MEDIA RELEASE

NZ FOREST OWNERS’ ASSOCIATION (Inc)

11 June 2005

Disastrous Kyoto policies must change

If New Zealand is to meet its Kyoto targets, the government must stop encouraging land owners to replace trees with cows, says the Forest Owners Association.

From 2008, owners of forests planted before 1990 will face a carbon liability of $6,000-20,000 a hectare if they fail to replant following milling.

“To avoid this liability, owners of pre-1990 forests have an incentive to mill and convert to livestock now,” association president Peter Berg says.

The liability is likely to dwarf the $20 million the government has budgeted for and in some cases may cost forest owners more than the net value of their crop.

Figures produced by the Climate Change Office last year indicate New Zealand will now have a negative greenhouse gas balance in the first Kyoto commitment period from 2008 to 2012. This is likely to be extremely expensive for the economy and the taxpayer.

Many forests are being replaced by livestock farms following harvest. Meanwhile new forest plantings have fallen to the lowest rates in decades.

“You can’t blame forest owners. Their carbon credits have been nationalised without compensation, yet they will be penalised if they change land use from 2008.”

If New Zealand is to meet its Kyoto targets, it needs to plant trees faster than it harvests them, Mr Berg says.

“For this to happen, the government needs to rebalance the relationship between competing land uses which occurred when forest owners’ carbon credits were nationalised.

“The forest industry reluctantly accepted the decision of the government to ratify the Kyoto Protocol even though this decision was against our advice.

“But the policies that accompanied that decision are proving to be disastrous. Not only are they wrong in principle; they have come at a time when log prices are at an all-time low.”

The forest industry sees the government’s Kyoto policies as perverse. It says livestock agriculture, which produces 49 per cent of the country’s greenhouse gas emissions, is essentially shielded from meeting its Kyoto costs by forest growers.

“The steel, aluminium, concrete, and brick and tile industries are equally sheltered by forestry, even though they are its main competitors. Yet all are very high energy users with negative emission balances.

“There is a very good case for wood to be actively promoted by government as the country’s environmentally preferred building material.”

Owners of greenhouse-friendly forests get no benefit whatsoever from Kyoto. Mr Berg says their pre-1990 forests are now a potential balance sheet liability, while their bottom lines are being eroded by carbon taxes on fuel.

He says the government needs to seriously revise its policies if it wants to avoid a Kyoto blow-out.

“All plantation forests need to be treated equally, regardless of when they were planted, with the Crown assuming liability for loss of carbon credits arising from deforestation. This will remove the perverse incentive to convert from forest to livestock between now and 2008.

“Also a planting and replanting incentive is needed to put all land uses on an equal footing with regard to their greenhouse gas profiles. If forestry continues to shelter farming, there will be massive distortions in land-use and the government will fail to achieve its Kyoto targets.”

Last year the forest industry rejected the Forest Industry Framework Agreement, which the government had proposed as part-compensation for the loss of the industry’s carbon credits.

The offer was seen as insulting when compared with the forest industry’s carbon credits – valued at more than $2.5 billion – which had been nationalised.

The largest part of the package was to partially fund the loss of carbon credits arising from deforestation. Since the credits had been nationalised anyway, this was seen as a bad case of taking with one hand and giving very little back with the other.

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