Friday, December 8, 2023

Aussies could give forest carbon a boost

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Forestry initiatives and political signals add to sector’s appeal while NZ counterpart droops.
One aim of the eventual biodiversity credit system will be to incentivise the planting of native forests over pines under the Emissions Trading Scheme.
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While the New Zealand emissions scheme continues to face multiple consultation rounds and foresters are unhappy about hikes in registration fees, the Australian forest carbon market is starting to ramp up.

Changes to regulations to make planting trees for carbon less onerous and restrictive, along with a recently announced federal grants scheme, has industry players starting to consider how carbon forest income can become an income earner.

NZ Institute of Forestry president James Treadwell said the Australian carbon forestry market is presently looking more stable than New Zealand’s, buoyed by the Canberra government putting more emphasis upon becoming carbon neutral.

“Unfortunately, our ETS [Emissions Trading Scheme] has become a political football that seems to change on a whim, and it is not just changes in government that do that, but even in response to public perception.”

Concern over the use of exotic forest plantations as carbon sinks has prompted a review of forest types and ETS eligibility, while overseas investment rules previously encouraging a specific forestry investment have since been reversed, all within the past three years.

In addition, the recent announcement of hikes in ETS participation fees charged to foresters has the sector claiming a flight of capital already being experienced will only be accelerated.

Treadwell said at this point the Australian Carbon Credit Unit (ACCU) market remains less developed than NZ’s, but it could only be a matter of time before it overtakes NZ’s.

At present Australia has 79 carbon project forests registered for 100,000 ACCUs, compared to NZ’s 3850 covering 12.4 million NZ Units. 

ACCUs are selling for about A$30 (about $32) a unit, compared to NZUs at $65/unit. Estimates are they have to reach A$60 a unit to offer a strong investment incentive.

The move to promote more forestry plantings has also been hastened by Australia’s decision to cease logging its native forests, recognised as some of the most carbon dense in the world. 

Data reported by the Australian National University has cessation of logging in Tasmania being the equivalent to removing 1.1 million cars off the road every year. Fire risk is also significantly reduced by not logging natives.

“This also means there will be a growing need to import more timber in coming years, which could play to New Zealand’s advantage,” Treadwell said.

Estimates are Australia needs 1 billion new production trees planted by 2030 to ensure a supply of timber and fibre, and estimates are it could be short of framing for 250,000 houses by 2050.

In July the Albanese Government also followed through on its election promise to remove the  controversial “water rule” that prohibited  plantation forestry being registered for ACCUs if it was in an area with an annual average rainfall of over 600mm a year, limiting many areas’ potential.

A A$74 million federal fund has also been made available to foresters and farmers wanting to establish plantation forestry, offering a $2000/hectare subsidy for planting a minimum of 20ha.

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