New rules proposed for carbon farming of exotic forests in future

A new proposal to better manage carbon farming could see future permanent plantings of exotic forests like radiata pine excluded from the Emissions Trading Scheme (ETS).

Forestry Minister Stuart Nash and Climate Change Minister James Shaw have released a public discussion document that seeks feedback on ideas to better manage afforestation.

“Climate change is a challenge we cannot postpone. The government wants to encourage afforestation to help meet our climate change targets, offset carbon emissions, and also help farmers, landowners and investors diversify their income streams,” said Stuart Nash.

“We want to balance the risks created by new permanent exotic forests which are not intended for harvest. We have a window to build safeguards into the system, prior to a new ETS framework coming into force on 1 January 2023.

“From 2023, under current rules, a new permanent forest category of the ETS would allow both exotic and indigenous forests to be registered in the ETS and earn New Zealand Units (NZU). We are now proposing to exclude exotic species from the permanent forest category.

“We want to encourage the right tree, in the right place, for the right reason. We intend to balance the need for afforestation with wider needs of local communities, regional economies, and the environment.

“Increased plantings of exotic forests are being driven by rising carbon prices as landowners and investors seek higher returns. The NZU price has more than doubled over the past year, from around $35 in late 2020 to over $80 in February 2022.

"Permanent exotic forests like radiata pine have potential environmental and ecological risks. These include pests, fire, damaged habitats for native species, biodiversity threats, and a relatively short lifespan compared to well-managed mixed indigenous forests.

"Later this year, we will also consult on proposals which could give local councils more powers to decide under the Resource Management Act where exotic forests are planted in their areas,” said Stuart Nash.

Climate Change Minister James Shaw said planting more trees can help us meet our climate goals, but it is important to make sure all types of afforestation are well-managed through the ETS and the planning process.

“Aotearoa was once blanketed with native forests, home to indigenous birds, insects and other wildlife. Today much of those ancient forests are gone, but what remains is still a vital carbon sink,” said James Shaw.

“In its advice to Government, the Climate Change Commission said we need to increase both indigenous and exotic tree planting to meet our emissions targets. But they also warned we need to reduce our overall reliance on forestry offsets, and better manage the impacts of afforestation.

“For example, a proliferation of permanent exotic forestry could result in lower long-term carbon prices and potentially limit investment in low-carbon technologies. At the same time, an increase in native forestry will require additional management efforts to eliminate pests that feed on native trees.

“This consultation is an opportunity for anyone with an interest in the future of forestry to have their say. We particularly want to hear from Māori landowners. Iwi-Māori have significant interests in permanent forestry and we want ensure they are not unfairly impacted.”

The decisions we take now will be felt decades into the future, so it’s really important we get this right,” said James Shaw.

Find out more and have your say at:  https://www.mpi.govt.nz/consultations/managing-exotic-afforestation-incentives

Public submissions can be made from 14 March. The consultation runs till 22 April 2022.

Questions and Answers

What key changes are being proposed?

The new permanent forest category of the NZ ETS, which comes into force on 1 January 2023, permits exotic species including radiata pine as well indigenous forestry to be registered in the scheme and earn New Zealand Units (NZU).

The Government has listened to submissions and confirmed the risk that the new permanent forest category and high NZU prices could accelerate the establishment of new permanent exotic forests which are not intended for harvest.

To manage this risk, the proposed changes include restricting exotic forests from registering in the permanent post-1989 category in the Emissions Trading Scheme, which will remove the NZ ETS incentive to plant permanent exotic forests.

The Government is also consulting on a proposal to adjust how the new carbon accounting method (averaging accounting) applies to remote and marginal land for harvesting.

What are the stats for afforestation and the forests in the ETS?

It is estimated there was nearly 11.5 million hectares of farmland in 2017. Te Uru Rākau – New Zealand Forest Service estimates that 2.8 million hectares of this could be suited to afforestation. Between 1990 and 2019 it is estimated 769,702 hectares of that farmland was converted to forest, as follows:

  • 1990-1999 – 490,101ha
  • 2000-2009 – 167,989ha
  • 2010-2019 – 111,612ha

The Ministry for Primary Industry's most recent Afforestation and Deforestation Intentions Report estimates that exotic afforestation accounted for 33,600 hectares in new planting in 2020, and 45,300 hectares in 2021. Of this, around 77 percent is intended for production ad 23 percent intended for permanent forest.

A significant proportion of post-1989 forest land in the ETS is on ‘poor quality’ land, classified as Land Use Capability classes 6 to 8, which is often more suited to forestry than agriculture. It accounts for around 88 per cent (308,664 hectares) of the total area in the ETS (349,076 hectares).

Around 89 percent of the registered forest in the ETS is exotic, mostly radiata pine. The balance of 11 per cent is indigenous species, at 37,000 ha. The registered exotic forests are comprised of 255,000 ha radiata pine and 57,000 ha of other exotic species.

In 2021, forests in the ETS sequestered 6.7 million tonnes of CO2 which is equivalent to the annual emissions from 2.5 million cars.

What is the scale of Māori forestry interests?

In 2018, Māori were estimated to own $4.3 billion of forestry assets and some 2,200 Māori were employed in the sector (40% of the forestry workforce). 

Around 30% of New Zealand’s 1.7 million hectares of plantation forestry is estimated to be on Māori land, and this is expected to grow to 40% as Treaty settlements are completed.