Emissions Trading Scheme Dates Loom for Small Forest Owners

Stuart Orme
Registered Forestry Consultant
Masterton
www.woodnet.co.nz

Pre-1990 forestry land owners are captured by the legislation whether they seek compensatory credits or not, and that extends over pines, willows, poplars, woodlots, homestead plantings – in fact anything that meets the MAF definition of an exotic forest of one hectare in size or more, wider than 30m on average and capable for reaching more than 5m in height and 30 percent canopy cover.  That definition captures most hill country planting in New Zealand, the majority of botanical gardens and probably a large percentage of golf courses.

If those trees come down, not replanted and the land use changes some time in the future (in fact since 1 Jan 2008), then the landowner will have to pay a deforestation liability.  For a 30-year-old stand of pine trees (lower North Island) it will mean obtaining around 850 NZ (carbon) Units per hectare and surrendering them to the Crown.

If, for some reason, this is not done voluntarily and the default is discovered by MAF, the units will still need to be surrendered plus a ‘not surrendered on time’ fine of $30 per unit could be added to the bill.  A potential cost of more than $40,000/Ha at current carbon rates.

Whilst co-presenting a recent ‘Road Show’ around New Zealand to Professional Trustees in an attempt to get the message across, we literally saw the blood drain from some faces as people realised the deforestation liability they had created or inherited from purchasing deforested land.

It is easy for the Crown to audit – all they will do is lay two aerial photos of different dates over each other, apply an algorithm to it saying ‘show the difference’ and up will come all land that has different vegetation cover, along with the land owner’s name.

It’s not the role of MAF to follow up every eligible landowner.

MAF rightly claims to have received applications for 60 percent of the known planted area, but that is heavily skewed towards large plantation owners.  The Government’s own figures suggest that 20 percent of forested land is owned by around 10,000 different owners (farmers) and to be fair, MAF has been putting out the message for some time to get engaged with the ETS.   Yet for a long time, media was used by people with ‘other’ agendas to promote ill-informed or myopic commentary, such that many land owners have not engaged or think they will wait until later.

Woodnet believe the logic is simple.  Ask the question: “What is my best land use?”

If it is growing vegetation versus trying to farm, then claim the compensation (or post-1989 annual) credits.  If however, the pre-1990 trees were planted on land that now has a better use, then CLAIM THE EXEMPTION that will allow you to deforest without penalty.

So to recap …
If you are a pre-1990 forest landowner, you have effectively been in jail since the legislation was passed.  You can get out of jail by:

  • Claiming an exemption that allows you to deforest (if you owned less than 50 Ha on 1 September 2007).
    Or
  • You can buy your way out of jail by purchasing the required number of credits and surrendering them if you have or want to deforest.
    Or
  • You can apply and take advantage of the up to 55 million NZU’s valued at $1,100,000,000 tax free (@$20/NZU) available until November this year.

The compensation may look huge but remember no one is doing you any favours here.  You can get 60 or 39 NZU/Ha as compensation depending on when the land last changed hands, but you could be taxed 800 NZU+/Ha plus the $30/unit fine if you are found in the future to have deforested illegally.

 

Note

 

 

Important Dates

 

 

Entity eligible to get the pre-1990 allocation of compensation credits

 

 

Landowner on 20 July 2010

 

 

Land ownership to gain 60 NZU/ha

 

 

31 October 2002 or before

 

 

Land ownership to gain 39 NZU/ha

 

 

1 November 2002 to 19 July 2010

 

 

Exemption to deforest land

 

 

Applications close 30 September 2011

 

 

Allocation (of credits) for pre-1990 forest

 

 

Applications close 30 November 2011

 

 

Post-1989 ETSA registration

 

 

Applications must be lodged by 31 December 2012

 

 

When reading the above close off dates, remember it can take six months or more to complete an application so

 DO NOT WAIT …. IT WILL BE TOO LATE!