Northland Set To Lose $765 Million

KYOTO FORESTRY ASSOCIATION MEDIA STATEMENT

Wednesday 21 February 2007 For Immediate Release

Northland Set To Lose $765 Million From Govt Carbon Credit Grab

Northland could lose at least $765 million and potentially over $1.1 billion from the Government's decision to nationalise Kyoto carbon credits legitimately owned by forest owners and forestry investors, the Kyoto Forestry Association (KFA) said today.

The association released the calculation on the eve of the Government's consultation meeting at Whangarei's Kingsgate Hotel at 9:45 am tomorrow, Thursday 22 February.

It is based on an estimate of the area of post-1990 Kyoto-qualifying forestry in Northland, derived from 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.

KFA spokesman Roger Dickie said it was vital that everyone in Northland with an interest in forestry attended tomorrow's meeting to say no to the Government's confiscation plans.

"Northland can't afford to have hundreds of millions of dollars ripped out of its economy by the Government, and Northlanders need to leave the Government in no doubt that they will never accept their carbon credits, or any other property, being confiscated by the Government without compensation," he said.

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

Through the 1990s, Government officials 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 with 30,000 ordinary New Zealanders and forestry companies putting up as much as $400 million per annum of their own risk capital to invest in more than 500,000 hectares of new forest - both because of the benefits predicted to arise both from the sale of wood products and from carbon credits earned from carbon sequestration. In Northland, KFA estimates that approximately 59,000 hectares of Kyoto-qualifying forestry was planted.

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 had 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. Now, however, Government officials are indicating it may extend the confiscation to the Second Commitment Period, putting eventual losses nationwide up to at least $8 billion and potentially many billions more.

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.

"In Northland, the regional council calculated in 2002 that the region was earning about $71 million a year from the forestry industry and hoped that would increase to over $380 million by 2022. It is difficult to see the regional council's forecast being met if the Government persists with its current approach to forestry policy."

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, 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

ENDS

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