Deforestation Data Demands Comprehensive Response

Monday 28 May 2007

Catastrophic Deforestation Data Demands Comprehensive Response

The catastrophic data on deforestation, released by the Government on Friday afternoon, demands ministers and officials start listening to the forestry industry and implement a comprehensive policy response, including reversing its disastrous 2002 decision to confiscate the carbon credits earned by forest owners since 1990, the Kyoto Forestry Association (KFA) said today.

“Ever since 2002, the forestry industry has been telling the Government that its decision to confiscate our carbon credits, which it had previously guaranteed us, would lead to a deforestation crisis,” KFA spokesman Roger Dickie said today.

“For five years, we have tried to explain to the Government that the 2002 confiscation had undermined investor confidence in the industry by bringing into question the Government’s commitment to property rights and its own policy promises.

“We have told successive ministers that people prepared to take the 25- to 30-year investment decision to invest in forestry need certainty that property rights and government promises are sacrosanct over up to ten elections.

“The Government, despite most of its ministers having no commercial background, has laughed off this information that we have offered in good faith, and instead told the forestry industry that it knows best what drives investment in our industry. Friday’s data, showing unprecedented deforestation of 13,000 hectares in a single year, clearly proves it was wrong.”

Mr Dickie said the Government needed to start listening to the forestry industry, and to take the portfolio seriously.

“We don’t need ad hoc planting-subsidy schemes which cost the taxpayer a fortune but don’t deliver many new hectares, we don’t need massive retrospective taxes and we don’t need policy on the fly,” he said.

“All we need to get planting underway again is for the Government to reverse its 2002 decision to confiscate our carbon credits. Prime Minister Helen Clark and her ministers would be amazed and the country pleasantly surprised by the positive investor response it would see from that single decision.”

END

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.

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 has carried out a consultation process on these and other ideas to address climate change. The deadline for submissions was 30 March and 3,500 were received. Other forest owners asked for an extension to this deadline but Forestry Minister Jim Anderton 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.

More positively, the National, Green, Maori and ACT parties have broadly supported the forestry industry on the question of carbon credits.

ENDS

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