Processing of Emission's Trading Scheme Applications

Thank you to those that have engaged PF Olsen to process their applications for post-1989 and pre-1990 forest land.

"Whilst we are very busy working to the [pre-1989] deadline of 31 March 2010 we are pleased to have previously invested a lot of time liaising with the Ministry of Agriculture and Forestry and clarifying the rules", says Richard Quinlan, Land Information Manager for PF Olsen (see photo left). "We have also done a lot of work developing new functionality in our GIS (Geographic Information System) to make sure that we are both conforming to the ETS rules, but at the same time maximising the area in the application."

An example of maximising the area is using "buffering" which adjusts the stand boundary relative to its expected growth. "We understand that few other applicants are using "buffering", adds Quinlan. "It's also important that we try to get applications right first time to avoid MAF spending a lot of time on the application, and potentially charging additional fees."

In terms of the pre-1990 free allocation, partial compensation NZUs, applications can only commence once the mapping standards and the Allocation Plan (not expected any earlier than April 2010) are finalised.

For those that have decided not to join the ETS yet, we reiterate our advice that unless you have an urgent desire to sell your NZUs in the near-term there is no urgency to join the ETS. You can enter the ETS up until 2012 and still claim your NZUs from 2008.

Many post-1989 forest owners will still be unsure if they should join. As covered in prior correspondence, and Wood Matters, some of the factors to consider are:

  1. Composition of forest holding (especially age-class structure).
  2. Expected returns from harvesting (to offset the carbon liability at harvest).
  3. Access to, and cost, of carbon insurance.
  4. View of the future of the carbon market.
  5. Attitude to the risk associated with the carbon liability at harvest.
  6. Desire to generate revenue from carbon sales.

This year PF Olsen will be able to assist forest owners with evaluation of points 1, 2 and 3 above, and continue to provide information and commentary about the carbon market, 4. As mentioned previously, we hope to be able to offer opportunities to hedge, or lay-off the carbon price risk associated with carbon through pooling-type structures (point 5 above) to allow forest owners to enjoy carbon revenue without the carbon price risk.

Some important dates:

  • 31st January 2010 - last day to notify MAF of deforestation of pre-1990 forest in 2008/09. Thereafter MAF notification is required within 20 working days of deforestation.
  • 31st March 2010 - final date for submitting voluntary post-1989 emission returns and mandatory pre-1990 emission returns as a result of deforestation in 2008/09.