Carbon Market/Carbon Forestry Update

Post-1989 registrations reminder

If you are considering registering your post-1989 forest into the ETS to claim NZUs for 2008-2010, and have not yet done so, get your application into MAF asap. We have been advised by MAF that recently there has been a significant influx of applications. To claim your NZU's by the 31 March 2011, your application first needs to be approved by MAF and this takes time. If you would like assistance with this process and have post-1989 forests in excess of 20 hectares contact Colin Hercus at PF Olsen on email colin.hercus@pfolsen.com.

Forestry ETS facts and figures

MAF has now allocated more than 5.1 million NZUs to 585 post-1989 forest owners. A total of 900 applications have been lodged with over 135,000 ha are now registered in the scheme.

For pre-1990 forest land owners, MAF has made final determinations on 39 applications, allocating just under 750 000 NZUs for both commitment periods. This represents about 13,500 ha of pre-1990 forest. A preliminary determination has been made for a further 84 applications (38,000 ha). To date 300 applications have been lodged with MAF.

Carbon Market

We indicated last month that a weakening international CER price was likely to cap the NZU price here in New Zealand. It was reported last month by Westpac that NZUs for the first time traded above the CER price in NZD, albeit briefly until the market corrected itself. Since then NZUs have traded around the $20 mark which is a slight drop over last month and just below the CER price.

CERs have fallen in value recently due to large issuances from industrial gas projects involving the reduction of hydrofluocarbon-23 and nitrous oxide which has forced the international price down. CERs are issued to emission reduction projects in developing countries and New Zealand and Europe are the only markets which allows their use for compliance as well as the domestic units.

Less Than 50 Hectare Exemptions

The less than 50 hectare exemption is a one off opportunity for pre-1990 forest land owners to exempt their land from the ETS. This means the exempt land can be deforested (land use changed) at anytime without incurring the deforestation liabilities. The exemption is registered as an interest on the land title and stays with the land if sold.

The exemption must be applied for by the 30 September 2011 by the landowner on the 20 July 2010 or if the land has already been deforested, the land owner at the time of deforestation (between 1 January 2008 and 20 July 2010).

Eligibility for exemption is determined by the following

  • Must be an area of less than 50 hectares.
  • Must have been owned on the 1 September 2007 by a person or persons who, together with any associated persons, owned less than 50 hectares of pre-1990 forest land across all land titles.

Sound complicated? It can be if you were not the land owner on the 1 September 2007 and/or the land was owned by multiple parties. We recommend that you don't leave your exemption application to the last minute as determining eligibility for the exemption and getting the required statutory declarations signed can take considerable time. If you would like assistance with applying for a less than 50 hectare exemption, contact Erin Leahy on email erin.leahy@pfolsen.com.

New Carbon Forestry Projects

PF Olsen has been evaluating projects which have the potential to allow post-1989 forest owners to either directly or indirectly benefit from the carbon market, and at the same time remove the risk of adverse movements in the price of carbon. Several PF Olsen clients are currently evaluating participating in such a project. This opportunity is available for a limited time and is limited to owners of at least 100 ha of post-1989 forest land. If you would like to learn more about this opportunity, contact Theo Vos at PF Olsen by email theo.vos@pfolsen.com.