys," he said. "We employ around 25,000 New Zealanders, we are the fourth largest export earner in the country, our trees protect the quality of our land and we are crucial to the Prime Minister's quest for a carbon neutral New Zealand - yet the Government persists in confiscating our property and is now proposing massive new taxes if we want to convert our land."

Mr Dickie said that all the forestry industry wanted was for the Government to endorse the six-point plan to get forest planting underway again, which was agreed last year by all key players in the industry, including the New Zealand Forest Owners Association (NZFOA), the New Zealand Farm Forestry Association (NZFFA), the Federation of Maori Authorities (FOMA) and KFA.

The plan included recognition of the industry's property rights in order to restore investor confidence and get tree planting underway again, he said. All political parties are being asked to endorse the plan for the election manifestos for the 2008 election.

Background Information

The New Zealand Forestry Industry's Six-Point Plan

1. Remove the inequitable, retrospective 'deforestation cap'.

2. Allow land owners with Kyoto-qualifying forests (forests planted from 1990) - as well as those replanting non-Kyoto forests after harvest - to financially benefit from the value of the carbon their forests remove from the atmosphere.

3. Introduce broad-based carbon charges, ensuring that all emitters of greenhouse gases face the same opportunity costs.

4. Ensure that New Zealand's Kyoto policies have the best long-term outcomes for New Zealand, even if they don't exactly mirror current Kyoto rules.

5. Develop a regime which puts a value on the environmental attributes of forestry, thereby encouraging investment in the sector.

6. Act immediately.

New Zealand Forest Plantings 1990-2005

Year Hectares 1990 16,000 1991 15,000 1992 50,000 1993 62,000 1994 98,000 1995 74,000 1996 84,000 1997 64,000 1998 51,000 1999 40,000 2000 34,000 2001 30,000 2002 22,000 2003 20,000 2004 11,000 2005 6,000

Source: http://www.climatechange.govt.nz/resources/reports/projected-balance-emi ssions-jun06/html/fig-1.html

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