Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Government Bans Kyoto Units... But Only For Forest Owners

The Government Bans Kyoto Units... But Only For Forest Owners

"Why does the National Party hate the forestry sector" That was the question posed in Parliament on Friday by Labour's Moana Mackay, Spokesperson for Climate Change Issues. She was speaking during the first reading of the Budget Measures (Miscellaneous Fiscal Matters) Bill which sneaks in an amendment which prohibits forest owners from using Kyoto Units when they remove forest registered under the NZ Emissions Trading Scheme (NZ ETS) and prevents 'reregistration arbitrage'.

It is hard not to agree with Moana Mackay's comment given that the ban only applies to forest owners and not to emitters such as petrol companies who still have another 12 months to purchase cheap foreign carbon credits for as little as 17 cents, primarily sourced from the Ukraine and Russia.

In an ironic twist, the forest industry has been pleading with Government to ban overseas units for years in an effort to save the local carbon price. The NZ ETS was designed under Labour as a finely balanced market with demand from emitters requiring carbon credits to offset emissions broadly matching supply from forest owners awarded New Zealand Units (NZUs) for the carbon absorbed and stored in their forests. Initially the supply and demand fundamentals worked and the price of a forest NZU was $20/unit.

However, in 2010 foreign carbon credits predominantly from China and Eastern Europe began flooding NZ shores. Unlike most other carbon schemes which place restrictions on overseas credits, NZ has left the door wide open. As a result the price of an NZU went from $20 in 2010 to as low as $1.50 in 2013 and last year 95% of the credits handed to Government to meet emission obligations were from overseas.

Another outcome of cheap foreign credits in the NZ ETS is a price arbitrage that some emitters may have been exploiting. As the price of carbon collapsed some emitters allegedly continued to charge their customers and consumers an inflated carbon charge and retain the margin as profit. This practice has been well reported in the media.

With the carbon price collapse forest owners have become disillusioned. However, there was a silver lining for the sector. Like the emitters, forest owners could also use Kyoto units to meet surrender obligations. Forest owners could voluntarily leave the scheme and repay to Government the equivalent number of NZUs they had received using cheaper Kyoto units. This also lead to another perverse loophole akin to carbon credit laundering. After leaving the scheme forest owners could re-register and earn NZUs again.

Many forest owners think this loophole is ridiculous and just another symptom of how dysfunctional the NZ ETS has become. The vast majority of forest owners want all Kyoto units banned altogether, and only engaged with the loophole reluctantly. In fact less than 50% of the exiting owners have re-registered and many have no intent of re-registering in the near term given their disappointment with the Government scheme.

The new ban which was passed under urgency on Friday closes the loophole but only to the forest sector. While most of us would agree that the law is justified, the way it has been implemented is inequitable and another 'knock back' for forestry.

First and foremost the ban should apply to all sectors in the NZ Emissions Trading Scheme so that emitters should equally no longer be able to use offshore credits.

Secondly, some forewarning should have been given. The Government has known about the loophole since early 2013 and as recently as December last year confirmed that foreign credits will be able to be used until May 2015. The shock move last week has caught all in the industry off guard with no consultation and has major fiscal implications for some forest owners who have been caught out. In the past, when the government has banned units there has been consultation and exemptions have been given for parties that already had purchased the banned units.

For more information on how the change impacts post-1989 forest owners read a Q&A here http://www.carbonforestservices.co.nz/news/implications-of-ban-on-kyoto-units-for-post-1989-forests .

Ends

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Spy Update: Appointment Of GCSB Acting Director

GCSB Chief Legal Advisor Lisa Fong will become the Acting Director of the Government Communications Security Bureau (GCSB) from 15 February 2016, Minister Responsible for the GCSB Christopher Finlayson announced today. More>>

Protests Close Roads: TPP Signed In Auckland

“TPP was signed by Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Viet Nam.” More>>

ALSO:

Emails Behind 'Diplomatic Immunity' Case: Whitehead Report Released

“As previously indicated the conclusions reached by Mr Whitehead’s investigation are not unexpected but they are very disappointing,” Mr Mccully says. “At the heart of the matter is a single email, along with procedural shortcomings, which gave Malaysian officials the impression it would be acceptable for Mr Rizalman to return to Malaysia." More>>

ALSO:

Gordon Campbell: On The Treaty/TPP Overlap, And Iowa

The fears about the ISDS provisions in the Trans Pacific Partnership deal are well-founded. The reality is that there is a sharp uptick in the occurrence of ISDS litigation in developed countries, and even the right wing likes of The Economist have been souring on the process for some time. More>>

ALSO:

Christchurch Red Zone Offers: Fresh High Court Proceedings

Grant Cameron, Solicitor for the Quake Outcasts said “the action seeks judicial review of the Crown’s recent decision to make a fresh offer to purchase properties from uninsured property owners in red zones. More>>

ALSO:

PM's Post-Cabinet Press Conference: Waitangi And TPP

Prime Minister John Key on Tuesday said his office has received an invitation for him to visit the Lower Marae on Waitangi Day, but was waiting for a meeting of the Te Tii Marae Trustees. More>>

ALSO:

Flagged: 'Wrong Colour' Bridge Flag To Change

NZ First: Only 13 days after National trumpeted its legally questionable flag on Auckland Harbour Bridge, it is now coming down because it is the wrong colour... “Mr Key’s latest flag fiasco is another waste of taxpayers' money. Given it is coming down, down is exactly the location where it should remain. More>>

ALSO:

School's In: Children Head Back To School

“Across the whole of this year we expect 61,820 five year olds will begin their primary schooling for the first time,” says the Ministry of Education head of sector enablement and support Katrina Casey. More>>

ALSO:

Dog & Lemon: FBI Disagrees With NZ Government Over Police Chases

Multiple studies, quoted by the FBI, show that once suspects realise they're no longer being chased; they tend to slow down to normal driving speeds and therefore become far less of a risk. The FBI report also categorically rejected the argument that abandoning police chases meant ‘giving in’ to offenders. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news