Clarky's Comment - March 2009, ETS Matters - Pre-1990 Forest Land Units

ETS Matters - Pre-1990 Forest Land Units

The Government has published its Draft Forestry Allocation Plan in respect of compensation for loss of land value from the imposition of a deforestation liability on pre-1990 forest land. This can be viewed at New Zealand Emissions Trading Scheme Draft Forestry Allocation Plan.

The date for public submissions on this Plan has been extended to 30th April. MAF officials advise that prescribed dates for applying for exemptions under the 50ha threshold (30 June 2009), and for applying for an allocation (31 July 2009) MAY also be extended but not until these and any other changes to the Climate Change Response Act have been considered by the Select Committee. The safe response to this uncertainty is to get the ground work done to make these applications by the currently prescribed dates.

PF Olsen has written to clients on our database, including a response form that will guide what specific work is required on each forest block that we manage. Please get your Response Form back soon, as there is a lot of pressure on our mapping and consulting staff to get all this work done in time.

If you have not received the letter and need some work done on your forest or forest land to check eligibility for the 50ha exemption or to maximise your NZU allocation in respect of pre-1990 forest land, I suggest you contact colin.hercus@pfolsen.com.

Korea Free Trade Agreement

During his visit to New Zealand on 3rd March, President Lee Myung-bak, President of the Republic of Korea and our Prime Minister John Key, jointly announced that negotiations would commence immediately for a Free Trade Agreement between Korea and New Zealand. Korea is our largest market for export logs, and logs are the single largest (by value) export from NZ to Korea. Logs do not attract tariffs but processed timber does. We sell very little processed timber to Korea but we welcomw an improving business case for Korean firms to set up log processing within NZ to supply into their domestic market. In particular:

  • Rising energy costs, combined with Korea's strong dependence on fossil fuel for electricity generation.
  • Korea's commitment to join in global efforts to reduce atmospheric greenhouse gas emissions.
  • Renewable geothermal energy close to our major CNI forests, can be used for drying timber.
  • Increasing constraints on tropical log supplies and the suitability of clear or finger-jointed Radiata to replace tropical timbers in furniture and interior apartment fit-outs.

A programme to aggressively remove tariffs on processed timber products also helps the business case. Suitable and reasonably-priced industrial land, along with security of electricity supply, and a streamlining of RMA and Building Consent processes will be important to attract investment from Korea in New Zealand wood processing.