Key Dates for Post-1989 Forest Owners

There are two key dates approaching for post-1989 forest owners thinking about ETS registration:

  • the 31 March 2012 voluntary emissions return deadline and
  • the 31 December 2012 registration deadline to claim 2008 to 2012 NZUs.

31 March 2012 Voluntary Emissions Return Deadline

To submit a voluntary emissions return for 2008 to 2011 post-1989 forest NZUs, you need to complete the registration process by the 31 March 2012. This is not just submitting the registration application to MAF, but MAF also need to process and approve the application by this date. The last two years leading up to the 31 March have seen many post-1989 forest owners leave the registration process to the last minute creating huge backlogs at MAF and some forest owners not able to claim their NZUs and having to wait another year. If you are considering post-1989 registration and want to claim your 2008 to 2011 NZUs by the 31 March 2012, please contact colin.hercus@pfolsen.com as early as possible.

31 December 2012 Registration Deadline

In order to claim your 2008 to 2012 NZUs, you must have your post-1989 forest registered by the 31 December 2012. If you don't, you will have forgone the opportunity to claim these NZUs forever. Many post-1989 forest owners are still unsure whether or not registering into the ETS and selling NZUs is the right decision for them, but this deadline could see many forest owners register next year so they can claim the 5 years worth of NZUs for option value alone and make the decision on whether or not to sell at a later date. This could see considerable pressure put on forest managers/consultants and MAF the closer we get to the 31 December 2012, so it would be advisable to make your decision on registration and engage a service provider in the first 6 months of 2012.

What is the value of 5 years worth of NZUs? This depends on species, growth rates and age, but at today's NZU value it could be $1,000 to $2,500 per hectare less any potential liability when carbon stock decreases i.e. harvesting. If you wish to discuss this further, please email colin.hercus@pfolsen.com.

The Ministry of Agriculture and Forestry (MAF), in its November Sustainable Forestry bulletin, is also strongly recommending that those submitting post-1989 registration applications to claim NZUs for 2008 to 2011 apply before the end of 2011 (see Sustainable Forestry Bulletin issue 32).

Many post-1989 forest owners are concerned about the price risk of selling NZUs and having to account (pay back) the equivalent number of NZUs at harvest time, but at a much higher price. This issue is the most pronounced for forest-owners with existing forests (established between 1990 to 2000) and with a single, or few, age classes. But even these forest owners have options to mitigate this price risk. In addition, PF Olsen has been in discussion with parties contemplating establishing instruments which enable post-1989 forest owners to extract value from their NZUs without taking on the carbon price risk. Whilst there are few such facilities in the market at present, if they do come on the market and you haven't registered and applied for your credits in time, the opportunity will be lost of all 2008-2012 units. There is still the opportunity to participate in a carbon leasing programme with no carbon price risk if you have 100 hectares or more of post-1989 forest. If you would like to learn more about your options please e-mail colin.hercus@pfolsen.com.

Carbon Price

Over the last month NZUs traded in the NZ$12 to 14 range on very light trading volume. The main driver is the European carbon market's response to the Eurozone financial crisis and impact on the CER price and the NZ$/€ exchange rate.