The response of Government Ministers to rural concerns about forestry policy is polarising the debate. Describing rural perspectives as ‘fiction’, and upset rural protesters as ‘rednecks’, is counter-productive.
The combination of the Zero Carbon Act and forthcoming Emission Trading Scheme legislation will transform the New Zealand landscape. The Government has done a poor job of educating New Zealanders as to what it will mean. The Government is now on the defensive.
In this article, the focus is on multi-rotation production forestry. The associated story of permanent forests must wait for another article.
The starting point is that New Zealand has a policy goal of zero net carbon emissions by 2050. That means, among other things, that either New Zealand has to find new energy sources to replace fossil fuels, or else it has to offset those emission in other ways. The offsetting has to start right now.
There are only two ways to offset emissions. One way is to sequester carbon in trees here in New Zealand. The second is to buy emission rights from overseas people who grow the trees overseas.
This second way is an avoidance strategy, whereby New Zealanders pay others to carry the burden. It only works in a world where there are lots of wealthy people in one part of the world and lots of poor people elsewhere.
Both New Zealand and Australia have played this game in the past. Unfortunately, New Zealand did it with cheap and largely fraudulent emission units from the Ukraine.
Both New Zealand and Australia plan to play the overseas purchasing strategy again, although this time hopefully with more integrity. However, there is not much virtue signalling or salving of consciences by these actions. It cannot be the main game.
To cut to the chase, the new zero-carbon legislation means that New Zealanders will need to totally change their lifestyles, together with planting a huge number of trees in New Zealand over the next thirty years.
To put things into perspective, the current wall of wood coming up for harvest in the next ten years is about 650,000 hectares. This will all need to be replanted, but these replanted forests will not earn carbon credits. It is only new forests on lands not recently in forests that earn carbon credits.
New Zealand’s short to medium term forest policy is encapsulated in Government messaging within the Billion Trees Program. Assuming a planting rate of 1000 trees per hectare, which is typical, then replanted forests will take up most of the Billion Trees Program. It bears repeating that these replanted forests will not earn carbon credits.
Extending the thinking out to 2050, by then almost all of the 1.73 million hectares of existing plantation forest will have been harvested. That too will need replacement with another rotation of trees on the same land just to avoid new carbon liabilities.
The proposed new emission-trading scheme, with its focus on new multi-rotation forestry converted from farmland, will provide forest owners with first-rotation credits based on the average sequestered carbon over multiple rotations. For new forestry based on radiata pine and 28-year rotations, forest-owners will claim credits for the first 17 years of the first rotation.
To state that as explicitly as I can: the carbon benefits relate to long-term accumulated environmental benefits over many rotations, but the total cash benefits are paid out in the first 17 years of the first rotation.
These credits are expected to total about 340 tonnes per hectare of carbon-dioxide equivalent. At current prices of around $25 per tonne, these will be worth around $8500 over 17 years.
However, the smart-money people can see potential for this carbon price, really a carbon-dioxide price, to rise to at least $75 per tonne but perhaps $100 or even $200.
Given a price of $100 per tonne, then a hectare of farmland converted to forestry would earn $34,000 over the next 17 years from carbon trading.
This raises the question as to how much farmland will be converted to forestry. It’s a multibillion-dollar question.
Let’s take a hypothetical figure of 100,000 hectares per year. After 10 years we would have one million hectares of new forests and these would be trucking along earning about 20 million tonnes of carbon credits each year. This would make a sizeable dent in our overall net emissions, but would not get us anywhere near zero net emissions.
To put things in perspective, New Zealand’s gross emissions of carbon-dioxide equivalence are around 80 million tonnes per annum. About half of this is long-lived carbon dioxide itself. The remainder is based on equivalence calculations for methane and nitrous oxide.
From a national perspective, one of the problems with 28-year rotation radiate pine is that these trees will only earn credits for 17 years. For the 11 years from year-18 to year-28 the trees are still growing, but neither earning new credits nor incurring new liabilities. So, after 17 years we have to plant more new forests on additional farmland just to keep up the existing flow of credits needed for elsewhere in the economy. It requires running fast to stand still.
Once 28 years have passed, then if the trees are harvested, there will be a liability attached to the land of around 340 tonnes of carbon-dioxide equivalence. To avoid payment of the liability, the land must be replanted in another rotation of forestry. But I emphasise this replanted forest, being second rotation, earns no further credits.
Hence, if we are to move to anywhere near a zero-carbon lifestyle, and unless we can totally eliminate use of fossil fuels, then the forests must continue marching across the landscape, like the mythical triffids of the John Wyndham classic.
So, is there a counter argument as to why the above scenario is alarmist?
The counter argument can only be that new technologies will come to the rescue. Supposedly, we will rely on solar, wind and geothermal, combined with new battery technology, to transform our economy. At that point the march across the landscape can stop.
Actually, the scenario that I have drawn above has already allowed for these technologies coming substantially to the rescue. Without them, the march of the pine trees across the landscape will need to be much greater than 100,000 hectares per year.
Even with policies that are well thought out, there are always prospects of unintended consequences. With carbon trading, there will be substantial windfall gains for people who own non-dairy pastoral land and sell it for forestry. We are seeing that already.
The reason I exclude dairy-land is that dairy economics are sufficiently strong that dairy-land values will provide a buttress against forestry. The forestry will go predominantly on sheep and beef land, although there will be exceptions.
Right now, when non-dairy pastoral land comes on the market there are multiple forestry buyers competing for it. This is particularly the case for land within 70km of a port. The likelihood is that competition for this land can only increase.
In previous articles, I have focused on the role of international investors because they have the scale and financial power to make big decisions quickly with implications that become irrevocable. However, the landscape transformation issue goes well beyond international investors.
If there is a key difference between ‘50 Shades of Green’ folk and the Government, it is that ‘50 Shades’ is looking forward while the Government is relying on rear-mirror statistics.
Right now, the Government has a tiger by the tail.
*Keith Woodford is a retired academic who now holds an honorary position of Professor of AgriFood Systems at Lincoln University, NZ. He now consults through his own company AgriFood Systems Ltd. Articles written since 2010 are archived at https://keithwoodford.wordpress.com. He can be contacted at kbwoodford@gmail.com
69 Comments
Some thinking has gone into this policy. It's just that the thinking has not been spelt out to rural folk because their interests do not feature in it anywhere. Much easier to achieve unstated policy objectives by using other policies that are difficult to argue against.
Sounds like just another game, where the winners will be the short term traders and the middlemen that pocket the sales commission.
As past generation sell down their farms; much of it inherited, I see farming becoming more of a business based on cashflow rather than capital gain. The new owners will see this policy for what it is. A ponzi scheme.
Zero carbon is indefensible and just shows National has jumped the shark. A futile attempt to get ecotard votes.
"Not since the Catholic Church sold indulgences to reduce time in purgatory has there been such a flourishing market in the forgiveness of sin. ...A 2016 study found that 73 per cent of carbon credits provided little or no environmental gain, as they supported projects that would have happened anyway. That figure rose to 85 per cent of projects under the UN’s Clean Development Mechanism.”
FT.com
Without representation by any political party, anyone who disagrees with the current set of fashionable ideas is effectively disenfranchised. Resentment builds, waiting for a champion. Positions harden. A hard line champion appears and gets voted in. Chaos ensues. Do we really have to go down this path?
A pity natural gas was virtue signalled off the table. "A NET Power plant sells power, CO2, and by-products including nitrogen and argon. The sale of those four products brings the cost of electricity from NET Power’s initial plant down to 1.9¢ per kilowatt hour, Goff said, compared to 4.2¢ for a conventional combined cycle natural gas plant ...But even without the by-products, Goff said, a zero-carbon NET Power plant achieves cost parity with conventional natural gas, but with none of the emissions."
www.forbes.com/sites/jeffmcmahon/2019/07/23/net-power-developing-multip…
How does native forest replanting factor into this? I’m currently leading a carbon zero program at work and have been instructed to only buy native forest carbon credits as these carry more weight for the brand. I can’t imagine we’re the only corporate thinking like this and I wonder if a two-tier market will evolve. A lower tier of relatively cheap credits full of radiata pine and a higher tier of more expensive native forest.
From what I understand, native forest sequests a lot less carbon than pines. As the ETS focuses on volume, pines makes the most per hectare. They also have harvest value. I'll try find the resource I had that showed each species and the amount of carbon sequested.
Well, some basic arithmetic here, for context. According to Worldstat Info, NZ has Ag and Forest land areas of 122,860 and 83,422 sq km respectively. Add the 'Other' land use area of 61,428 sq km and there's the total NZ land area of 267,710 sq km. Roughly 1/10th of WA's area, for comparison.
If the March of the Carbon Credit Mines continues, at 100,000 ha/year, or 1,000 sq km/year converted (1 sq km = 100 ha), then by the application of Advanced Mathematics, we have 122 years before every scrap of Ag land is covered in forests. Which cannot be cut down and not replanted, without incurring Carbon Liabilities.
Still, glass half full. There's always Kai Moana, and Beach-combing to keep us at our accustomed level of comfort......
It's all a huge lie isn't it? Plant forest, accumulate carbon for 28 years, but then clear fell it so that essentially all that carbon is returned to the atmosphere over following few decades as the detritus and all the downstream products decompose. To have significant genuine impact you would need to bulldoze all the trees into massive landfills and seal them up in the earth. Stop wasting money and time on this virtue signalling nonsense. Build Nukes and PV plants and invest in cheaper low CO2 energy R&D if you are serious about reducing CO2 production.
Keith, I thought the MPI's ETS figures for carbon sequestration was close to 800 tonnes per ha over 28 years for pine trees and kept rising to 50 years. Yet you mention 340 tonnes per ha?
The forestry companies have had a major impact on farm price expectations in our area. Probably only the current strong beef and lamb prices that are slowing down even faster flow of farm sales to trees.
Wilco,
I have taken the 340 tonnes figure from the recent paper from MPI as to how the scheme will work under the averaging provisions. This averaging system will be compulsory for new forests on farmland that are destined for harvesting.
https://www.mpi.govt.nz/dmsdocument/30285-a-better-ets-for-forestry-pro…
KeithW
With the greatest of respect. The 340 is the average. This is a hypothetical figure. In reality most pine rotations will earn an average of around 600 tonnes in 17 years. At harvest they will carry between 1,000 tonnes plus. The average is what is what the stands will hold on average over time. Nothing has to be paid back at harvest - In effect the land will carry an extra @600 tonnes of carbon per ha on average if in rotational forest compared to pasture. The reality is the forests simply buy us time to change. We need to reduce emissions. If we don’t want forests let the market go on carbon price. At $100 plus we will start to change. At the heart of all this is the science of what not reducing emissions will do to us all. Do nothing and it’s not good for anyone - we might not like the science but unfortunately the predictions are starting to play out.
"radiata stands on fertile farm sites accumulate carbon at an almost constant rate until at least age 30. After 25 years a stand would accumulate ~190 tonnes C/ha and after 30 years, ~225 tonnes C/ha."
https://www.scionresearch.com/__data/assets/pdf_file/0017/17720/NZJFS23…
This carbon trading scheme seems a complete load of rubbish to me. Just like buying a catholic church indulgence as one correspondent observed. A method of appearing to do something but really do nothing.
If it were a meaningful mechanism the aluminium produced from Tiwai point smelter should enjoy the equivalent of a 2.24 cents per kWhr carbon credit premium over coal sourced power produced aluminium at NZ carbon credit rates. I believe that the price of power paid by Tiwai is in the order of 5.5 cents /kWhr so the carbon credit should be significant. Does it work for us this way. Seemingly, no.
Remember when the government introduced the carbon credit system. These were included in the prices that we pay for petrol, gas and electricity. I compared the price changes back then and they made no sense whatsoever. The % price rises was greatest for power and that for gas was greater than liquid fuels. These were in the opposite order of their co2 emissions, especially for power as 70-80% of ours is sourced from renewable sources. The rational for the system is to give price signals to users to modify their energy choices, however the results appear totally counterproductive.
Does anybody have any awareness of these carbon charges and do they have any impact on our choices? I can't see any evidence of this, so what is the point. Are they not just a very dangerous diversion from directly addressing what is a very major problem.
Despite trying to be clear, Keith still manages to obfuscate it a little, probably because he is trying to provide a balanced perspective. Bluntly the current policy if left unchanged will result in NO productive farmland, only forests. Therefore no food production.
But, and I have asked this question before, trees mature and eventually slow their growth and stop sequestering carbon. Forests are living things and individual trees, like people, don't live forever. So harvesting a forest is not necessarily a bad thing. The question that should be asked is when is best to do this? Thus replanting a milled forest would continue the sequestering of carbon.
In NZ there used to be a law that required any harvested forest to be replanted. If memory serves, Helen Clark's labour Government tossed that into the trash.
A declaration of conflict - I do not like the ETS. I think it is a way for wealthy people to avoid responsibility and accountability.
I get that Keith, hence my comment above. But your comment encapsulates at least one assumption - that carbon production continues at least a bit out of control. A harvested forest does not necessarily mean that the carbon is released into the atmosphere, as some commenters suggest. it rather depends on what the wood is used for. But as I said above, the sequestering of carbon doesn't stop if a forest is replanted, but the policy seems to imply that it does. If we are successful at changing the way the human races lives, and poisons the planet, the need for unlimited forests to absorb our excesses will tail off.
I believe the law requiring forests to be replanted when milled/harvested should be re-enacted, but in none of the reports or discussion do i see any evidence that the Government is either considering that or is even open to the suggestion, despite it being not too long ago that it was actually law.
But if you don't replant the forest then don't you have to cough up $$ for the carbon credits? So presumably the cheapest option will be to replant. Unless you can access credits cheaper than the cost of replanting, or can change the land use to something even more valuable than the carbon credit cost.
Or go broke and leave NZ taxpayers with the liability;
https://www.interest.co.nz/news/102722/oil-and-gas-company-voluntary-ad…
A gentle reminder...much of our rivers (Whanganui for example) are a brown and muddy due to erosion off the farmland that was only converted to pasture thanks to the tax payer funded livestock incentive scheme. Much of the land that will be planted should never have been cleared. And it won't be planted if it's more economic to run sheep and cattle. Just a little point worth noting.
You may want to follow that trail of brown in reverse. Chances are you'll find a pine Forest or ex pine Forest at the end of it. Radiata pine monoculture forests are not a panacea for erosion, even if they were that's not where they're being planted, harvesting on that land is to costly. Reverting to bush would be much better but there's no sort term money in that.
Keith- in a paper published in June 1992 D Y Hollinger and others estimated that NZ's exotic forests of all ages, ie. freshly planted, mid aged and mature sequestered about 3.6 tonnes CO2-e per hectare per year on average, rising to 4.5 to 6.4 tonnes per hectare per year if no harvest occurred. Even at that rate, in order to sequester 80m tonnes we would need to have planted 12.5m hectares. I think we presently have 8.5m hectares given over to sheep and beef farming, so where will the necessary land come from? Perhaps we could plant all the airport runways ?
wee willy winkie,
By my calculations we would neeed to be planting 235,000 ha of trees each year if we were to sequester 80 million tonnes per annum. However, the Government policy is that we only have to get to net zero in 2050 so by my reckoning we only need to be planting at this full 235,000 ha by around 2036. That also assumes that there are no new energy technologies. But it is still somewhat mind boggling. Also, over the next few years as we harvest the 'wall of wood', that too has to be replanted as 'extra plantings' over and above the 'new conversion' plantings.
KeithW
On average radiata will store 30 to 35 tonnes per ha over 30 to 40 years. Even at age 50 they will be still doing 15 to 20 tonnes per annum. If you assumed we had zero fossil fuel by 2050 and ag at say 25% less you need 600,000 ha of permenant radiata and job done. There is over 1.2 million ha of class 6e land and worse in NZ.
Jack Lumber,
The NZ policy is for zero net emissions by 2050 but I have not seen anywhere that this is zero gross emissions of fossil fuels. However, with our hydro and geothermal resources we are in a very favoured international situation relative to most countries. I agree with you that permanent forests (never harvested) do change the numbers considerably, but even then, the job is 'never done'. The march of forestry across the land has to continue until gross emissions are zero. Otherwise, forestry offsets continue to be needed to achieve net zero and these cannot come from mature forests.
KeithW
I don't disagree - forests just buy us time on the carbon front and we cant keep planting trees forever. We need to use this time wisely and reduce emissions. At the end of the day the science is clear we need to reduce emissions and this change seems to be the issue for many. We also need to look at the timber profit - this is simply more profitable in many cases than pastoral farming - not in all areas - but is in many. I've just done numbers with a well known farm consultancy on forest vs farming in Otago on timber alone - forestry with timber alone is more profitable, creates more jobs and returns more income to the region per ha by nearly 100% over farming. I look forward to seeing if this report is made public by the farming organisation that commissioned it!!!
Keith- your calculations are correct if we assume that 340 tonnes per hectare of CO2-e is sequestered per 28 year rotation. How realistic does 340 t/ha seem to you? That equates to 12t/ha/yr on country that would struggle to produce 6t/ha/yr of DM as grass. Mature grass is mainly lignin as is wood, so where might the difference arise from? That 340 t result is wildly different from the result that Hollinger reported.
Keith- I have been thinking hard ( can you smell the smoke?) about your figures and have come up with the following- 80m/ 340= 235,000 every year for at least 17 years =4m hectares to be converted from sheep to forestry, but if nothing else on the emissions front changes ie. we get to 2050 and are carbon neutral we will still have to do what is necessary to maintain that status. So does that mean we have to continue to plant ad infinitum? I think Hollinger's 6.4t/ha is more realistic than MPI's, if so that would mean that 235,000 would need to be 444,000.
wee willy winkie
I can see the smoke this morning - it is coming from Australia - but I cannot smell it.
At this stage I am prepared to go with the 340 tonnes - actually I should have said 350 tonnes in my article, mea culpa, not that it really makes a difference. I go with that figure because 350 tonnes is currently the 'official' figure. But I have more number crunching to do. Also I have yet to see how it all changes if we move to permanent (non harvested) forests. That is th enext article ( hopefully). But even with permament forests we have to continue wth the forestry march across the landscpe as long as we need offsets for gross emsissions so as to acheive zero net emissions.
KeithW
Going by the large number of farmer clients coming in our door wanting to plant trees I wouldn’t say this is not upsetting everyone in rural NZ. Most are tired of poor returns and want a better life. Sure meat prices are good this year and hopefully they stay good but something needs to change for many. The biggest investors we see in planting trees, and buying whole farms is other farmers. Best talk to your own brethren as in reality they are leading the charge.
This is a factor in many sales. No one in the family wants to take on the farm. In many cases farms in more remote rural areas, Wairoa, coastal SNI these farmers have been trying to sell for many years. Not many can afford to buy them for farming as the yield on farming is so low - only 1 to 3%. Lifestyle is a factor but at the end of the day you have to pay the mortgage and now it has to be done in 20 years. Land prices are to high for new farmers but older farmers have capitalised any profit into tax free land value and want it along with there children. This pickle is a result of living on capital gain. If farming yield was at or above the cost of capital you could buy it. Any industry will come under change pressure when the asset they use can be used by someone else who has a far higher rate of return. Look at all the dairy conversion from sheep and beef land and multiple other industries.
https://www.washingtonpost.com/climate-environment/2019/11/26/bleak-rep…
Nothing about NZ's current path is "drastic action". Drastic action requires a plan for immediate and growing reductions in emissions, not a plan/policy to offset (our still growing) emissions. Many a scientist has pointed out that we can't plant our way out of this - just as Keith points out.
It seems to me ludicrous that we are spending any amount of taxpayer money on subsidies for planting exotic pines (which do nothing to protect/enhance our natural biodiversity), let alone taxpayer money on purchasing these so called carbon offsets from the (largely) international foresters.
Our attention should be on making our environment and our people resilient to change - not just the predicted weather and environmental changes, but to likely global social change as well.
I'm not so sure about Keith's assumption that dairy economics are sufficiently strong that dairy-land values will provide a "buttress" against forestry. It doesn't take that much of a change in milk price to push a dairy farm into receivership when the debt loading is so high. Banks will be desperate to stop distressed sales happening though as it will impact on land values underlying their lending.
We are being offered dairy farms for forestry because they are broke, the banks won’t finance any new dairy farmers. Don’t fret we aren’t buying them as they are still to expensive even at high carbon prices. In fact at high land prices carbon at any price plays a very small part in return. It comes down to timber returns for 80% plus of the yield. Most I’ve seen are going back to sheep and beef although I do wonder how they make it work at the prices being paid.
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