Forestry Units

Government Policy Announcements - 20 September 2007

On 20 September 2007, the NZ Government announced significant forestry policies, including the Government's intention to:

• devolve to forestry land owners (or forestry rights holder), the liability associated with deforestation of pre-1990 forests;
• devolve to forestry land owners (or forestry rights holder) all forestry sink credits and associated liabilities (for deforestation and harvesting) allocated to NZ under the Kyoto Protocol in recognition of the carbon sink value of post-1989 forests; and
• allow for Permanent Forest Sink Initiative (PFSI) forests to switch to the New Zealand Emissions Trading Scheme.

New Zealand Plantation Forestry Units

Pre-1990 Forests

Pre-1990 forests will automatically enter the New Zealand Emissions Trading Scheme (NZ ETS) on
1 January 2008, and owners will be liable for deforestation from that date. If deforesting (through land use change for example), owners will have to surrender New Zealand Units (NZUs) to the Crown in amounts equivalent to the emissions calculated as a result of deforestation.

Some exemptions from deforestation liability are possible for less than 2ha (of total pre-1990 forest land), or for weed control purposes (upon application).

In addition, owners of less than 50ha of forest may lodge an application for exemption from the NZ ETS provisions.

Post-1989 Exotic Forests

From 1 January 2008, if a land owner chooses to do so, (within a stipulated timeframe), post-1989 forests can enter the NZ ETS and be allocated NZUs. If entering the NZ ETS, NZUs will be allocated equivalent to the carbon sink potential of the forest. Corresponding liabilities for deforestation will also apply to the participating post-1989 forestry owners. 

Further Information

Further detailed policy decisions are expected later this year including those concerning methodologies to be used for assessing carbon sink potential, gifting of NZUs to pre-1990 forest owners, and dealing with post-1989 indigenous forestry. 

Further information on NZ climate change forestry policies, is available on the Ministry of Agriculture and Forestry's website: MAF - Climate Change.

New Zealand Permanent Forest Sink Initiative (PFSI)

The Permanent Forest Sink Initiative (PFSI) provides an opportunity for landowners to establish permanent forest sinks and obtain tradable Kyoto Protocol compliant emission units ('Assigned Amount Units' (AAUs)) in proportion to the carbon sequestered in their forests.

To be eligible for this initiative the land must not have been covered in forest as at 31 December 1989 and the forest must be "direct human induced .... through planting, seeding and/or the human-induced promotion of natural seed sources."

It is proposed that PFSI participants will have the option of switching from the PFSI to the NZ ETS within 18 months of the NZ ETS legislation coming in to force. To do so participants will need to give up their right to AAUs and take on the obligations required by the NZ ETS.

More information on the PFSI is available from the Ministry of Agriculture and Forestry's website: MAF-PFSI.

Policy Advice

NZCX's role is as a broker and so we are not in a position to provide policy advice.

For questions on Forestry policy the Ministry of Agriculture and Forestry have set up a help line 0800 CLIMATE (254 628)

If you are a corporate and need help in this areas, please contact our affiliates:

• Policy advice:  www.frazerlindstrom.com
• Legal Advice:  www.chancerygreen.com

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