Several changes to the Emissions Trading Scheme will be introduced later in the year, and more are planned.
Farmers with forestry blocks will have decisions to make to maximise risk management and returns, New Zealand Farm Forestry president Neil Cullen said.
A sheep and beef farmer in Glenomaru Valley, Mr Cullen is a member of the Government’s forestry advisers group.
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He has 150ha of forestry on his 650ha property and about 140ha planted in natives.
Some of the changes were announced in December, following the Government’s review, and will come into effect later this year, when the Climate Change Response Act amendment Bill is passed.
Others are being discussed.
”At present [what those changes are] is still a bit of guesswork,” Mr Cullen said.
He said the changes were designed to make the system less complex, encourage flexibility and better compliance, improve land use and meet New Zealand’s commitment to the Paris Agreement requirements as part of its ”Carbon Zero” emission targets for 2050.
Agriculture, which generates about 40% of New Zealand’s total emissions, may be included in the scheme, but that has yet to be decided.
The announced changes include adding permanent native or exotic forests to the scheme, which means farmers are encouraged to plant more non-productive land.
While carbon credits were capped at the $25 at the moment, a marketplace as well as ceiling and minimum prices were likely to be introduced.
Farmers with credits can then sell them to businesses which generate emissions, such as transport companies.
Another move called ”averaging” may be introduced.
Farmers gain credits when they plant and pay them back when they harvest.
However, Mr Cullen said averaging meant farmers would not have to pay back the value of carbon credits as long as they replanted.
There is also a move to look at the carbon that remains in products after processing, such as within furniture.
He said as carbon credits and liabilities were attached to land titles, the changes were likely to have implications when buying and selling property.
As to which changes will occur and what liabilities will be incurred, he said it was unknown at this point.
”Another problem is if a new government comes in, we might not see the changes – but if we can get the main parties to agree, then that is best for New Zealand and for the industry.”
Another issue faced by the industry is its difficulty in attracting more people to work in the sector, but there is discussion about possibly bringing people in from the Pacific Islands to fill jobs as part of a programme similar to the Recognised Employer Scheme, which is already in place for horticulture.
Alternatively it might be possible to utilise those workers who were already here, once the horticultural work was finished.
”It will be interesting to see the developments in the next few months,” he said.
He is to speak about the changes at a South Otago Forestry Association field day at Toko Mouth on February 22.