KYOTO FORESTRY ASSOCIATION MEDIA STATEMENT

Sunday 18 February 2006 For Immediate Release

Waikato Is Biggest Loser From Government Carbon Credit Grab

Waikato and the central North Island have more to lose than any other part of the country from the Government's planned carbon credit grab, the Kyoto Forestry Association (KFA) said today, ahead of the Government's consultation meeting at the Kingsgate Hotel in Hamilton, 9:45 am, Tuesday 20 February.

"For the central North Island - with its 323,772 hectares of Kyoto-qualifying forests planted since 1990 - at least $4.2 billion and as much as $6.5 billion could be at stake from the Government's plans to confiscate Kyoto carbon credits legitimately owned by forest owners and forestry investors," KFA spokesman Roger Dickie said today.

"As many forest owners and forestry investors as possible need to get to the Kingsgate Hotel on Tuesday to say no to the Government's plans. The people of the Waikato and central North Island - 20% of who work in land-based industries - need to make clear that they will never accept their carbon credits or any other property being confiscated by the Government without compensation."

KFA's calculation of $4.2 billion to $6.5 billion as the likely losses for the central North Island is based on official MAF forest area data by age class and territorial authority and an estimate that carbon credit values will reach between $13,000 and $20,000 per hectare during the life of a forest.

Carbon credits are earned by those who sequestered carbon through the planting of new trees since 1990, and by those industries which have cut their carbon emissions since then.

Through the 1990s, 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 new forests - both because of the benefits predicted to arise 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, tree planting in New Zealand has plunged and New Zealand's is experiencing deforestation for the first time in living memory.

"We've now reached crisis point with just 6,000 hectares of new forest planted in 2005, much less than the amount converted into other industries - and it is only going to get worse," Mr Dickie said.

Mr Dickie said the Government had 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. However, officials are now indicating it may extend the confiscation to the Second Commitment Period, increasing the cost of the confiscation by many billions of dollars.

"For the central North Island alone, the combined losses over the two periods are estimated at between $4.2 billion to $6.5 billion, depending on the market value of the carbon credits in future years," Mr Dickie said. "Waikato and the central North Island simply can't afford to have billions of dollars of property ripped out of its economy by the Government."

Mr Dickie said the forestry industry was genuinely perplexed about why the Government was taking such an aggressive and uncompromising approach to the one industry capable of sequestering carbon in the fight against global climate change.

"Forest owners are the environmental and economic good guys," he said. "We employ around 25,000 New Zealanders, we are the fourth largest export earner in the country, our trees protect the quality of our land and we are crucial to the Prime Minister's quest for a carbon neutral New Zealand. We really don't understand why the Government thinks that undermining confidence in the forestry industry by confiscating our property and threatening us with new taxes is going to encourage us to start planting again."

Mr Dickie said that all the forestry industry wanted was for the Government to endorse the six-point plan to get forest planting underway again, which was agreed last year by all key players in the industry, including the New Zealand Forest Owners Association (NZFOA), the New Zealand Farm Forestry Association (NZFFA), the Federation of Maori Authorities (FOMA) and KFA.

The plan included recognition of the industry's property rights in order to restore investor confidence. All political parties are being asked to endorse the plan for the election manifestos for the 2008 election.

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Attached: Background Information NZ Forestry Industry's Six-Point Plan to Get Planting Underway Again NZ Forest Plantings 1990-2005

Inquiries: Roger Dickie Kyoto Forestry Association Ph: 027 4428687

BACKGROUND INFORMATION

The New Zealand Forestry Industry's Six-Point Plan

1. Remove the inequitable, retrospective 'deforestation cap'.

2. Allow land owners with Kyoto-qualifying forests (forests planted from 1990) - as well as those replanting non-Kyoto forests after harvest - to financially benefit from the value of the carbon their forests remove from the atmosphere.

3. Introduce broad-based carbon charges, ensuring that all emitters of greenhouse gases face the same opportunity costs.

4. Ensure that New Zealand's Kyoto policies have the best long-term outcomes for New Zealand, even if they don't exactly mirror current Kyoto rules.

5. Develop a regime which puts a value on the environmental attributes of forestry, thereby encouraging investment in the sector.

6. Act immediately.

New Zealand Forest Plantings 1990-2005

Year Hectares 1990 16,000 1991 15,000 1992 50,000 1993 62,000 1994 98,000 1995 74,000 1996 84,000 1997 64,000 1998 51,000 1999 40,000 2000 34,000 2001 30,000 2002 22,000 2003 20,000 2004 11,000 2005 6,000

Source: http://www.climatechange.govt.nz/resources/reports/projected-balance-emi ssions-jun06/html/fig-1.html

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