Surprise ETS law change affects forest owners

Posted on 27 May 2014 in Carbon | Comments Off on Surprise ETS law change affects forest owners

In a surprise move the Government has banned post-1989 forest owners from using Kyoto units when they de-register from the NZ Emissions Trading Scheme.

Until May 16th, post-1989 forest owners were able to voluntarily de-register from the ETS by surrendering cheap units such as Emissions Reduction Units (ERUs). A new law announced in the recent budget banned this practice overnight.

Until the budget announcement, forest owners had been told by Government they had until May 2015 to complete deregistration using Kyoto units. The budget announcement is unprecedented in that private individuals operating within the law stand to lose out significantly in financial terms.

Woodnet is lobbying hard on behalf of clients and all post-1989 forest owners caught out by this change.

Please contact us if you wish to discuss your individual situation.

Select Committee fails to fix ETS Amendment Bill

Posted on 18 October 2012 in Carbon, Forestry | Comments Off on Select Committee fails to fix ETS Amendment Bill

The Finance and Expenditure Select Committee has released its report on the Climate Change Response (Emission Trading and Other Matters) Amendment Bill.

Disappointingly, the Bill remains largely unchanged from its first reading –  Read the Select Committee Report

Despite the comments of Minister Groser in his press release (Government to clarify use of international units in ETS), we at Woodnet see little that will do anything to reduce the cost to the average New Zealander or allow credit producers to benefit from what the average New Zealander is being charged by some businesses in New Zealand.

The Select Committee had the opportunity to do something that would positively affect long term land use in New Zealand at no additional cost to what most people have been happy to pay. Despite the multiple provision of good sound information the Select Committee appear to have ignored it and are rolling out what seems to have become established rhetoric over the last six months.

Many of our clients have pre-1990 forest land that has devalued due to the Climate Change Response Act encumbrance on it – at $20/NZU it was unfairly compensated, at less than $3/NZU it’s a farce!

Close to 60% of post-1989 land is now registered into the ETS – those landowners pay $20-$25 at the pump or electricity meter, yet their credits are almost worthless. Sound decisions made on Government Department advice and expectation has cost them dearly. They too are New Zealand businesses and incidentally the ones that make it possible for New Zealand to boast a carbon surplus. We are struggling to see much out of this review that acknowledges these landowners with anything but disdain.

We appreciate that it might be hard for organisations that cannot see past the next opinion poll to make long term decisions for our nation’s benefit, however we believe that this Bill is so far from practical reality that it’s still worth lobbying your local MP to make a difference.

Read other commentary about the report:

Returned ETS Bill a failure – Environment Commissioner

No restrictions on foreign sourced carbon credits confirmed

ETS process a rubber stamping exercise – Mackey

Groser deliberately missing the point – Mackey

Iwi lose out in Carbon Crash

Govt throws bone to ETS critics, looks to ban dodgy foreign credits

 

 

 

Presentation to the Select Committee

Posted on 19 September 2012 in Carbon, Forestry | Comments Off on Presentation to the Select Committee

We verbally presented our argument to the Select Committee today regarding the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill.  We reiterate that some sections of this Bill undermine original objectives of the Climate Change Response Act 2002, and furthermore the passing of this Bill in its entirety will not only erode what has been achieved thus far by New Zealander’s who have bought into the overall philosophy of the ETS, but will effectively stop it in its tracks.  Here is a  Summary of points made to Select Committee – 18.9.12

Power industry's carbon gift

Posted on 10 September 2012 in Carbon | Comments Off on Power industry's carbon gift

This article found on the Stuff website makes for interesting reading.

Despite the price of carbon crashing, Contact Energy is yet to alter the carbon levy it imposed on customers when the Emissions Trading Scheme began in 2010. And Contact may not be the only power company overcharging customers for carbon … READ MORE

Proposed changes to the Climate Change Response Act. Close off date for submissions – 10th September

Posted on 6 September 2012 in Carbon, Forestry | Comments Off on Proposed changes to the Climate Change Response Act. Close off date for submissions – 10th September

The Climate Change Response (Emissions Trading and Other Matters) Amendment Bill is currently before Parliament’s Finance and Expenditure Select Committee. The closing date for submissions is 10th SeptemberREAD OUR SUBMISSION IN FULL

If you are in agreement with the contents of the submission and are comfortable that it represents your views, please email admin@woodnet.co.nz and we will add your name to the list of parties that this submission represents. You are also welcome to include any comments of support at the same time. This in no way stops you from making your own submission (online via www.parliament.nz), however we appreciate that not everybody has the time to do that.

If you wish to respond please do so by midday on Monday 10th September.

Amongst other things this Bill is proposing to retain New Zealand emitters’ ability to continue to purchase cheap foreign credits (derived from schemes/projects not considered appropriate for our own ETS) to satisfy their surrender obligations.

In the 2011 year less than 13% of all credits surrendered by emitters were forest-created NZUs. The majority of the balance were purchased off-shore from projects registered with the United Nations. The credits from the majority of these projects can only be surrendered in minor or nil proportions in Europe, and New Zealand is the only country we are aware of that will allow an emitter to surrender up to 100% of them. Many of these projects (although they meet UN requirements) would not be able to generate credits within New Zealand under our own ETS framework. Continued access to them will allow emitters to cover off on their New Zealand surrender requirements but will do nothing to reduce New Zealand’s actual carbon emissions. Furthermore, although we have tried very hard, we have been unable to confirm that emitters are passing the savings on to the people paying at the fuel pump and electricity meter.

Going forward, we understand Europe requires 1,750 million carbon credits, and latest estimates are that there will be a minimum of 4,427 million available up until 2020. This does not count other units that are just starting to emerge from Russia and the Eastern Block countries from UN approved projects.

We believe New Zealand wants to do its fair share and is capable of doing that through forestry carbon sequestration, but to do this will require some recognised reward for those making it possible. The solution we are proposing is that Government impose a requirement for emitters to surrender a minimum of 50% NZUs in their annual emission returns which would align with the Australian approach (incidentally Australia has capped the maximum amount of UN-backed Kyoto units at 12.5% from 2015 onwards).

Don't let the ETS become a nightmare

Posted on 5 August 2012 in Carbon, Magazine/News Articles, Publications | Comments Off on Don't let the ETS become a nightmare

Law Talk – August 2012

Woodnet has contributed an article for the Law Talk Magazine (August Issue #801) – the official magazine of the NZ Law Society.

  • Definitions of Pre-1990 and Post-1989 forest land.
  • Risks of deforestation. Deforestation case study.
  • Offsetting.
  • Land transfers – What needs to be done for property registered into the ETS if ownership changes more than 40% for properties. Land transfer case study.

Download article:  Don’t let the ETS become a nightmare

MPI may only accept post-1989 ETS applications up until October 2012

Posted on 1 August 2012 in Carbon | Comments Off on MPI may only accept post-1989 ETS applications up until October 2012

ACT NOW!

Although the official deadline to get your Post-1989 ETS application approved is 31st December 2012 (in order to back claim credits back to 2008), MPI have indicated that due to current processing workloads, they may not accept any new applications after end October 2012.  So if you have Post-1989 forest to register – ACT NOW!  Otherwise you may miss out on the first five year’s worth of credits.

Government announces changes to the ETS – July 2012

Posted on 17 July 2012 in Carbon | Comments Off on Government announces changes to the ETS – July 2012

SPECIAL BULLETIN

Government has announced a number of changes to the NZ Emissions Trading Scheme (ETS), to be implemented via legislation to be passed later this year.

THE GOOD NEWS – Second tranche of Pre 1990 compensation to stay!

THE NOT-SO-GOOD NEWS – NZ carbon market looks a bit grim in the short term.  Forestry appears to be expected to subsidise the New Zealand ETS in the short term by continuing to generate credits that the Crown can benefit from in ‘Kyoto returns’ but which forest owners are unable to sell at a realistic price.

THE KEY CHANGES ARE:
  1. Pre 1990 landowners will continue to receive their allocation of emissions units in full, unless they take up offsetting. In recognition of the benefits offered by offsetting, Pre 1990 forest landowners who take up offsetting will need to return the second tranche of this allocation.
  2. The introduction of offsetting as an option for Pre 1990 forests, giving forest landowners the flexibility to convert their land to a better use, but avoid ETS deforestation costs by planting a carbon equivalent area of forest elsewhere.
  3. The start date for surrender obligations for biological emissions from agriculture has been deferred, pending a review in 2015.
  4. The transitional measures designed to reduce the initial cost impacts of the scheme beyond 2012 have been extended. In particular, these will extend the ability of many of those with ETS obligations to surrender one emissions unit for every two tonnes of emissions (the ‘one for two’). In addition, participants will also have the choice to meet their obligations by paying the Government $25 per tonne of emissions (the fixed price option).
  5. Government will have the power to increase the supply of New Zealand Units (NZU’s – the primary emissions unit used within the ETS) through an auction, within an overall cap on the number of NZU’s auctioned and allocated. This will help to ensure that ETS participants do not need to fund more emissions reductions in other countries than New Zealand needs to in order to meet its international obligations or domestic targets.
  6. Quantitative restrictions on the number of international emissions units that can be surrendered by those with ETS obligations will not be introduced. This will ensure that the carbon prices faced by ETS participants continue to reflect international prices.

The Government also intends to make some operational amendments for forestry under the ETS.  One of these changes will be to extend the time for submitting Post 1989 emission returns from three months to six months (currently emissions returns must be submitted between January and March of each year). The Government’s reasoning for the changes is “to maintain the costs that the ETS places on the economy at current levels. This will ensure businesses and households do not face additional costs during the continued economic recovery, and that New Zealand continues to do its fair share on climate change.”

SO WHAT DOES IT ALL MEAN?

While some ETS commentators have reacted as saying the carbon market has been “buried in a six-foot hole” and others are saying it’s merely in “suspended animation”, for many the confirmation that the second tranche of credits will be allocated is welcome news – landowners will continue to receive their second tranche allocation of New Zealand Units (NZU’s) in full. Where landowners have approval to take up offsetting they would be required to pay back any second tranche NZU’s they have received.

Offsetting opens up the way for better land use and should be understood by anyone able to benefit from it.  Offsetting means that Pre 1990 forest landowners will be able to convert forest land without deforestation liabilities provided a new forest is established elsewhere. Offsetting will be an option for Pre 1990 forest landowners from 2013.  Pre 1990 forests harvested before 2013 will also be eligible provided these areas are not already considered to be deforested (ie, already converted to other land use or fallow for over four years).

Major emitters were expecting to have to progressively increase the number of units they had to surrender (and therefore purchase) from next year.  As the Government has now chosen to retain the ‘one for two’ policy, it’s expected that the potential increase in demand for forest credits will take longer to appear.

Despite calls to follow Australia’s lead and introduce a mandatory proportion of carbon offset purchases to be sourced from within NZ, Government has continued to allow emitters to source units from overseas (in the form of Certified Emission Reduction units, CER’s) to meet their surrender obligations.  This effectively benchmarks the price of NZU’s against the international market and does little to affect an internal balance in NZ emissions reduction programmes.

Point ‘5’ regarding the introduction of auctioning appears to allow the Government to provide NZU’s to the market to generate cash returns for the Crown.  Potentially commendable as it will help to keep the money in NZ, but concerning in that these credits may sell at less or equal to international rates and effectively be in competition with forest produced credits – watch this space and be prepared to lobby when it comes up for consultation.

The good news is that the EU Carbon programme participants are unhappy with low carbon prices and are looking to effect policy that will put upward pressure on price but we all know they have some major economic factors to consider at the same time along with working out how Italy lost 4:0 to Spain in July!

Although we think that the Government could have been more proactive in:

  • tying NZ produced credits to the NZ market,
  • ensuring that the price paid to emitters by consumers is aligned with their costs of compliance, and
  • positioning agriculture better so that an election change does not inflict a sudden change on the NZ ETS for farmers …

… the reality is that the ETS appears to be HERE TO STAY and if you have land that is better in exotic forest or indigenous reversion, then the ETS is still a worthwhile consideration.

Credit prices like any other product can be expected to react to changing market conditions and credits are easy to store in your NZEUR account.