Forest owners are angry and frustrated a change to
legislation affecting how they can pay for their emissions
obligations has been fast-tracked through Parliament.
The amendment to the Climate Change Response Act 2002 was
pushed through with post-Budget legislation and came as a
surprise to forest owners.
It means only New Zealand Units (NZUs) - not lower value
international units - can be used to pay for obligations when
post-1989 forest land is deregistered from the Emissions
Trading Scheme (ETS).
Climate Change Minister Tim Groser said the amendment would
remove an unintended consequence of the operation of the
scheme which allowed forest owners to ''arbitrage'' NZUs.
Arbitraging is a form of trading which means participants in
the ETS can profit by selling high value NZ units while
meeting their obligations using cheaper international units.
If left unchecked the situation could create ''reputational
and integrity risks'' to the ETS and fiscal costs to the
Crown, Mr Groser said.
New Zealand Farm Forestry Association president Ian Jackson
told Courier Country the move was a ''big negative'' for
forest owners and was yet another example of the Government
giving them ''more of the same'' treatment.
''The ETS is just a bloody mess.
''The Government hasn't got the will to enact it.
''It wants it to go away but it's not politically astute to
This legislation was put in place to appease other emitters
but it effectively penalised forest growers because they were
locked into the scheme, he said.
''It blurs the whole investment market in forestry.''
The scheme was supposed to be simple but the various
amendments had changed that.
As a result, the numbers of new forest plantings was down
despite returns lifting of late, Mr Jackson said.
Forest Owners Association (FOA) president Paul Nicholls said
forest owners who had planned to pay their emissions
obligations with international units were no longer able to
do so under the amended Act.
Yet, these units, which typically sell for about a tenth of
the price of NZUs would still be legal tender for power
companies and other emitters.
''Forest owners who have bought international units to meet
their obligations during the next 12 months will be forced to
sell them at a likely loss.''
Mr Nicholls said the number of forest owners directly
affected was not known but all forest growers would be
concerned by the inequity of this.
''For the second time in the tawdry history of the ETS,
forest owners are being hit by retrospective legislation.''
While the Bill was designed to stop arbitraging by forest
owners, it also caught out everyday forest owners who entered
the ETS in good faith and who wanted to exit because ''it
isn't worth the candle''.
''Small forest owners and iwi will be disproportionately
''Meanwhile, power companies and other emitters will be
allowed to arbitrage for another year.''
FOA chief executive David Rhodes said arbitraging did not
benefit New Zealand or the climate in any way but was an
inevitable result of allowing unrestricted volumes of cheap
international units into the country.
FOA, Maori interests, the Parliamentary Commissioner for the
Environment and environmental groups had repeatedly told the
Government these units undermined New Zealand's ability to
address climate change.
''Finally they've decided to act. But why now? Why with such
urgency? Why retrospectively? And why only forestry?
''Mr Groser announced, in December, non-New Zealand units
would not be able to be used in the ETS from mid-2015, which
would have given people time to adjust, Mr Rhodes said.
Primary Industries Associate Minister Jo Goodhew said
post-1989 foresters could still use Kyoto units for
liabilities incurred through deforestation or harvesting, and
sell Kyoto units on either domestic or international markets.