Profit-rich foresters might quit ETS
January 18, 2013. Media release
Forest owners who have made a tidy profit by selling carbon high and buying low are now looking to quit the Emissions
Trading Scheme, Carbon News reports today.
In 2008, the forestry sector became the first to enter the scheme.
The idea was that giving the owners of post-1989 forests tradable credits for the carbon stored in their trees would
encourage planting.
And, at first, it worked. Influential forestry companies such as PF Olsen and Ernslaw One entered the market, and carbon
forestry projects sprang up.
But that was when spot NZUs (the units issued to New Zealand forest owners) were worth between $18 and $24 a tonne. In
2010, they started falling on the back of cheap international prices, and today spot NZUs are worth around $2.50.
Figures from the New Zealand Emissions Unit Register show that New Zealand emitters are now using four times as many
international units as foreign units to meet their carbon obligations, according to Carbon News, the country's
specialist information service on carbon markets.
In September, the heads of eight forestry companies, who between them control about 70 per cent of the country’s
plantation forests, wrote to Prime Minister John Key asking him to intervene directly to stop the flow of cheap carbon credits into the country.
Carbon News understands that companies that sold credits in the $20 range in the first few years of the scheme are now
buying European carbon at around 40 cents a tonne in order to meet their own looming carbon liabilities from harvesting
their forests.
As one source said, that leaves them with a huge profit and little incentive to stay in the scheme.
Forest Owners’ Association chief executive David Rhodes has now confirmed to Carbon News that several forestry companies
are looking at quitting the scheme.
“I wouldn’t be surprised if they do,” he said, “I expect some will.”
Rhodes said that at $2.50 a tonne, it wasn’t worth the work involved in monitoring and measuring the carbon stored by
forests and meeting the compliance requirements of the ETS.
ENDS