4 February 2008

Green is the new black

In a first for public conservation land, DOC helps businesses gain their green credentials through a “win-win” investment in biodiversity.

The recent announcement by Conservation Minister Steve Chadwick on the tender for investment in forest carbon sink projects on public conservation land opens up some exciting opportunities for companies keen to compensate for their carbon footprints. Ms Chadwick says “It is potentially a classic win-win.”

Six pilot projects currently up for tender will appeal to companies interested in obtaining carbon credits and wanting to support a ‘made in New Zealand’ initiative – both likely to improve a company’s appeal to environmentally conscious consumers with a flow-on effect to the bottom line.

Department of Conservation (DOC) estimates show between three and sixteen tonnes per hectare of carbon could be saved using indigenous ‘forest carbon sinks’ – a forest established to store carbon as it grows. A small forest sink area of just 500 hectares could generate carbon credits worth over $1.4 million at today’s prices. Although it is hard to predict the future price of carbon, experts say that the carbon market may become the world’s biggest commodity market – worth in excess of €1 trillion in the next decade.

Under the Kyoto Protocol and the New Zealand Emissions Trading Scheme (ETS) there are generally two types of carbon sink – new forests established on land that was bare at 31 December 1989 (Kyoto-compliant forests) and forests existing at 31 December 1999 that have been subject to additional pest control activity.

As well as the associated marketing and brand benefits, return on investment in one of DOC’s three Kyoto-compliant forest projects is a 45 year contract for carbon credits. The credits can be used to offset greenhouse gas emissions and can be traded on the international carbon market. As the cost of emitting could rise sharply in the future, there is no telling how much the forest sink generated credits might be worth.

Investors in one of the three existing forest projects earn carbon credits that can be traded on the secondary or voluntary market, popular with companies wanting to be certified ‘green’.

Harry Maher, DOC’s National Revenue and Procurement Manager says interest from the commercial sector and SOEs highlighted the need for the pilot projects.

“We decided to conduct a contest via tender in the interests of fairness and transparency, and so that learning opportunities from the pilot project would be maximised.”

The science around developing carbon credits from indigenous forests is developing rapidly. A public-private partnership marrying the expertise of both parties is likely to contribute significant knowledge gains, as well as enabling businesses to manage carbon dioxide emissions. The department has been working closely with a number of expert advisors, including Landcare Research to ensure that the best possible deals are on the table for the tenders.

DOC’s offer is a home-grown one, directly benefiting all New Zealanders - an important incentive to companies that might otherwise be looking to the international carbon market to obtain the credits they need. The projects will reduce numbers of pests, like possums and stoats, encourage regeneration of native forests and help with ecosystem restoration. Investors have the opportunity to help with core conservation work addressing climate change in their local area, while at the same time earning carbon credits.

Maher says the level of interest from potential investors has been strong and he expects to have tenders from several big corporate players. He says “New Zealand companies have seen the potential to invest in a New Zealand carbon credit scheme for the benefit of New Zealanders. DOC is pleased to be assisting the private sector to reduce their carbon footprints.”

Rather than asking potential investors to tender their highest cash offer, DOC has requested investors tender a proposal for sponsorship of an additional conservation project. Additional conservation projects contribute to specific biodiversity or recreational development. This could range from funding a threatened species recovery programme to investing in a new recreational opportunity, like a new walking track.

In return, DOC undertakes total management of the forest carbon sinks – organising replanting and pest control activities - and the investors walk away with the all the credit.

DOC has identified over 165,000 hectares suitable as forest carbon sinks for the pilot projects. Over 4,500 hectares is designated Kyoto-compliant forest. Examples include Motuihe Island in the Hauraki Gulf, Quail Island in Lyttelton Harbour and Mimiwhangata Farm Park in Northland. A further 160,000 hectares of existing forest will generate carbon credits for the voluntary market as a result of pest control activities.

The forest carbon sink sites will all remain public conservation land. Public access will not be affected except for occasional operational requirements, like pest control programmes.

In this age of climate change, earning Kyoto Protocol-compliant carbon credits by helping New Zealand’s biodiversity is an excellent opportunity to do well while doing good. For more information on the forest carbon sink projects see DOC’s website www.doc.govt.nz/carbonsinktender.

ENDS

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