In a surprise move the Government has banned post-1989 forest owners from using Kyoto units when they de-register from the NZ ETS. The change was part of the Budget Measures (Miscellaneous Fiscal Matters) Bill and was implemented to prevent 'reregistraton arbritrage' and close a loophole allowing forest owners to exit the NZ ETS and subsequently re-join.

Under the NZ ETS, post-1989 Forest Owners can voluntarily exit and de-register from the scheme. Upon de-registration the forest owner is required to repay to Government the equivalent number of units they have been issued. Prior to the recent law change the units acceptable included cheap Kyoto units such as Emission Reduction Units (ERUs) which have traded for as low as 17 cents in recent weeks. The new law prohibits these Kyoto units from being used.

The Law change has major consequences for post-1989 forest owners which are outlined below in a series of Q&As.

The latest IPCC report released at the end of March 2014 shows that NZ is not doing it's 'fair share' to mitigate climate change, and that our changing climate over the coming century means more extreme weather such as extensive floods, major droughts. Read the IPP report here, or read an article about NZ's status in the Report in the Christchurch Press 'Wake-Up call for NZ in climate report'.

Brian Fallow wrote an interesting piece in the NZ Herald outlining why it is essential for NZ to curb emissions, not from an moral/environmental viewpoint but from an economic viewpoint on reducing the monetary costs to current and future New Zealander's. Here is the link to the Article 'Curbing emissions is vital'.

1. NZ emissions in 2012 were 25% higher than the year 1990. This is primarily due to increased agriculture and transport.
2. NZ's net emissions are slightly less than our Kyoto target of 309 million tonnes, mainly through our forests sinks removal of carbon.
3. There is a surplus of 90 million credits in the New Zealand Registry above the Kyoto requirements. This is due to the influx of cheap foreign Kyoto units from countries such as Ukraine.
   
4. NZ has the 5th highest emissions per capita out of  40 industrialised countries with an average of 16.6 tonnes of CO2e per person compared with the average of around 11 tonnes per person.

To read Minister Grosser's Release click here. To read the the MFE Report click here.

We voluntarily disclosed the error to MPI, and helped the client through compliance with MPI waiving any additional penalties. However, MPI initially states that NZUs must be repaid for the over issuance.

After Carbon Forest Services challenged MPI they accepted that eligible RMUs, CERs and ERUs were also permissible under the legislation. This reduced the cost for the client from $3.40/unit to $0.20/unit.