WoodWeek – 31 March 2021

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Greetings from your WoodWeek team in Rotorua. Well, it's “pick on the wood industry week" by the mainstream media this week. For all of their 'the-sky-is-falling' routine, you’d think someone might have fact-checked that CHH don't supply Bunnings. The more rational reaction from the building industry is that prudent planning ahead, while the CHH Kawerau mill gets back to capacity, will see most business receive their orders. On the positive side, now your local builder has a 'real' reason why his plans to get to your renovation are delayed.

Carbon sequestration news this week saw Sir Stephen Tindall saying, “we congratulate the Climate Change Commission on its draft recommendation of 300,000 hectares of native forest by 2035. However, we think New Zealand can be more ambitious.”

On that note, registrations are pouring in for our Carbon Forestry 2021 Conference in mid-June. Earlybird rates still apply, but we recommend you register before this event sells out. The pace of discussion on carbon forestry options and best practice is growing and will accelerate when the feedback comes from the first feedback round by the Climate Commission as they refine their planned advice to Government for action. Make sure your team is registered for our conference before time runs out.

With this week seeing submissions close for our Climate Commission’s first consultation round, a request was made to Government to help build a big biofuel plant. Z energy’s CEO is suggesting emerging biofuel technologies could be more efficient than electric vehicles to reduce transport sector emissions. This from our biggest petroleum retailers in a submission to the Climate Change Commission. You may recall Z Energy mothballed a biofuel plant that cost too much to produce biodiesel from meat tallow. Now they want to build a more cost-effective plant, about 20 times the size, to meet more of our national fuel needs.

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Re-thinking native forest establishment growth

Re-think needed for native forest establishment growth - In January the Climate Change Commission proposed 300,000 hectares of new native forests be established by 2035 to provide effective carbon sinks over the next century.

However, while Pure Advantage and Tane’s Tree Trust are in support of the Commission's draft advice, they are calling for greater ambition - and an urgent change to the way native forests are planted, managed and valued. The two organisations have joined forces in a major programme called O Tātou Ngāhere to address this important gap in New Zealand’s climate change and biodiversity plans.

Sir Stephen Tindall, Pure Advantage trustee, says: “We congratulate the Climate Change Commission on its draft recommendation of 300,000 hectares of native forest by 2035. However we think New Zealand can be more ambitious.

“We think 350,000 is doable under the current settings and that the ‘moonshot’, with the right changes to regulations, management practices and incentives, is between 1 million and 2 million hectares of new permanent native forest cover.

“Successfully achieving this would reduce our current carbon footprint and add numerous other commercial and biodiversity benefits.”

But to deliver those numbers a major shift in policy and practice is required.

“We need a revolution in the way we think and act regarding native forests,” says Sir Stephen. “We must find ways to engage young people and encourage private land-owners to plant and regenerate native trees – on farms, on marginal land, on lifestyle blocks, through civic partnerships and in our urban environments.

The O Tātou Ngāhere report is delivered as a suite of 37 articles by New Zealand and global experts via an interactive website as well as a short documentary available now at Pure Advantage and soon hosted on TVNZ On Demand.

The comprehensive program of work calls for a wide range of changes to native forest management, including:
  • A fundamental shift in valuing native forests for their holistic impact, including biodiversity, long- term carbon sequestration, amenity, spiritual and cultural values
  • Biodiversity credits to reward land-owners for planting and growing native trees (currently excluded from the Emissions Trading Scheme)
  • Continuous cover forestry – a change in forestry practice that replaces more intensive silvicultural practice such as clear felling with closer-to-nature practices and selective harvesting in the future
  • Sustainable harvesting of native timber for high-quality timber products and veneers, as well as outlets for lower grades in manufacturing and construction
  • Downstream, commercial uses for New Zealand hardwoods such as beech and tawa in joinery and furniture
  • Expanding ‘non-timber’ uses of forestry such as honey, bioactives and tourism
  • Co-mingling of natives with exotic species to create transitionary forests and greater biodiverse habitat
  • Encouragement of collaborations and joint ventures between private land-owners, iwi, civic organisations and government to plant and manage native forests.

Tane’s Tree Trust chairman, Peter Berg, says the predominance of pine in New Zealand forestry needs to be reconsidered.

“Pinus radiata is a spectacular tree for many reasons; it has served New Zealand extremely well and made a massive contribution to our economy, but we should not limit our thinking to plantation forestry in every situation nor have it the only tree that we plant at scale. We need to see the same level of research, investment and interest in other species including New Zealand natives – and the rewards will follow.

“This report sets out some bold thinking about what needs to be done if we are to unlock the full potential of New Zealand’s native forests – for commercial, cultural and spiritual benefit,” says Peter Berg.

About Our Forest - O Tātou Ngāhere (Our Forest) is a joint venture between Pure Advantage and Tane’s Tree Trust, both privately funded organisations established to promote sustainable development.

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Closer look into Russia log export ban fallout

Chinese imports of softwood and hardwood wood products will be significantly altered in 2022 if Russia’s log export ban is implemented - China is the world’s largest importer of softwood and hardwood logs, and for many decades, Russia has been a significant log supplier for them. This relationship may change in 2022 if Russia implements their proposed ban on exports of softwood logs and valuable hardwood logs, while also introducing export taxes on green lumber. All these policy changes are designed to encourage increased domestic production of higher-valued forest products.

The Russian parliament has not yet announced the final legislative proclamation, so it is not clear if there will be a complete or phased-in ban, a significant export tax, or even the possibility of a state-owned export monopoly. However, a signal has been sent to the marketplace that Russia will no longer be a major supplier of softwood and hardwood logs. One consequence of this decision is that Chinese wood manufacturers will need to explore new long-term log supply regions.

In 2020, China imported almost 6.5 million m3 of logs from Russia, predominantly softwood species. The trade was substantially less than in any year during the past two decades. Nevertheless, Russia was still the largest supplier of hardwood logs to China in 2020 (more prominent than any other source of temperate or tropical logs) and the third- largest supplier of softwood logs.

It is crucial to keep in mind that China has shifted from sourcing logs from Russia to European suppliers the past few years as insect-infested timber in Central Europe has been in temporary abundance. From 2018 to 2020, softwood log imports from Europe increased from 1.3 million m3 to 12.3 million m3, while Russian- supplied logs fell from 7.8 million m3 to 4.2 million m3.

However, shipments from Europe are not sustainable long-term. According to the just-released study by the consulting firms Wood Resources International and O’Kelly Acumen (Russian Log Export Ban in 2022 - Implications for the Global Forest Industry), China is expected to source more sawlogs from Oceania, Europe, and the US short-term. Longer-term, the study anticipates that China is likely to shift further from importing logs to lumber, thus creating opportunities for lumber manufacturers, mainly in Europe and Russia, to increase shipments to this growing market.

The excerpt above is from the just-released Focus Report “Russia Log Export Ban in 2022 – Implications to the Global Forest Industry”, published by Wood Resources International LLC and O’Kelly Acumen. For more information about the study or to inquire about purchasing the 60-page report in easy-to-read slide format, please contact either Hakan Ekstrom (hakan@woodprices.com) or Glen O’Kelly (glen.okelly@okelly.se).

Source: Wood Resources International

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Carbon market update

NZU Update

The NZU price has held up reasonably well given the large number of NZUs sold by the Government at what certainly appeared to be a reasonable discount to recent prices in the secondary market - 4.75 million at $36.

The secondary market went on to finish up last week, Friday, at $37.30 and this week NZUs have settled back a little, changing hands between there and $36.90, last trade $37.

Closing Soon - Submissions on the draft advice from the Climate Change Commission are due by the end of this weekend, 28 March.

Consultation on the latest proposed amendments to the ETS Forestry Regulations continues, including technical amendments and finer details of how averaging accounting will work. Submissions are due 9 April on that body of work.

It's a Hard Knock Life - One observation just on that, the evolving complexities of the rules pertaining to forestry, do add to the cost of doing business, particularly for small forest owners who don't have a dedicated compliance resource.

There have also been a number of historical changes down the years that foresters argue have been ill signalled or unfair. Think the original delineation of pre-1990 v post-89. Think back to 2014's overnight ban on the use of eligible kyoto units against forestry liabilities while emitters continued to be able to use these for a further year.

The list continues and some have recently pointed to the Government joining the sell side "so far below recent market" as just another example.

Is that just sour grapes? Perhaps. But the upshot is that growing forests is hardly the easiest way to get exposure to the carbon economy, and involves ongoing cost, and relatively high uncertainty over an extended period.

By contrast, nothing is simpler than buying and holding an NZU. NZUs bid $36.90, offered $37.10.

Carbon Match - open every weekday 10am-5pm.

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Dr Rod Carr - Carbon Forestry Conference Keynote Speaker

We’ve been working closely with a range of speakers and sponsors across the carbon landscape, led by our keynote speaker, Dr Rodd Carr, Chairperson of the New Zealand Climate Change Commission.

Do you want to learn how New Zealand forestry fits into wider carbon markets? Our conference is running in Rotorua mid-June. To attend, you can choose either in-person or virtual registrations. Our programme will appeal to anyone seeing opportunities in planting, investing and carbon emission offsetting. This event will also attract international policymakers and research entities looking to New Zealand’s emissions trading scheme for benchmarking.

Conference Keynote Presentation by Dr Rod Carr: The Big Picture - The Climate Change Commission; what we’re doing and what we’re seeing; the role of forestry.

Dr Carr (pictured) has extensive experience in both public and private sector governance and leadership. He served as Chair and non-executive director of the Reserve Bank of New Zealand and served as Deputy Governor and for a time Acting Governor of the Bank.

Dr Carr was the founding Chair of the National Infrastructure Advisory Board and for over a decade was a non-executive director of the Canterbury Employers’ Chamber of Commerce. He led the University of Canterbury as Vice Chancellor for ten years, and holds a PhD in Insurance and Risk Management, an MA in Applied Economics and Managerial Science, an MBA in Money and Finance and honours degrees in law and economics.

Full conference details and early bird rates are available now at: www.carbonforestry.events

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Timber supply shortages hit NZ market

(BusinessDesk) – Carter Holt Harvey is suddenly cutting building timber supplies to major trade suppliers Mitre10 and ITM, and to Bunnings, citing "critical supply issues" caused by booming housing construction - The building supply companies could start running out of structural timber products within the week. CHH, owned by Kiwi billionaire Graeme Hart’s Rank Group, is now unable to honour supply commitments to the three hardware and building supplies chains, citing “critical supply issues”.

Industry insiders told BusinessDesk that CHH had slashed supply to most of its customers apart from its biggest clients. They include Fletcher-owned supplies company Placemakers and CHH's subsidiary, Carters Building Supplies. Both are understood to have supply agreements in place with CHH, with Carters contracted to receive about 90% of its timber supply from CHH.

Placemakers chief executive Bruce McEwen said it had been advised last Wednesday about changes to customer supply. “There had been no prior discussion about this move, but these changes will have no material impact on our ability to supply timber products to our customers.”

Bunnings said it worked with a large number of timber suppliers and didn't expect Carter's decision would have any impact on product availability for its customers.

In an internal memo to ITM staff and shareholders, chief executive Darrin Hughes said the decision to cut supply with immediate effect was “a massive decision on CHH’s part and one that will have ramifications for years to come”.

He said the firm, which is the second biggest supplier in the building trade after Placemakers, spent almost $34 million with CHH per year, “so I know this will have a significant disruptive impact on many of your businesses”. ITM is a cooperative with about 100 stores.

Source: BusinessDesk

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Dutch signal limits coming on biomass subsidies

In a speedbump for the accelerating biomass industry in the European Union, the Dutch Parliament on February 25 voted to stop issuing new subsidies for 50 planned forest biomass-for-heat plants, a rare industry setback cheered by the country’s biomass opponents and shrugged off by the industry itself.

The vote came with a caveat: current annual subsidies of €578.5 million ($698 million) will remain in place for existing Dutch biomass plants — some 200 of which produce heat, while four power plants are co-fired with coal and biomass. The plants primarily burn wood pellets imported from the Southeast United States and Eastern Europe.

Dutch policy could change further, biomass critics say. The general election for the Dutch House of Representatives is set for March 17 and public opposition to subsidizing burning wood pellets to make energy stands at 98%, according to a 2020 Dutch survey by De Telegraaf, the country’s largest newspaper.

Maarten Visschers and Fenna Swart lead two separate conservation groups. They and others have aggressively lobbied Dutch elected officials for years to reduce the country’s dependence on woody biomass — which accounts for 61% of renewable* energy generated for the country’s 17.3 million people. They told Mongabay that the February 25 vote marked “a huge victory.”

“The vote came just before our national elections,” said Visschers of Leefmilieu (Environment). “The entire Parliament except the liberals voted for the motion (118-32) on the last day they were in session before the elections. Biomass burning is in the election (campaign) of every political party. There is a national climate demonstration on March 14, just before the election. Biomass will be an important issue on that day.”

The burning of forest biomass to make energy is becoming increasingly controversial, with scientists again and again debunking the long-standing industry and political claim that biomass is carbon neutral — what critics call a “carbon accounting loophole” that could, if not plugged, put the global climate at greater risk of destabilization.

Noting that the recent vote was limited in scope, Swart of Comité Schone Lucht (the Clean Air Committee) told Mongabay, “This step does indeed only concern new subsidies, but with this decision, the next step — stopping the existing and planned subsidies — is more logical and comes a lot closer. By declaring that new subsidies are no longer desirable until there is a definitive phasing-out trajectory, the government is forced to consider the end of all [biomass] subsidies. Continuing as usual has thus become a lot less likely.”

The Dutch decision comes as the United Nations sounds a red alert regarding deeply insufficient national emission reduction pledges made under the Paris Agreement to slow the rate of global warming and avoid imminent climate calamity. The UN Framework Convention on Climate Change (UNFCC) warned late last month that global emissions must fall by 50% by 2030 and that current reduction pledges are alarmingly short of that goal.

Both the European Union and United Kingdom rely heavily on burning woody biomass at former coal-fired power plants to help meet their carbon-reduction pledges. That’s because biomass is considered a renewable energy source under the Kyoto Protocol (a classification tolerated by the Paris accord).

Thus, emissions from burning biomass are not counted at the smokestack, enabling countries to claim more robust progress toward emission reductions than they are actually making. A range of recent studies have found that woody biomass is actually more polluting than coal, while biomass atmospheric carbon reductions will not be redeemable until cut forests regrow decades from now, which many researchers say will be far too late to slow rapidly escalating climate change.

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NZIF Foundation Awards & Scholarships open

Applications are invited for the awards and scholarships offered by the NZIF Foundation for 2021. The total value of awards offered is $34,700.

The awards open for application are:

  • Two Future Forest Scholarship for post graduate research each of up to $10,000
  • The New Zealand Redwood Company Scholarship of $5,000 for an undergraduate scholarship at the University of Canterbury School Forestry
  • One or more Otago Southland Awards up to a combined total of $5,200 to assist a project or projects of relevance to forestry in the Otago/Southland region
  • Mary Sutherland Scholarship of $1,000 for a polytechnic student
  • University Undergraduate Scholarship of $1,000
  • Frank Hutchinson Postgraduate scholarship of $1,000
  • Student poster prizes at NZIF Conference (1st, 2nd and 3rd prizes of $800, $500 and $200)

Applications are now open. Further details and an application form are available on the Foundation web page.

Applications must be received by the Foundation administrator (foundation@nzif.org.nz) no later than 5pm on Monday 31st May 2021. The awards will be announced at the Awards Dinner of the joint conference of the NZ Institute of Forestry being held in Masterton from 27th to 29th June 2021.

Enquires to the Foundation (foundation@nzif.org.nz) or phone +64 274 733 262

Please pass on this notice to your networks and to anyone you think may be eligible to apply. Membership of NZIF is not a requirement for application.

About the NZIF Foundation

The NZIF Foundation was established in 2011 by the NZ Institute of Forestry to advance education in relation to forestry.

This includes encouraging and supporting forestry related research, education and training through the provision of grants, scholarships and prizes; promoting the acquisition, development and dissemination of forestry related knowledge and information and other activities that do not conflict with the charitable purpose.

For the purposes of these awards, forestry is broadly defined to include all those activities involved in the management and use of forests and their products, the objects of which are the production of wood or other forest benefits and the maintenance of the environment in its most beneficial form. All forests in New Zealand, whatever their purpose, are encompassed in the definition.

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Rayonier celebrates success of Acacia Farmery

By just 26 years old, Acacia Farmery, an establishment forester on Rayonier’s New Zealand team, had earned international awards, discussed our industry with royalty and presented to countless students on the merits of working in forestry.

Sap runs in Acacia Farmery’s veins.

At just 26, Acacia has already scooped international awards, met with royalty and is sharing her passion to educate New Zealand students about forestry.

The Rayonier Matariki Forests Establishment Forester has become a passionate advocate for the forestry industry and has been recently recognised through a number of international awards.

Acacia was awarded the highly prestigious Prince of Wales Award for Sustainable Forestry late last year for her significant university achievements and ambassadorial roles within the forestry industry. She was one of a small group, including past recipients, invited to a round table with His Royal Highness during his visit to New Zealand last year, to discuss the opportunities and challenges facing the forestry sector.

As well as doing her daily role for Rayonier Matariki Forests Southland region, Acacia travels around the region educating school students about the forestry industry and promoting it as a career worth considering.

“There are so many great opportunities in the forestry industry and a lot of young people are completely unaware of what is on offer,” says Acacia.

“It is so important to get into schools and spread the word. There is so much variety covering so many different facets of forestry that you can always find your place. But even if students choose not to take up a career in forestry, at least they have learnt about it and understand it a bit better.”

In her final year of school, Acacia was trying to work out what tertiary study she could do that would guarantee a job at the end of it. She had always been interested in sciences and geography and when she discovered the University of Canterbury Forestry degree had a 94% job success rate at the end of the four years, she turned her sights to that.

“It ticked a lot of boxes so I took a leap of faith and it turned out to be absolutely the right decision and one I wouldn’t change for anything.”

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What beats wood? Recycled board apparently

New Zealand builders will soon be able to replace plywood, particle board and plaster board with low carbon, environmentally sustainable construction boards made from packaging waste such as used beverage cartons, soft plastics and coffee cups.

The technology to turn waste into high performance building material was developed in the United States where it has been widely used for more than a decade. The product is used by Tesla as the membrane roof substrate for its 200,000m2 gigafactory in Nevada. The Tesla factory roof equates to upcycling 2,000 tonnes of composite plastics and saves 336,000 kgs of embodied CO2 compared to using plywood.

The waste-to-building material technology is being brought to New Zealand by saveBOARD, a new venture backed by Freightways, Tetra Pak and Closed Loop. The first New Zealand saveBOARD plant will be at Te Rapa near Hamilton and its first production run is scheduled for late 2021. The plant will save up to 4,000 tonnes of waste from landfill every year. Twelve new jobs will be created initially, with more expected as the project grows.

saveBOARD will manufacture an impact resistant board with similar performance to plywood, OSB (oriented strand board) and particle board that can be used for interior and exterior applications. Using proven, patented technology which has been operating for over 12 years, the material is upcycled from waste into affordable, high performance, low carbon building materials.

saveBOARD Co-Founder and Chief Executive Officer Paul Charteris says making high-performance low carbon building materials using 100% recycled materials from everyday waste is a game-changer that will transform the construction industry in New Zealand. “It will enhance the construction industry’s drive towards more sustainable construction practices.” saveBOARD is negotiating to receive waste material from large food and beverage companies that want to meet ambitious waste reduction targets and be more environmentally responsible. Building a circular economy also requires backing from key industry partners. saveBOARD has funding and support from industry leaders who will provide recycled material as well as transport and logistics solutions. Partners include Freightways – will help manage waste collection and logistics; Tetra Pak – food processing and packaging solutions company producing low climate impact packaging formats and Closed Loop – circular economy pioneer.

Tetra Pak Oceania Managing Director Andrew Pooch says the solution demonstrates Tetra Pak’s commitment and contribution to a low carbon economy.

“It is more than just an investment for us. It is the right thing to do - to help limit waste to landfill and support a technology that improves local waste collection and recycling infrastructure,” says Mr Pooch.

Freightways, Chief Executive Officer Mark Troughear says its investment in saveBOARD allows the freight and logistics company to fully realise a commitment to circular waste solutions with minimal carbon kilometres, all while providing a new strategic growth category.

“saveBOARD completes an end-product solution for Freightways, where waste can be regenerated and reused into world class products while utilising our core capabilities in pick-up, process and delivery channels,” says Mr Troughear.

“It’s an investment in what we believe will be a very compelling business, offering a brand-new sustainable product to one of New Zealand’s largest industries,” he says. Closed Loop Managing Director Rob Pascoe says saveBOARD products will be the lowest carbon footprint interior and exterior board products on the market.

“saveBOARD promises a better, greener, more affordable solution that can lead us towards a more sustainable future. It’s the perfect example of the circular economy in action,” says Mr Pascoe.

Source: Scoop

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Who Knew: Taranaki bounces back

Taranaki Is Back On Top As Number 1 For GDP Per Capita - In Stats NZ most recently release Regional GDP data Taranaki was back on top as number 1 for GDP per capita with a good growth rate of 5.1 percent in 2020. This was below the national average of 5.4 percent.

Please see per capita animated graph for reference.

Taranaki’s economy is centred around three main industries – energy, food production/farming, and the manufacture of products from those primary sources. These industries make up 42.3 percent of the region’s GDP in 2019. Taranaki has had the highest GDP per capita from 2007 onward except in 2017 when Wellington was highest.

In 2020, Taranaki’s 5.1 percent GDP increase was mainly driven by forestry, fishing, dairy, and energy, and placed us in good stead heading into the COVID-19 lockdown period and the rest of 2020.

Taranaki has potentially not been as hard hit as some other regions, and against the New Zealand average, throughout COVID-19 based on indicators like retail stats and tourism numbers. Demand for quality industrial investment properties in Taranaki also signals as another positive indicator for the region. However, we will have a clearer picture of our position when we receive the Regional GDP figures for year-end March 2021 (which won’t be till March 2022).

Source: Venture Taranaki

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Buy and Sell

... and finally ... the lighter side of shipping news

Thanks to far too much news flow around the world, you'd have to live under a rock not to have heard about the container ship stuck in the middle of a desert, I mean the Suez Canal. Luckily there are plenty of quick minds to share the lighter side of this odd bit of news.

That's all for this week's wood news.

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John Stulen
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

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