Breaking news (received Friday 19 June 2009)… Legislation to amend parts of the NZ Emissions Trading Scheme (NZ ETS) relating to forestry has been introduced and is expected to pass into law by 30 June 2009 - they all relate to pre-1990 forest land.

Key elements of the proposed legislation are:

  • New deadlines for notification of deforestation and surrender of credits.
  • Deferral of deadline to apply for 50 hectare deforestation exemption to a still-unspecified date.
  • Giving the ability for the government to suspend, re-notify or withdraw altogether, any notified draft allocation plan (for free allocation credits).

It appears the government's intention is to withdraw the current draft Forestry Allocation Plan and not progress the issue of free allocation to pre-1990 forest land owners until after the ETS Review Committee has reported its findings. There is speculation that an offsetting scheme (planting forest elsewhere to cover deforestation liabilities) may be gaining traction in lieu of the free allocation of units.

The ETS Review Committee is due to report towards the end of July.

If the free allocation process goes ahead (which is anything but certain) pre-1990 forest land owners may not receive their allocation credits until mid to late 2010 once all the due process is concluded.

Looking ahead, according to Nick Smith's press release, it is the government's intention to introduce a substantive climate change amendment Bill later in the year once the ETS Review Committee has completed its work.

Earlier in the month EcoSecurities announced a small sale of Assigned Amount Units (AAUs) derived from 300 hectares of forests under the Permanent Forest Sink Initiative (PFSI) to a Japanese purchaser. This is a significant sale in that it is the first sale of forest-derived carbon credits from NZ on the international market. The only other sale of forest-derived carbon credits was the sale of 50,000 New Zealand Units (NZUs) from a NZ forest owner to a NZ industrial firm a few months ago.

PFSI projects suit a limited number of situations since heavy restrictions are placed on harvesting the trees.