Wood Matters

Next year will be an important year for participants of the New Zealand Emissions Trading Scheme (ETS):

Final Emissions Return
 

All ETS participants will be required to lodge a Final Emissions Return (FER) between 1 January and 30 June 2023. If you have an ETS service contract with PF Olsen that covers emissions returns, we will automatically lodge the FER on your behalf.
 

Averaging Accounting

Among the most critical of the many changes coming to the ETS next year, will be the introduction of a new carbon accounting system called “averaging accounting”.

All forest that is registered in the ETS after 2022 will be subject to this new method for calculating carbon storage unless it is registered in the new permanent forestry category, in which case it will be subject to the legacy carbon stock accounting system.

Under averaging accounting, first rotation Carbon Accounting Areas (CAAs) will earn carbon credits until they have reached their “average age”. Forest owners will not have to surrender credits when they harvest these CAAs as long as they are harvested after their average age has been reached and are replanted within four years of harvesting. Future rotations on these CAAs will not get any further carbon credits.

CAAs that were registered in the ETS on or after 1 January 2019 and before 1 January 2023 and that meet certain criteria will have the option of switching over to averaging accounting. In many cases, the switch will increase a production forest’s enduring (aka “low-risk” or “safe”) carbon available for sale.

CAAs registered in the ETS prior to 2019 will stay on the stock-change accounting system.

We have developed a flow chart (see below) to help you determine if you have CAAs that might qualify for and benefit from a switch to averaging. The chart should be regarded as a decision-making aid only, not as a definitive guide.

Participants who wish to switch existing CAAs over to averaging will need to complete a special emissions return for the CAAs concerned. This return must be lodged and approved before the Final Emissions Return for all CAAs is submitted. Once the Final Emissions Return has been submitted, a subsequent switch to averaging will no longer be possible.

Similarly, it’s important to note that once you have switched a CAA from stock change accounting to averaging accounting, you cannot switch it back unless you register it in the “Permanent Forestry” category. 

We will be contacting all PF Olsen ETS service clients who have CAAs that are eligible for averaging in due course to assist with the decision making and switching process.