How will the revised ETS affect forestry?

Published: Fri 18 Sep 2009 03:28 PM
How will the revised ETS affect forestry?
Associate Professor Euan Mason of the School of Forestry at the University of Canterbury, comments on the likely effects on forestry and greenhouse gas production of the new, revised ETS announced this week.
The new ETS is being seen as a 'weaker' ETS due to its subsidies for business as well as the late inclusion of agriculture - on of the country's most heavily-emitting industries - in the ETS, amongst other things.
In his commentary, Assoc. Prof. Mason points out that the new, weaker ETS will is unlikely to encourage afforestation due to lowered demand for NZ Carbon Units. He also says that the ETS will require that New Zealand changes its behaviour towards greenhouse gases at a slower rate.
An excerpt of Assoc. Prof. Mason's comments can be read below - the full version, with accompanying graph, is available on the SMC website.
Impacts on domestic demand for NZUs
Under the existing ETS, domestic demand for NZUs would likely have exceeded the maximum capacity of existing Kyoto forest (planted since 1989 on grassland) to supply credits by approximately 2013, thereby providing a powerful incentive for investing in new forest plantings.
Under the proposed ETS, domestic demand for credits would not be likely to exceed the maximum capacity of current Kyoto forest to supply NZUs until the early 2020s.
In making these calculations, there is a large uncertainty about national emissions of GHGs in future. The nation emits approximately 88 Mt of CO2 equivalent/annum, and 88 million NZUs are required to fully offset this level of emissions. National GHG emissions are likely to increase under the proposed ETS, which would bring forward the time when demand exceeded supply from existing forests, but this effect is difficult to quantify.
Impacts on supply of NZUs from the forestry sector
Supply of NZUs might come from three sources within the forestry sector. Firstly, a proportion of Kyoto forest owners will register for the ETS and the maximum possible supply from this source is approximately 16 million NZUs/annum. Secondly, pre-1990 forest owners will receive an allocation of 50 NZUs per hectare in compensation for the removal of the right to change land use without financial penalties. This latter supply of NZUs will be a one-off total of approximately 72 million NZUs. Perceptions of likely demanInformation
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