Clarky's Comment - May 2009, ETS Deliberations

The Select Committee has been sitting each Monday and hearing many submissions on what different sector groups and agencies would like to see in New Zealand's domestic climate change policies. Some have been calling for a "do nothing" policy. This is supported by neither National nor Labour for very compelling reasons of international credibility and trade implications. Our best guess is that we will have an ETS, with the pre-1990 forest provisions altered to accommodate offsetting i.e. deforestation on one site replaced by a forest of equivalent biological growth on another. This concept is however not getting a great deal of traction in the international negotiations for post-2012 so the government will be concerned about the fiscal implications of such a policy. That may be reflected in the allocation of pre-1990 forest land "partial compensation" units.

Discussions to date around post-1989 forests have focussed on enhancements that further de-risk the scheme to encourage new planting. Specifically a Force Majeure clause that would cover forest losses from causes not reasonably insurable by the forest owner, and potentially an "averaging" scheme that would enable forest owners to secure 50% of the forest credits from new planting, but face no harvest liabilities provided the forest is replanted.

A better understanding of any amendments to existing legislation, including the treatment of other sectors (so important to make an ETS work for forestry) will be revealed following the Select Committee report in late June or early July.

What About 2009 Planting?

We are not aware of much new planting planned for 2009. This is hardly surprising given the uncertainty created by the ETS review. In all my involvement with the ETS over the last 5 years (including as a member of the Government's Climate Change Leadership Forum) I have not heard anyone in either the private sector or government dispute that increased tree planting is an important part of the NZ domestic climate change response. This applies regardless of the flavour of what the rest of the domestic policy looks like.

Being highly capital intensive it is desirable that this new tree planting is funded by the private sector rather than the taxpayer. But in 2009 we are in a unique situation that the private sector does not have the confidence to start investing until the outcome of the current ETS legislation is known. Thus if ANY material area of new land planting is to be commenced in 2009 it must be carried out by government or initiated by a government policy that makes it attractive for the private sector. Such activity need not be subject to finalisation of the ETS review.

Treestocks and planting labour are available now for a 7-10,000 ha afforestation programme. Some private land is available for lease. Access to a small area of government land (e.g. Department of Conservation) land may be needed if the government were to fund the tree planting. Getting started this year would mean the infrastructure around larger planting programmes in future was not further eroded.