Forest Owners Welcome Key Comments

Monday 14 May 2007

Forest Owners Welcome Key Comments; Need Certainty From Govt

The Kyoto Forestry Association (KFA) has welcomed Opposition Leader John Key’s restatement yesterday that post-1990 Kyoto forest owners would receive at least some carbon credits under a National-led Government, but says the Government’s failure to answer basic questions about its policy intentions confirms that 2007 will become the worst-ever tree-planting season in New Zealand.

“Mr Key, with his business background, clearly understands the importance of investor confidence in business decisions,” KFA spokesman Roger Dickie said today. “He understands that the people most likely to plant trees in the future are those who have invested in the industry in the past, and that their confidence to make 30-year investment decisions going forward depends on them having confidence that government commitments will be respected over time. It is therefore pleasing to see National moving to reverse the Government’s 2002 decision to confiscate the carbon credits previously promised to forest owners.”

Mr Dickie said that while there were ongoing positive signals from the Opposition, the Government’s silence over whether or not even trees planted this year would earn credits was further holding back investment decisions, and compounding New Zealand’s deforestation crisis.

“Despite numerous approaches, no official can even tell us whether or not even trees planted this year would earn carbon credits under the Government’s proposals – despite Forestry Minister Jim Anderton previously indicating that 2007 trees would quality,” Mr Dickie said. “At least three businesses we know of were planning to resume limited planting this year but, with government officials now refusing to answer questions about the carbon-credit status of those new trees, everyone is getting cold feet.

“New Zealand has already suffered several years of low planting because of the Government’s inability to develop a fair, acceptable Kyoto policy. It seems irresponsible in the extreme – although perhaps not unexpected given this Government’s record on Kyoto – to again leave uncertainty out there, undermining the 2007 season.”

BACKGROUND INFORMATION

Introduction to Carbon Credits

Kyoto carbon credits are earned by those individuals and businesses that sequestered carbon by planting new forestry since the Kyoto Protocol’s baseline of 1 January 1990, and by those industries which have cut their carbon emissions since then.

Through the 1990s and early part of this decade, Government officials made clear that forestry investors would gain financially from the credits, which are a clear property right, as confirmed by the Treasury.

This fuelled a planting boom through the 1990s with 30,000 ordinary New Zealanders and forestry companies putting up as much as $400 million per annum of their own risk capital to invest in more than 600,000 hectares of new forest – both because of the benefits predicted to arise both from the sale of wood products and from carbon credits earned from carbon sequestration.

Since the Government first indicated that it intended to confiscate the credits in 2002, tree planting in New Zealand has plunged and New Zealand is now experiencing net deforestation for the first time in living memory.

The Government has previously indicated it would limit its confiscation of the credits to those associated with the First Commitment Period of the Kyoto Protocol, costing forest owners nationwide as much as $2.5 billion. Now, however, Government officials are indicating it may extend the confiscation to the Second Commitment Period, putting eventual losses nationwide up to at least $8 billion and potentially many billions more.

The Government is also proposing a retrospective tax of up to $13,000 per hectare on the owners of forests planted before 1 January 1990, if those forest owners decide to convert their land to another land use.

MAF is carrying out a consultation process on these and other ideas to address climate change. The deadline for submissions is 30 March. Forest owners have asked for an extension to this deadline but Forestry Minister Jim Anderton has refused.

The confiscation of the credits, the proposed retrospective tax and Mr Anderton’s handling of the forestry portfolio have received near-unanimous condemnation at the MAF consultation meetings, with forest owners even in his home town of Christchurch calling on him to resign.

ENDS

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