Carbon Match: Pines and Permanency

Wednesday 8 Jun 2022

Pines and Permanency - Jury Still Out? – Another uncertainty is what the Government will do on settings that will affect the forestry supply side. We are still waiting to see the decision on a highly publicised proposal to exclude exotic forests from the permanent post-1989 category in the NZ ETS. This has been vigorously opposed by some Maori groups who are concerned about the potential loss of a useful economic opportunity.

Officials' analysis to date has indicated that cumulative NZU supply from forestry is at risk of exceeding demand in the NZ ETS in the 2030s. See below. However, removing exotic forest species from the permanent forest category would reduce supply by some 40 million tonnes in the period between 2031-2035, relative to the status quo.

Whilst the effects of rising NZU prices have increased afforestation, the flow on effects onto pastoral farming, communities, and iwi are not insignificant. Policy makers - and the Minister are under real pressure to get the balance right on this. The changes - however they ultimately look - were targeted to be legislated in Q3/4 of this year, to take effect from 1 January 2023.

For more details see: MPI Interim Regulatory Impact Statement: Managing Exotic Afforestation Incentives March 2022

Source: Carbon Match

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