Majority Close On Carbon Credit Issue

Tuesday 15 May 2007

Parliamentary Majority Close On Carbon Credit Issue

The Kyoto Forestry Association (KFA) says answers by Foreign Minister Winston Peters to parliamentary questions today have confirmed to forest owners that a parliamentary majority is emerging to reach a sensible resolution to the contentious issue of ownership of post-1990 carbon credits.

“Mr Peters’ New Zealand First Party has always been a friend of the forestry industry and has opposed the 2002 confiscation, with former New Zealand First MP Jim Peters strongly criticising it in 2004 as arbitrary,” KFA spokesman Roger Dickie said today.

“Forest owners understand that Mr Peters’ position as Foreign Minister makes it difficult for him to disagree with the Labour-led Government on a matter with an international dimension, such as the implementation of the Kyoto Protocol in New Zealand. Forest owners therefore understand the significance of Mr Peters, under questioning in Parliament today, not resiling from his party’s previous position on the confiscation, nor endorsing the Government’s view that it owns the credits that forestry investors have earned since 1990. Those New Zealanders who invested in forestry in the 1990s as a way of putting something aside for their retirements will be particularly grateful to Mr Peters for his consistency on this matter.”

Mr Dickie said Mr Peters’ answers in Parliament today gave hope to forest owners that a sensible resolution to the carbon credit issue could be achieved.

“The Maori, ACT, National and Green parties have all indicated that they believe getting tree planting underway again requires a resolution that will see forest owners receive at least some of the value of credits they have earned by planting trees since 1990. National Leader John Key and Green co-Leader Russel Norman have both publicly reconfirmed their parties’ positions on this matter in the last week.

“With New Zealand First also being a long-standing supporter of the forestry industry on this matter, parties representing 67 seats in Parliament – a clear majority – appear willing to work out a solution.

“Parliament exceeded the public’s expectations on the smacking debate. It would be good if the National, Green, New Zealand First, Maori and ACT parties could make similar progress on the carbon credit debate. Co-operation amongst those parties would lead to a far more constructive outcome for New Zealand than Forestry Minister Jim Anderton’s constant slagging off of the very industry he is meant to represent.”

Mr Dickie said United Future could also be part of the solution, with it officially uncommitted on the question of carbon credit ownership.

END

Attached: Background Information: Introduction to Carbon Credits

Inquiries: Roger Dickie
Kyoto Forestry Association
Ph: 027 4428687
BACKGROUND INFORMATION

Introduction to Carbon Credits

Kyoto carbon credits are earned by those individuals and businesses that sequestered carbon by planting new forestry since the Kyoto Protocol’s baseline of 1 January 1990, and by those industries which have cut their carbon emissions since then.

Through the 1990s and early part of this decade, 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 600,000 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.

Since the Government first indicated that it intended to confiscate the credits in 2002, tree planting in New Zealand has plunged and New Zealand is now experiencing net deforestation for the first time in living memory.

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. 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.

The Government is also proposing a retrospective tax of up to $13,000 per hectare on the owners of forests planted before 1 January 1990, if those forest owners decide to convert their land to another land use.

MAF has carried out a consultation process on these and other ideas to address climate change. The deadline for submissions was 30 March and 3,500 were received. Other forest owners asked for an extension to this deadline but Forestry Minister Jim Anderton refused.

The confiscation of the credits, the proposed retrospective tax and Mr Anderton’s handling of the forestry portfolio have received near-unanimous condemnation at the MAF consultation meetings, with forest owners even in his home town of Christchurch calling on him to resign.

More positively, the National, Green, Maori and ACT parties have broadly supported the forestry industry on the question of carbon credits.

ENDS

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