MEDIA STATEMENT

Tuesday 18 September 2007

FOR IMMEDIATE RELEASE

Kyoto Forest Owners Looking For Movement On Carbon Credits

Kyoto forest owners are looking for substantial movement from the Government on the controversial issue of post-1990 carbon credits when it makes its climate change policy announcements later this week, the Kyoto Forestry Association (KFA) said today.

“The chainsaw massacre across New Zealand has gone on long enough,” KFA spokesman Roger Dickie said today.

“It is time for the Government to take a more constructive and positive approach to the only industry capable of sequestering carbon in the fight against climate change.

“The Government needs to show it has listened to the views of the more than 2,800 people who attended its consultation meetings in February and March, and the more than 3,000 individuals and organisations who prepared submissions. They overwhelmingly called on the government to return the carbon credits to their rightful owners – those who have invested their own capital to plant new trees.”

Mr Dickie said that a return of all the carbon credits – which the government says are worth $1.25 billion – was necessary to restore confidence in the forestry industry and get planting underway again. He said there was a direct link between the carbon credit issue and planting rates.

“There is no doubt that the promise of carbon credits by former Environment Minister Simon Upton strongly contributed to the decision by as many as 30,000 ordinary New Zealanders and forestry companies to put up as much as $400 million per annum of their own risk capital to plant 640,000 hectares of new forest through the 1990s,” he said.

“Planting was still underway in 2001, when Climate Change Minister Pete Hodgson was telling the Ninth Annual Resource Management Law Association Conference that the new Government had secured rules on forest sinks that would provide for valuable credits for post-1990 forest plantings. He said that no other country's plantation forestry industry had more to gain from the Kyoto Protocol than New Zealand's.

“It was only after 2002, when the Government did a u-turn and decided to confiscate the credits, that new plantings plunged to below replacement rates and our deforestation crisis began.”

Mr Dickie said movement on the carbon credit issue would also signal that the Government genuinely sought a long-term, sustainable and multiparty approach to climate change policy.

“Opposition Leader John Key has announced that, under a National-led Government, forest owners will get a proportion of the carbon credits we have accrued since 1990. He has acknowledged that without such an incentive, our record high deforestation will only get worse.”

Mr Dickie said that KFA had also received support from the Maori, Green and ACT parties, while the New Zealand First and United Future parties have reserved their position.

“Significant movement on this issue by the Labour-led Government would lay the ground for a consensus across all parties in parliament to emerge,” Mr Dickie concluded.

Inquiries: Roger Dickie
Kyoto Forestry Association
Ph: 027 4428687

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.

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, 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, the proposed retrospective tax and Mr Anderton’s handling of the forestry portfolio were criticised, 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, while the Federation of Maori Authorities has announced plans to challenge the 2002 confiscation in the Waitangi Tribunal.

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