Trees part of business balancing act

Emission units, or carbon credits, can be bought by a business from a forest owner or through a broker, allowing the owner to emit greenhouse gas.

Emission units are recorded by the Ministry of Economic Development and each unit is individually identifiable. When bought or sold, units are transferred from the vendor's holding account to the purchaser's holding account.

Owners of forests planted since 1989 are entitled to receive emission units for carbon stored in their forests. Forest owners sell the entitlement to receive emission units and obligations to surrender emission units, not the trees or land.

If participating forest owners cut down their trees, they have to surrender emission units equal to the carbon released.

An exporting business can seek Government assistance if exposure to ETS charges puts its economic viability at risk.

A business emitting one million tonnes of greenhouse gas for example, receives carbon credits from the Government equivalent to 900,000 tonnes, requiring it to offset 100,000 tonnes of emissions by buying carbon credits from forest owners or a business which has reduced its emissions.

In one case quoted by Climate Change Issues Minister Nick Smith, a business invested $60 million in new technology to change from coal-fired energy generation to wood waste fuel.

That halved its emissions to 500,000 tonnes, leaving it able to sell carbon credits equivalent to 400,000 tonnes.

Forestry is at the heart of offsetting emissions, with 6ha of newly planted trees enough to offset July 1 electricity and energy price rises for an average New Zealand business.

 

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