The Coalition Government plans to cap the amount of pine trees permitted in the Emissions Trading Scheme (ETS) to protect too much farmland from being converted into carbon forests.
This policy, if implemented, could increase the cost of carbon credits and force emitters to turn to more expensive kinds of offsets and reductions.
Climate Change Minister Simon Watts revealed the plan in a broad draft Emissions Reduction Plan published early on Wednesday morning.
It said the second emissions budget would be achieved through a mix of gross emission reductions and net offsets or removals such as forestry.
Planting permanent pine forests on cheap rural land has proved to be the most cost-effective way to remove or reduce a tonne of carbon from New Zealand’s emissions profile.
Some estimates have said forestry removals are often a quarter of the cost of gross reductions available to businesses. This has led to a proliferation of pine forests and ETS units.
The draft plan said exotic forestry was an “essential part” of achieving climate targets but new rules were needed to manage “unintended consequences”.
“Forestry competes with agriculture for land. The NZ ETS creates powerful incentives that could result in large-scale afforestation on productive farmland and whole-farm conversions”.
“To manage this risk, the Government intends to introduce limits on the entry of new forests into the NZ ETS on productive farmland. Existing forests already in the NZ ETS will not be affected,” it said.
This will allow ETS participants to use the market’s price signals to optimize reductions and removals, just without being permitted to take over too much farmland.
The document also flagged other environmental risks that come with planting too many pine forests and that more regulations may be needed to manage other risks.
The Government also committed to not putting an expiry date on ETS units and not putting a different price on units that originated from the forestry sector.
These were both policies floated in the past that created uncertainty in the carbon markets, ultimately pushing down prices.
“Investors must believe governments will remain committed to targets and choose NZ ETS and other policy settings accordingly. Credibility can be measured by expectations about the current and future value of NZUs,” the discussion document said.
Work was also underway to review the free allocation of units to emissions-intensive and trade-exposed firms. The scheme was intended to avoid emissions leakage but hasn’t been updated since 2010.
The price of ETS units have been trending upwards over the past two weeks and closed at almost $54 on Tuesday evening, up from about $50 at the start of July.
The policies outlined in the emissions reduction plan are expected to reduce household consumption by just under half a percent by 2050, relative to taking no mitigation action.
“This is because added costs from changing to low-emissions production or from the NZ ETS raise the price of goods and services, so that people cannot purchase as much as they would have otherwise,” the document said.
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Interesting. The Govt has just told farmers they are cutting off an alternative and higher paying income stream and reducing the sale potential (value) of their major asset - land.
Couldn't farmers decide this by themselves i.e we won't sell/convert?
Seems at odd with right leaning Govt - especially with an Act influence.
Industry lobbyists that squeal the loudest. Beef and lamb, along with dairy, have more heft than forestry.
Historically farmers don't really like trees. Trees take up space that could graze another lamb. I don't think they've really got their head around the fact the tree is worth more than the lamb, so they let their "agendaless" industry leaders do their thinking for them.
True dat, although I don't think planting pine trees will cause starvation in NZ, do you? At the end of the day, a return to a paddock of lambs is just a day with the chainsaw and a bonfire away.
Far more calories can be grown by cropping the land, rather than running livestock, if starvation really concerns you?
Odd headline. Could have read - 'Govt relies solely on pine forests and hopium to (miss) climate targets'.
Basically, the policy will lead to all sheep and beef farms becoming pine forests while the price of carbon emissions remains at $50 per tonne (about the point at which it become better to move from meat to pine).
This has been coming for sometime Jack, cheap land on the horizon. Personally I'm not surprised at all. All those bee keepers who paid moon beams for crap land are in a much worse position than carbon farmers who planted fast growing trees. Even at $35-50 for carbon it is still alright. For farmers like us who have forest it keeps us going. Without carbon things would be grim. I know land owning bee keepers who would be nearly broke now without carbon money, even though they receive much less for regenerating native. There are some who are planting pines on a grand scale on remote crap land and would be happy with anything as in price of carbon.
Yes interesting times indeed. In a strange way we have gone back in time regarding much of the farming lands of NZ as in the early 1900's things became unviable in many areas. A lot of families simply walked off. Thankfully for many farming families these days they have been able to sell out to forestry and get on with life. Maybe, as you say, those days are over.
The govt is doing a fair amount of wriggling to lessen the impacts from ostensibly solely man made climate change. They'll need to do a lot more wriggling to get around the Climate Change Response Act. As a start how about amending the CCA to push the targets out by say 25 years. Most of Europe are unlikely to achieve their targets which I think is net zero by 2050 as well. NZ needs to stop trying to be a leader in this regard. At the most keeping our overseas markets happy if they start wielding the carbon emissions tariff which is a convenient trade barrier dressed up as trying to do something for climate change.
Look at us go - same rating as China and India
"Planting permanent pine forests on cheap rural land" - that cheap rural that tripled in price due to a government created carbon scam - creating all sorts of unintended consequences.
The government should show some courage and throw the ETS and net zero fantasy out. The Paris Accord is non-binding. Walk away.
Another stupid policy change that will generate zero votes for National. Luxinda is just keeping the seat warm for a term.
There are more urgent problems to sort Rastus. These chaps could do with the $15/t siphoned off them by the ETS every time they fill the car.
After a six year hiatus the media is reporting on this again.
https://www.stuff.co.nz/nz-news/350342218/nzs-homelessness-worst-living…
There could be "suffering", but there's an enormous amount of waste to slice off before the actual suffering point is reached. Think the whole tourism industry for a start, 5%+ of heating gone just like that.
(1) How do you feel humanity is doing right now, riding the crest of ever-increasing emissions? It doesn't feel like all that fossil fuel depletion has been put to use alleviating the suffering of the masses.
(2) If we don't cut emissions now, what's the plan for your grandchildren, when fossil fuels are rare and expensive and extreme weather events are frequent?
Lifted out of poverty? Depends how you view the population explosion fuelled with a one off inheritance of geologically stored sunlight I guess? Without burning all that carbon the bulk of our 8 billion wouldn't have existed in the first place. More a chicken and egg scenario. Oh and fossil fuels are going away!
In absolute terms, there's probably more people living in poverty now than before we started the burn. Previously humans lived in a stable, resource rich and functional biosphere, sustainable in perpetuity. Now we have lots of toys, nutritionless food, so much psychological stimulus there's no time for rational thinking and a looming energy cliff/climate stability catastrophe.
"Previously humans lived in a stable, resource rich and functional biosphere, sustainable in perpetuity." Try telling a moa that.
"This feeds into the popular notion that environmental destruction is a recent phenomenon.
The lives of our ancestors are often romanticized. Many think they lived in balance with nature, unlike modern society where we fight against it. But when we look at the evidence of human impacts over millennia, it's hard to see how this was true.
Our ancient ancestors contributed to the extinction of many of the world's largest mammals ('megafauna'). This was during an event known as the Quaternary megafauna extinction (QME).
The extent of these extinctions across continents is shown in the chart. Between 52,000 and 9,000 BCE, more than 178 species of the world’s largest mammals were killed off. These were mammals heavier than 44 kilograms, ranging from mammals the size of sheep to mammoths.
...Humans reached Australia somewhere between 65 to 44,000 years ago.1 Between 50 and 40,000 years ago, 82% of megafauna had been wiped out. "
If you take a look at the policy they are saying up to class 5 land will be off limits to forestry. That's good as that is our most productive land and worth farming. Class 6 will have limited forest planting and class 7 up no limits.
This makes sense as class 7 land is generally unprofitable to farm. Usually remote and likely to need retiring. Also gives the opportunity for owners to sell out or participate.
HALF ABSURD
The Coalition Government plans to cap the amount of pine trees permitted in the Emissions Trading Scheme (ETS) to protect too much farmland from being converted into carbon forests.
A blanket cap makes no sense.
This policy needs to be bolstered by identifying the hillside erosion prone land that is effectively uneconomic to farm and allowing those areas to be forested, while protecting productive economic land.
That's the interesting thing Palmtree, probably just an assumption. There is wide spread interest in Redwoods and E. Fastigata.
Thing is to make it work there needs to be reasonably fast growing species capable of sequestering large amounts of carbon. Radiata is simple to establish and cost effective. In most remote places this tree will be the solution for rapid afforestation of erodible land.
And yes the bigger concern is building on class 1 land.
The area of land going into pine will initiate a timber glut in thirty years time. There will be no market for it. China is virtually closed for business. Perhaps there may be a biofuel market, but failing that?
Anyone planting pine solely for the political football known as carbon credits must have rocks in their head. Personally, I'd like to plant more trees, but they won't be radiata. I'll see what happens to the intended user pays "admin fee". I don't really fancy being charged $$thousands a year in perpetuity for storing someone elses CO2 pollution. Some of these quick buck types may be surprised they have to return the CC cash windfall with a yearly clawback, until the carbon market becomes redundant, whenever that may be?(decades? centuries? never?). Perhaps when forest owners have spent up the cash and then gone bankrupt paying yearly fees, the land with a carbon liability overhang will just be handed back to the taxpayer? Kind of like leaky depleted oil and gas fields.
"I don't really fancy being charged $$thousands a year in perpetuity." Are you immortal Palmtree? Thing is most land being planted is best left in forest and nature will sort it out. There are thousands of hectares of regenerating scrub that are in private ownership. Those owners pay rates etc right now and are presumably happy. As it stands now the carbon area which is claimable will decrease over the life span of the forest until either regen or other tree species take over. You do realize this could take up to 200 yrs to unfold. Trees we are planting now will only be 25 years old in 2050 and still be sequestering carbon. In fact most forest will be still standing in 2050 that was planted in 1995. Of course there will be collapse in places. Those areas will either self regenerate or be replaced by other tree species most likely native.
Immortal? No one could accuse me of short term thinking, however my illusions of immortality are tempered depending on which bones ache in the morning 😃.The farm is in trust, so hopefully there's at least one more generation that can scratch a liviing? p.s. the charges I mentioned aren't rates, they were a fee imposed on every hectare of forest to fund MPI admin of the ETS. Starting at $50/ha from memory, so yeah, as long as there's an ETS scheme you will be on the hook. Unless you fancy buying any units you sold back of course.
Nice having a chat Hans. I see you're an early riser. My opinion of our ETS scheme is that it's a bad joke set up to keep the cash flowing into the financial ticket clipping industry.
The system that should have been applied is a straight up carbon tax that is distributed directly to those storing carbon as custodians of the land and as regular income. It shouldn't be the one off sugar hit of selling credits and then a permanent liability. That's a zero sum game for growers, especially as markets for actual timber product dry up. Any removal of that stored carbon makes you an emitter, which triggers the tax again. Perhaps home builders using timber could gain credits? Get the political football and the fingers in the pie types out of the scene. The unnecessary friction these people cause makes the whole system not fit for purpose.
I think you can harvest up to 5% a year, without penalty. As Hans says, if we get our act together by 2050, it will be a different scenario. I would plant and maintain trees that would be high value in 25 - 30 years time, if in it for a decent return.
All academic to me now, I passed on a possible chance to buy suitable land, would have been tits up with interest rates and carbon prices now, I don't think banks can see 20 years ahead.
It actually plans to plant a lot of trees - assuming that everyone will at a $50 price maybe going to $35. Yeah right.
Then you cant plant land thats profitable for timber - class 7 anyone - yeah right.
By 2050 it assumes 1 million ha of new exotic and 1.5 million ha less of hill country farming (See technical annex) but in the report assumes about 500,000ha of new exotic - the numbers don't add up and where's the other 500k of farmland gone?
Clearing sale at The Wisp - Fed Farm leader saying it was the end a few years ago - now a good decision and wondering why they are farming still.
https://www.odt.co.nz/rural-life/horticulture/clearing-sale-%E2%80%98last-hurrah%E2%80%99-station
Land now only worth 1/3 of what they sold it for - don't let the banks see that!!
The main message is invest in Gentailers and 50% of all car sales will be EVs by 2030 - yeah right.
ERP1 actions discontinued by this Government ERP1 action number Discontinued action 3.2.1 Develop an equitable transition strategy. 3.2.2b Support regions and industries to manage the transition. 3.2.3 Implement the Just Transition Partnership Programme. 3.3.1 Develop an income insurance scheme. 5.2.1 Adjust the New Zealand Emissions Trading Scheme (NZ ETS) to drive a balance of gross and net emissions reductions. 5.2.3 Assess how the NZ ETS can support indigenous biodiversity. 6.10 Establish the Climate Emergency Response Fund (CERF) to ensure the climate is prioritised in the Budget process. 8.1.1 Establish a portfolio of Climate Innovation Platforms to support and coordinate strategic, effective and innovative initiatives. 8.2 Te Ara Paerangi – Future Pathways science-system reform programme. 9.4 Support businesses moving to circular economy models. 9.10 Commence a Circular Economy and Bioeconomy Strategy. 10.1.1.6 Require new investments for transport projects to demonstrate how they will contribute to emissions-reduction objectives and set a high threshold for approving new investments for any transport projects if they are inconsistent with emissions-reduction objectives. 10.1.2 Revise Waka Kotahi’s national mode shift plan (keeping cities moving) to ensure nationally led activities align with the pace and scale of vehicle kilometres travelled (VKT) reduction and modeshift required in urban areas. 10.1.2 Set sub-national VKT reduction targets for New Zealand’s major urban areas (Tiers 1 and 2). 10.1.2 Develop VKT reduction programmes for New Zealand’s major urban areas (Tiers 1 and 2) in partnership with local government, Māori and community representatives. 10.1.4 Establish a high threshold for new investments to expand roads, including new highway projects, if the expansion is inconsistent with emissions-related objectives. 10.2.1 Continue to incentivise the uptake of low- and zero-emissions vehicles through the Clean Vehicle Discount scheme and consider the future of the Road User Charge exemption for light vehicles beyond 2024. 10.2.1 Establish whether the Clean Vehicle Discount can be extended to other vehicle classes. 10.4.1 Ensure the next Government Policy Statement on Land Transport (GPS-LT) guides investment consistent with the emissions reduction plan. 11.1.1 Provide rebates for energy-efficient equipment. New Zealand’s second emissions reduction plan (2026–30): Discussion document 119 ERP1 action number Discontinued action 11.2.2 Ban new fossil-fuel baseload generation. 11.2.2 Investigate options for dry-year electricity storage through the New Zealand Battery Project. 11.3.1 Manage the phase-out of fossil gas. Develop a gas transition plan. 11.4.1.a Develop a mandatory energy and emissions reporting scheme. 11.4.1 Set an action plan for decarbonising the industrial sector. 11.4.1 Continue the rollout of the Government Investment in Decarbonising Industry (GIDI) fund. 11.4.1 Fund further decarbonisation of industry and heat through expansion of the GIDI fund. 11.4.1 Provide grant funding for commercial space and water heating and high-efficiency electrical equipment. 11.4.1 Finalise and implement the Advanced Manufacturing Industry Transformation Plan. 11.5.1 Monitor progress towards the aspirational renewable electricity target. 13.1.1 An emissions pricing mechanism is developed, and agricultural emissions are priced by 1 January 2025. 13.1.2 All producers will have emissions reports by the end of 2022 and a farm plan in place by 2025. 13.3.1 Develop further climate-focused extension and advisory services. 14.1.1a Ensure regulatory settings deliver the right type and scale of forests, in the right place. 14.4.1 Develop forestry and wood-processing industry transformation plan.
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