Wednesday, December 6, 2023

ETS fees sting foresters into action

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Commerical forestry launches High Court action against proposed new fee structure.
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Forestry groups representing the bulk of New Zealand’s commercial forestry blocks have doubled down on proposed new fees for emissions trading scheme participation, seeking a judicial review of the new structure.

The groups – responsible for over 300,000ha of the country’s 1.75 million hectares of exotic forestry land – include the Climate Forestry Association, Ngā Pou a Tāne – National Māori Forestry Association and the Forest Owners Association.

They are pushing back on charges expected to add at least $14 million a year to forestry fees. 

Estimates are that some individual owners will be facing bills over $1m a year in new fees.

The increases come as the sector contemplates a loss of investment in coming years on the grounds of continuing uncertainty and a loss of confidence among foresters in the direction of emissions trading scheme (ETS) reform (see “Forestry owners frustrated by ETS turmoil” (August 16, here).

Concerns have been mounting that after this year’s planting season the rate of new exotic forestry plantation is about to significantly decline, fuelled also by the collapse of carbon prices late last year when the government opted not to accept the Climate Change Commission’s advice to tighten the supply of NZ carbon units. 

The sector is estimated to have lost $3 billion when prices collapsed from $88 to $40. They now sit at $65.

“The new charges are likely to have a major chilling effect on planting intentions and new investment, already thrown into uncertainty by the government’s ETS review,” Climate Forestry Association CEO Andrew Cushen said.

The charges have also drawn the ire of iwi foresters who have had issues with government proposals to limit carbon forestry to indigenous plantings, hampering their ability to make an income from lower quality land classes.

Ngā Pou a Tāne National Māori Forestry Association chair Te Kapunga Dewes said the fees are in breach of the Crown’s duties as a Treaty partner and put the environmental and economic futures of Māori and non-Māori alike at risk.

“Many iwi and Māori landowners are captured participants of the ETS. As a result of confiscations and the Treaty settlement process, much of the land Māori have been left with is best, and often only, suited to afforestation. Indeed, in many of these settlements, the carbon value of forests was part of the negotiation and settlement with the Crown.”

The new fees regime will only further devalue the settlements and disproportionately hit Māori owners, he said.

Forest Owners Association CEO Elizabeth Heeg said the new fees are enough to put some small to medium operators out of business in a generally unfavourable economic climate.

The foresters’ action was filed last week in the High Court.

An MPI spokesman said it cost $29.8 million a year to administer the forestry ETS and it has been almost 100% taxpayer funded since beginning in 2002. Government has decided participants will pay two thirds of those costs and the outcome is a result of public consultation in March.

“We anticipate annual voluntary emission returns will claim NZ carbon units to the approximate value of $600 million a year at current unit prices of $67 a unit. The annual cost to the industry of the new fee structure is about $18 million.”

MPI had no futher comment while the matter was before the Court.

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