There are currently two carbon accounting systems for forests registered in the New Zealand Emissions Trading Scheme (ETS): "averaging accounting" and "stock change accounting".
Averaging accounting became the new default carbon accounting system for production forests in 2023. Under averaging accounting, first rotation trees earn carbon credits up to their "average age" (16 to 26 years, depending on species - see table below). These carbon credits do not have to be surrendered when the trees are harvested, provided the forest is replanted within four years of harvesting. Other key points to note about averaging accounting:
- A species' average age is determined by ETS rules, not the actual rotation length
- Trees that are cleared before reaching their average age will miss out on a significant portion or all of their carbon credit entitlement, depending on the age at which they were cleared
- Trees that have passed their average age cannot earn any carbon credits under averaging accounting
- For trees registered in the ETS in the current reporting period, which runs from 2023 to 2025, carbon credit entitlement is backdated to the start of 2023 only. This means that trees that were planted in 2020 but not registered until 2023, for instance, will miss out on the first three years of carbon credits
- All forests registered in the ETS before 2019 will always be "stock change forest".
- Some forests registered in the ETS between 2019 and 2022 were eligible to switch to averaging accounting. The option to switch had to be exercised before the Final Emissions Return for the 2018-2022 reporting period was submitted.
- Although most, if not all, carbon credits have to be surrendered when stock change forest is harvested, future rotations will resume earning carbon credits, provided the forest is replanted within four years of harvesting.
- The permanent forest category, which was introduced in 2023, uses the stock change accounting method.
Quick comparison of the stock change and averaging accounting systems
