KFA Thrilled With Carbon Credit Announcement

Thursday 20 September 2007

KFA Thrilled With Post-1990 Carbon Credit Announcement

The Kyoto Forestry Association (KFA) has congratulated Prime Minister Helen Clark, Forestry Minister Jim Anderton, Climate Change Minister David Parker and the Labour/Progressive Government on today’s announcement that owners of forests planted after 1 January 1990 will be able to opt into the emissions trading scheme, accruing both credits and associated liabilities.

“We are thrilled with this announcement,” KFA spokesman Roger Dickie said today.

“It indicates that the Labour/Progressive Government has listened carefully to our 30,000 supporters, the more than 2,800 people who attended consultation meetings in February and March and the more than 3,000 individuals and organisations who prepared submissions on the issue.

“It demonstrates to us that the Prime Minister and her Ministers have worked hard and in good faith on this issue and it gives us assurance about the integrity of the next round of consultation, noting that we believe we have a property right to these credits.

“Most importantly, the Government’s announcements will give people confidence to look more seriously at new forestry investment to reverse our current low levels of new plantings and reverse the trend towards deforestation.”

Mr Dickie noted with concern that the retrospective carbon tax on pre-1990 forests was still in place which creates a sovereign risk for the forestry industry in the future.
Acknowledging the strong political support KFA had received from across the political spectrum, Mr Dickie said: “We are also very grateful to the National, Maori, ACT and Green parties who have offered us support on the carbon credit issue.”

Mr Dickie announced that KFA’s billboard at Auckland International Airport would be taken down this afternoon.

He said any further comment on the details of today’s announcements would be made next week.

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. Climate Change Minister Pete Hodgson told the Ninth Annual Resource Management Law Association Conference on 5 October 2001 that New Zealand had secured rules on forest sinks that will provide valuable credits for our post-1990 forest plantings. He said no other country's plantation forestry industry had more to gain from the Protocol than New Zealand's. Foreign Minister Phil Goff also told foreign governments that New Zealand forest owners would own the credits.

Statements such as these 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, or $1.25 billion according to the Government’s calculations, depending on the market value of carbon credits. In early 2007, however, Government officials indicated they may extend the confiscation to the Second Commitment Period, putting eventual losses nationwide up to at least $8 billion.

The Government has also proposed 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.

In February and March 2007, MAF carried out a consultation process on these and other ideas to address climate change. More than 2,800 people attended consultation meetings and 3,000 individuals and organisations prepared submissions. Overwhelmingly, the confiscation of the credits and the proposed retrospective tax were condemned, and the Government also came in for criticism for its handling of the matter.

More positively, the National, Green, Maori and ACT parties have broadly supported the forestry industry on the question of carbon credits, while the Federation of Maori Authorities announced plans to challenge the 2002 confiscation in the Waitangi Tribunal.

ENDS

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