The government signals provided in New Zealand’s ETS review can kickstart carbon forestry and help reverse the trend of declining greenhouse gases stored in NZ forests, the Forest Owners Association said on Thursday.
The Ministry for the Environment on Tuesday released the long-awaited ETS review discussion paper, making it clear the scheme needs to be amended in order to driver bigger emission cuts.
“The discussion document is refreshing in its candour. It clearly states that New Zealand needs to reduce its carbon emissions and for this to happen, policy settings need to change,” David Rhodes, chief executive of the Forest Owners Association said.
The association has previously been highly critical of the ETS, and in February warned the weak scheme rules risked causing emissions to balloon later in the decade as the low NZU price failed to encourage more planting of trees.
In 2014, 3,000 hectares of new forest was planted, far short of the government target of 20,000 hectares.
“If things don’t change, emissions will gather pace in the 2020s as the spike of forests planted the 1990s are harvested. Fortunately the government recognises this and wants to identify changes to the NZETS that could help increase the rate of forest planting,” Rhodes said on Thursday.
Climate Change Minister Tim Groser made it clear on Tuesday that New Zealand must step up its emission-cutting efforts if it is to meet its target of cutting emissions to 30% below 2005 levels by 2030.
Rhodes’ sentiment was echoed by Carbon Forest Services, a specialist firm participating in the ETS.
“(It) could have a significant impact on the attractiveness of carbon forestry by reducing the amount of carbon liability to be repaid upon harvest and reducing perceived risk,” the company said in a comment to a press release from Associate Minister for Primary Industries Jo Goodhew on forestry-related issues in the ETS review.
The market responded positively to the discussion paper. On Wednesday the NZU price burst through the NZ$8 threshold for the first time since Feb. 2012 to close at NZ$8.20. The price went unchanged in Thursday trade.
“Two things are a positive in my view,” said Lizzie Chambers, director of online trading platform Carbon Match.
“The first is that it’s clearly in the government’s interest to get rid of the 2-for-1 as fast as possible, and that they have made this a priority issue because legislative change could occur as early as the first half of next year is great,” she told Carbon Pulse.
“The second is that they do not seem that keen on auctioning in the short term and make no mention of a cap. The prospect of auctioning has hung over this market for quite a while and it now looks like they acknowledge that supply is not the issue.”
By Stian Reklev – firstname.lastname@example.org