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The ETS can be improved, say forest owners

24 August 2008

The ETS can be improved, say forest owners

For more information, please contact David Rhodes,

The NZ Forest Owners Association is calling on the Greens and NZ First to continue to support an emissions trading scheme (ETS) that includes earlier commitments by some sectors and that restores confidence to the forest sector.

Whatever form the scheme takes, it should from day one send appropriate signals to emitters to either reduce emissions, or increase absorption of greenhouse gases, says chief executive David Rhodes.

"We agree that the government's proposed ETS does not send strong enough signals to sufficiently influence investment and management decisions in transport and agriculture," he says.

"Like the Green Party, we support some elements of the current ETS. For example, it is positive that post-1989 forest owners have the option of participating in emission trading. However, many will not do so because of the carbon price risks and because there are now too few parties in the ETS for them to trade with.

"The treatment of those who were unfortunate to have planted forests before 1990 has badly shaken industry confidence. They are the only sector in the economy that is liable for 100 per cent of its emissions from the start of the scheme. Also, they cannot replant on a better site after harvest without paying massive penalties.

"The compensation offered by government will help cushion the blow of having their land locked into forestry in perpetuity, but is only a fraction of the liability being carried and is insufficient to encourage the increase in planting that the economy and the environment needs."

He says the ETS as it stands is not expected to stimulate the new planting the economy and the environment need.

To make the NZ scheme truly positive, forest planting needs to be an attractive proposition for land owners, especially those with experience and investment in the sector. By way of contrast, the Australian ETS does not impose any tax on pre-1990 forest owners, Mr Rhodes says.

"To make carbon trading attractive, forest owners need a market where there are people actively buying carbon credits. But this won't happen, because transport and agriculture won't have much incentive to reduce their emissions for several years.

"The quality of the market will also be weakened by the intention to allow Russian 'hot air' credits to participate in the NZ scheme whereas the Australian ETS will not permit it."

Mr Rhodes says forest owners need certainty, and need it soon, because of the risk of missing yet another planting season.

"Forestry is the only sector that can assist New Zealand to achieve its Kyoto obligations at no cost to the tax payer. But for that to happen we need land owners to have an incentive to plant trees."

ENDS

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