Wood Matters

New Zealand Government Proceeds with Forestry ETS Cost Recovery Plans

Felix Brandt
Published on

On 21 September 2023, the NZ Government announced its final decision on Tranche Two of its proposed cost recovery charges for services in the forestry Emissions Trading Scheme (ETS). We covered the proposed charges in some detail in our March ETS bulletin in Wood Matters.

Despite strong and largely unanimous industry opposition, including from PF Olsen, the government has decided to implement its original proposal almost unchanged. The only concession it made was to exempt indigenous forest less than six years old from the new annual $30.25 per hectare charge.

This new annual charge alone represents a major increase in the annual cost of ETS participation. Particularly hard hit will be ETS participations – present and future – that are already on the margins of financial viability, such as stock change production forests with little or no saleable carbon and permanent indigenous forests.

ETS participants who wish to avoid the annual charge must lodge an application to remove all of their post-89 forest land from the ETS before 18 October 2023 and repay the full balance of carbon credits issued to their forest land, including any credits that may have been sold or that were retained by a previous owner.

Please note:

+ The option to exit the ETS will continue beyond 18 October 2023.
+ Forestry ETS participants who wish to remain in the ETS, but want to reduce the impact of the new annual charge, can also opt to remove part of their post-89 forest land from the ETS.
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