New Zealand will be investing in overseas forestry assets to reduce emissions, so it would be very disappointing if similar support was not available locally to help landowners move from plantation pines to valuable permanent natives.
Opinion: The genesis of the over-abundance of CO2 in the atmosphere is that emissions were free and those harmed were disconnected from those who benefited. The current generation enjoying cheap energy are a long way off from future generations or people on low-lying land facing rising seas.
There is overwhelming agreement that the most effective way to reduce emissions is to put a cost on them.
In New Zealand today a litre of diesel includes a carbon cost of 20 cents; $15 for a 75 litre fill-up that will result in 200kg of CO2 emissions.
The latest OECD forecast is that by the end of the decade the carbon price will add about 65c to a litre of diesel ($50 per fill-up). At some point that cost will cause people to use diesel vehicles less by switching to other ways of getting around.
However, going from “no price/cost” to “high price/cost”, creates a range of problems. Some transitional, some structural. Reflecting that:
- Export industries (ranging from the Tiwai aluminium smelter to tomato growers) are now given free allocations of carbon credits so that their export prices are competitive compared to products manufactured or grown in countries with no carbon cost, like Australia.
- Farmers are entirely exempt from paying for animal emissions to avoid New Zealand dairy and meat being uncompetitive internationally.
- Social welfare benefits have been increased to compensate those on low incomes for high energy costs. Investment into public transport and walking/cycling infrastructure ensures there will be more choices about how to get around.
- International shipping and aviation are exempt from paying for emissions to ensure New Zealand remains affordably connected.
- Reflecting the benefits of decades of free emissions, it is also recognised that developed economies (such as New Zealand) should bear more of the cost and should assist poorer countries transition to low-emission energy. The NZ Government has committed to assist other countries’ adapt to climate change and to contribute to programmes that reduce emissions beyond our border.
These measures are motivated by a desire to avoid crushing New Zealand exporters (until international emission pricing means New Zealand aluminium or milk face similar charges to similar commodities produced elsewhere) and to provide financial and practical assistance to those impacted by carbon costs and the cost of transitioning to low-emission energy (whether in our community or internationally).
However, these measures have not addressed one particular area where the New Zealand emission pricing regime is flawed and threatens to cause material ecological, social, and economic harm: plantation forestry.
In New Zealand there are charges for emissions and payments for sequestration. While the latter was set up to encourage pine plantation forestry, in the past it was not a major determinant of land use, but it is now.
Today, farmers face being charged for the emissions of their animals, yet receive no carbon-credits for their pockets of native bush, riparian planting, shelter belts or soil sequestration.
On the other hand, the carbon captured by a hectare of pine forests returns about $1,600 per year at current carbon prices, which will rise to over $5,000 by the end of the decade if OECD CO2 price forecasts are correct.
Relative to native bush, pine provides significant financial benefits to landowners from carbon capture, even though a longer-term and wider perspective would indicate this is a false economy:
- The NZ pine industry has invested in research and systems which ensures that the calculation of pine plantation sequestration is well understood and nurseries are now growing tens of millions of saplings.
- Planting a diverse native forest which suits local soil and climate is slower, more expensive, and more complicated, as is measuring its sequestration.
- Pine is a poor long-term proposition for capturing carbon. A forest will be either harvested, making the carbon capture less than permanent, or the pines will be left standing until they die. From a national perspective we either have a future liability if we cut the trees or countryside of dying forest.
- Pine is the opposite of diverse, doing nothing for other flora/fauna.
- Plantation pine provides few local jobs. It is of little interest to tourists. Planting, maintenance, cutting, and processing are usually done contractually on a fly-in fly-out or centralised basis.
Policies now in place protect export facing industries and agriculture, and help vulnerable members of the community. Similarly motivated measures are required to balance the incentives which currently favour pines over other land uses.
The solution should not merely be to “penalise pines”. That will only cause value-maximising landowners to jump on the bus as quickly as possible to avoid missing out. Not to mention fanning grievances already felt in agricultural circles about government initiatives.
Simple ways to change the balance in favour of native planting include investment in nurseries and the measurement of sequestration and an offer by the Government to take some of the carbon quantity and price risk associated with native planting. For instance, the Government could agree to pay landowners, say, $2,500 a hectare for each year through to 2030 in exchange for the carbon sequestered over that period.
Given that the Government will be undertaking initiatives outside of New Zealand to reduce emissions, it would be very disappointing if similar policies were not available locally.
Government needs to quickly send a clear message to landowners that pine may not be the most profitable or long term best use for their land, that Government is willing to take some volume and price risk associated with the carbon sequestered by native forest, that small parcels of native forest will be eligible to earn carbon credits, and that Government will increase its investment to assist planting and measuring sequestration.