Govt Stance on Forestry Carbon Price Negotiations

Media Release
16 March 2008

Government’s Secret International Stance on Forestry Carbon Price Negotiations Revealed

A secret Government negotiating stance to try convincing the world that forests planted before 1990 should be cleared at no carbon cost is revealed in the first edition of Carbon News which goes live at 9am tomorrow.

The new daily online intelligence service for the carbon markets, quotes what it calls “well placed sources” - saying the Government will plead with its Kyoto Protocol partners to introduce forest offsetting to the rules covering the second commitment period from 2012 to 2025.

However, the source says its chances of success are remote.

Negotiations on changes to the protocol are under way and are expected to be finalised by the end of 2009, but New Zealand’s will probably be the only voice calling for pre-1990 forests to be allowed to be cleared at no carbon cost provided a similar amount of new forest is planted elsewhere, Carbon News says.

New Zealand’s plea will be partly in response to a demand for such an offset scheme by the newly-formed climate lobby group, the Flexible Land Use Alliance (FLUA).

The alliance’s preferred option is that pre-1990 forests be excluded from the forthcoming emissions trading scheme (ETS) altogether, though both the Government and the main National opposition have signalled they won’t countenance that.

As an alternative to what it considers is an unwarranted interference in landowners’ rights to use their land as they think fit, FLUA wants the Government to eliminate what amounts to a prohibition on changing pre-1990 forests’ land-use.

At present if a pre-1990 forest is cleared and the land turned over to, say, dairying or lifestyle blocks, the owner is liable for the full cost of the carbon liberated into the atmosphere by the removal of the trees.

The Government’s initial estimate of this cost was around $13,000/ha, though most commentators believe it has now risen to $20,000/ha, while FLUA says it could actually be as high as $65,000/ha.

Under the Kyoto Protocol no carbon charges will be levied if the landowner immediately replants a harvested pre-1990 forest.

What FLUA is suggesting is that foresters be allowed to change their land use without facing carbon charges provided if they plant an equivalent area of previously unforested land elsewhere. The Alliance says 800,000ha of mostly North Island hill country desperately needs forestry to stabilise it against erosion. However, the Kyoto Protocol does not allow such offsetting.

The Carbon News source said New Zealand is definitely going to have a crack at getting a forestry offsetting regime accepted into the protocol structure, but the chances of achieving it are not good.

Carbon News also quotes National environment spokesperson Nick Smith as saying FLUA had put up a “pretty good case” for its offsetting regime and National would be pursuing it through the committee stages of the emissions trading bill in Parliament, but was not prepared to exclude pre-1990 forests from the ETS regime.

Carbon News also reports New Zealand businesses want the Government to make trading in emissions credits, created when coal plants overseas are replaced by nil-emission nuclear ones, to be freely traded by Kiwi companies.

At the moment the law stops trading here in nuke credits, but business sources are quoted as saying there should be a free trade in emission units worldwide, allowing New Zealand firms access to the best possible market price for carbon.

Carbon News goes live at www.carbonnews.co.nz at 9am March 17 to serve the burgeoning new carbon market with specialist information.

ENDS

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