ETS changes bode ill for forestry

Marlborough forestry will suffer from the Government's abandonment of serious commitment to the Emissions Trading Scheme. Afforestation in Marlborough is significant and has expected to benefit from earnings from carbon sequestered in existing and new forests.

However, in an abrupt and controversial shift in emphasis, the scheme's reliance on a trading market to set a reasonable price for carbon is now undermined. The value of units is heading for zero as the Government refuses to limit the quantity of cheap and dubious credits New Zealand emitters and industry can import to offset their carbon footprint. New Zealand is the only market not applying a limit, based on a Treasury assertion that the atmosphere doesn't care where the carbon reductions occur so spending our funds in Ukraine, Russia and Hungary is an adequate response to climate change obligations. That is barmy reasoning because the impact is serious long term.

In the first place, no new forest planting will occur because there will be no support from carbon unit income. This has long-term consequences for the supply of wood.

Secondly, New Zealand will be exposed as a fraud internationally in respect of its obligations to take local action to reduce emissions.

Forestry was promoted as the star contributor to climate change obligations. Our large plantation forests store carbon and reduce the obligations we have taken on internationally to reduce greenhouse gas emissions. Forestry was the first industry to enter the ETS and the obligations from this were to be compensated with credits from sequestration.

With an ineffective market, forestry is now backing off involvement so forests are being harvested and not replanted and very few new forests are being established. This will increase the cost to taxpayers when New Zealand has to balance its carbon emission books in 2015 under the international agreements.

Without a reasonable cost being applied to carbon abatement, no carbon reduction activities will occur and this will affect our reputation. Instead of helping lead the campaign for reducing greenhouse gases in the world, New Zealand is falling off the pace and will be seen as not doing "our fair share".

This will expose our international negotiators to pressure and is likely to affect our trade conditions as well. Europe and now many parts of the world such as China, California, Canada, South Korea and, of course, Australia have or are introducing carbon pricing schemes to reduce emissions. New Zealand, trading on its clean green image, will be out of step.

The Government will press on and pass the current amendment in the face of strong opposition and has left itself very little wriggle room for effective change. Using regulation powers to limit the import of dubious credits for offsetting by local emitters will be one option for the Government but it is making no decision on this. The carbon market is influenced by supply and demand, and increasing the percentage of units that must be of local origin will help.

Marlborough foresters are urged to keep the pressure on their Parliamentary representatives to recognise that new forestry is of enormous value long term.

A vigorous carbon market is one way of encouraging the industry to get moving again.

Geoff Thompson is a Wellington consultant with expertise and interests in forestry, agriculture, the Emissions Trading Scheme and climate change issues

The Marlborough Express