Wellingtonians Set to Lose $870 Million of Credits

KYOTO FORESTRY ASSOCIATION
MEDIA STATEMENT

Wednesday 14 March 2007
For Immediate Release

Wellingtonians Set to Lose $870 Million from Carbon Credit Grab

Thousands of Wellingtonians risk losing a big chunk of their retirement savings as a result of the Government's decision to nationalise carbon credits legitimately owned by forest owners and forestry investors, the Kyoto Forestry Association (KFA) said today. For Wellingtonians alone, at least $870 million could be at risk, according to the association.

The association released the calculation on the eve of the Government's Wellington consultation meeting at the Duxton Hotel at 6.00 pm, Thursday 15 March.

It is based on an evaluation of the profile of forestry investors indicating, conservatively, that approximately 10% of those who invested in Kyoto-qualifying forestry in the 1990s were "mum-and-dad" investors from Wellington, and an estimate that carbon credit values will reach $13,000 per hectare during the life of a forest.

"The Government's confiscation of carbon credits is not a rural or provincial issue alone - it's a Wellington issue," KFA spokesman Roger Dickie said today.

"Throughout the 1990s, thousands of Wellingtonians and up to 50,000 New Zealanders in total put their retirement savings into forestry, investing an average of $40,000 each in new forest planting.

"They expected a return both from the sale of wood products in the future but also from the carbon credits they would earn from carbon sequestration, as promised by Government officials. By confiscating those carbon credits - likely to be worth $14,000 over the next five years - the Government has stolen a big chunk of their retirement savings."

Mr Dickie said every Wellingtonian with an interest in forestry needed to get along to the Duxton Hotel on Thursday night to stand united with the more than 2,500 other New Zealanders who have attended MAF consultation meetings over the last three weeks, to say no the Government's confiscation plans.

"A big message from the capital city could make the difference," he said.

Mr Dickie said political support for KFA was growing daily, with the Green, National and ACT parties agreeing that carbon sequestered by forestry investors since the Kyoto Protocol's 1990 baseline needed to be financially recognised in order to reverse New Zealand's deforestation crisis.

Mr Dickie said KFA continued to work closely with the rest of the forestry industry in urging all political parties to endorse the six-point plan to get forest planting underway again, which was agreed last year by all key players in the industry, including the New Zealand Forest Owners Association (NZFOA), the New Zealand Farm Forestry Association (NZFFA), the Federation of Maori Authorities (FOMA) and KFA, after work with Government officials.

BACKGROUND INFORMATION

Introduction to Carbon Credits

Kyoto carbon credits are earned by those individuals and businesses that sequestered carbon by planting new forestry since the Kyoto Protocol's baseline of 1 January 1990, and by those industries which have cut their carbon emissions since then.

Through the 1990s and early part of this decade, Government officials made clear that forestry investors would gain financially from the credits, which are a clear property right, as confirmed by the Treasury.

This fuelled a planting boom through the 1990s with 30,000 ordinary New Zealanders and forestry companies putting up as much as $400 million per annum of their own risk capital to invest in more than 600,000 hectares of new forest - both because of the benefits predicted to arise both from the sale of wood products and from carbon credits earned from carbon sequestration.

Since the Government first indicated that it intended to confiscate the credits in 2002, tree planting in New Zealand has plunged and New Zealand is now experiencing net deforestation for the first time in living memory.

The Government has previously indicated it would limit its confiscation of the credits to those associated with the First Commitment Period of the Kyoto Protocol, costing forest owners nationwide as much as $2.5 billion. Now, however, Government officials are indicating it may extend the confiscation to the Second Commitment Period, putting eventual losses nationwide up to at least $8 billion and potentially many billions more.

The Government is also proposing a retrospective tax of up to $13,000 per hectare on the owners of forests planted before 1 January 1990, if those forest owners decide to convert their land to another land use.

MAF is carrying out a consultation process on these and other ideas to address climate change. The deadline for submissions is 30 March. Forest owners have asked for an extension to this deadline but Forestry Minister Jim Anderton has refused.

The confiscation of the credits, the proposed retrospective tax and Mr Anderton's handling of the forestry portfolio have received near-unanimous condemnation at the MAF consultation meetings, with forest owners even in his home town of Christchurch calling on him to resign.

The New Zealand Forestry Industry's Six-Point Plan

1. Remove the inequitable, retrospective 'deforestation cap'.

2. Allow land owners with Kyoto-qualifying forests (forests planted from 1990) - as well as those replanting non-Kyoto forests after harvest - to financially benefit from the value of the carbon their forests remove from the atmosphere.

3. Introduce broad-based carbon charges, ensuring that all emitters of greenhouse gases face the same opportunity costs.

4. Ensure that New Zealand's Kyoto policies have the best long-term outcomes for New Zealand, even if they don't exactly mirror current Kyoto rules.

5. Develop a regime which puts a value on the environmental attributes of forestry, thereby encouraging investment in the sector.

6. Act immediately.

New Zealand Forest Plantings 1990-2005

Year Hectares
1990 16,000
1991 15,000
1992 50,000
1993 62,000
1994 98,000
1995 74,000
1996 84,000
1997 64,000
1998 51,000
1999 40,000
2000 34,000
2001 30,000
2002 22,000
2003 20,000
2004 11,000
2005 6,000

Source:
http://www.climatechange.govt.nz/resources/reports/projected-balance-emi
ssions-jun06/html/fig-1.html

ENDS

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