Forests carbon credit sale world's biggest

Douglas fir, such as these owned by City Forests near Three Mile Hill Rd, in Dunedin, yesterday,...
Douglas fir, such as these owned by City Forests near Three Mile Hill Rd, in Dunedin, yesterday, have double the carbon credit value of radiata pine. Photo by Linda Robertson.
Southern forester Ernslaw One has sold more than $10 million worth of carbon credits to the Norwegian Government - believed to be the first international carbon credit sale by a New Zealand company.

A company spokesman said the credits were sold overseas out of "frustration because of the political interference here" over the Emissions Trading Scheme.

Industry sources understand the 520,000 Ernslaw credits were sold for $21 to $22 a tonne, earning between $10.9 million and $11.4 million, depending on the exchange rate.

This makes it the world's largest forest-sink sale to date.

Ernslaw recently sold about $1 million worth, or 50,000 credits at $20 each, domestically.

The international deal is being hailed as the start of a possible major export earner with "enormous potential" for Otago and Southland.

The Ernslaw sale also brought into sharp focus uncertainly over the future of the Emissions Trading Scheme (ETS), which has been put on hold by the Government and is under review.

Privately-owned by a Malaysian family, Tapanui-based Ernslaw One has almost 28,000ha of forests - 11,000ha of Douglas fir in Otago and Southland and almost 17,000ha of radiata pine in the North Island. The potential for millions of dollars in revenue for the South lies in the Douglas fir, which can absorb twice as much carbon as radiata pine.

The carbon credits could be sold internationally during the Government review.

Ernslaw One chief executive Phil De La Mere said the sale was "very good news" at a time when the forest industry was shrinking and hundreds of jobs had been lost.

He declined to confirm the per-tonne price paid for the carbon credits but said it was "significant" for Ernslaw.

Mr De La Mere said that with the ETS under review, there was no need for domestic carbon emitters to buy credits until they knew the conditions attached.

"We sold the credits overseas out of frustration because of the political interference here," he said, citing Labour's implementation of the ETS and the National Government's desire to implement changes.

Ernslaw environment manager Peter Weir, who is also chairman of the New Zealand Forest Owners Association. said the ETS select committee had recommended New Zealand's ETS be linked to international trading rather than a carbon tax as the primary economic way of managing climate change.

"Policy and political uncertainty" had actively discouraged new forest plantings during recent years, he said.

"The Government needs multiple party support to confirm legislation that provides for stable long-term policy to incentivise new planting."

Southern Wood Council chairman and the chief executive of Dunedin City Council-owned City Forests, Grant Dodson, said any government modifications to the ETS legislation from the review had to take the needs of New Zealand forestry into account.

"Landowners can then maximise the opportunities that now exist for international carbon trading."

The Wood Council believed the carbon unit sale by Ernslaw demonstrated significant interest internationally in New Zealand's forestry carbon units, and highlighted the potential value of Otago and Southland plantation forests for carbon sequestration.

Emissions Trading Scheme

> Limits on greenhouse gas emissions, with those exceeding their limits having to buy carbon credits from those with credits to spare.

> The tradeable domestic New Zealand unit equates to 1 tonne of carbon dioxide.

> These can be converted into assigned amount units for international trade.

> AAUs are sold by brokers to (non-European) overseas companies, or Kyoto-signed-up governments, which hold AAU credit balances.

> Malaysian-owned Ernslaw One is one of New Zealand's largest private owners of Kyoto-compliant forests.

> The Southern Wood Council represents Otago and Southland forest owners with an annual harvest of 1.2 million cu m of wood and 140,000ha of forests.

Add a Comment



Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter