Last week we made a submission to Ministry for the Environment's technical review of the ETS. The review focused on ETS forestry including changing the way carbon is treated at harvest (averaging) and recognising stored carbon in wood products (harvested wood products). The proposed changes could greatly benefit the economics of carbon forestry and lower risk. CFS also calls for participation of pre-1990 forests to earn NZUs, and also for certainty on the future use of overseas units in NZ. You can read our submission here (CFS Submission ETS Review April 2016).

The latest issue of the Listener features how NZ has used 'junk' overseas credits to cheat climate change targets, crash the carbon price, and ruin the NZ ETS and carbon forestry.
The Listener article follows on from the Morgan Foundation report 'Climate Cheats'. article. Ollie Belton from Carbon Forest Services features in the Listener and also is referenced in the Morgan report.

​Read "The great climate change rort" in issue 3961 of the Listener April 23-29, 2016.

A new report by the Morgan Foundation exposes how New Zealand is meeting it climate change targets by using 'dodgy' international carbon credits from Russia and Ukraine and asks the Government to "dump the junk". The report can be read at morganfoundation.org.nz/new-report-climate-cheats.

CFS talks with Carbon Pulse on the latest ETS consultation documents released by Ministry for the Environment on forestry matters. The Government is considering changing how emission liability is accounted at harvest and whether embedded carbon in Harvested Wood products should be introduced into the NZ ETS. The Carbon Pulse article can be read here.

CFS clients are giving landowners free forests for timber, and in some cases manuka forest (for honey). The forests are offsetting pre-1990 deforestation. Offset forests cannot be registered to earn carbon and must be planted after harvest. More can be read at Farmers Weekly here.

CFS talks to Farmers Weekly about the upcoming ETS Review and the possible increase in NZU demand if proposed changes are adopted but warns that oversupply is a risk if Government allows foriegn credits back into the NZ ETS after 2020. Read the Farmers Weekly article here.

CFS is interviewed by Ecosystem Marketplace for their article on the upcoming NZ ETS Review 'New Zealand Seeks To Reform A Floundering Emissions Trading Program'. Ecosystem Marketplace is a leading source of international news about market place approaches to conserving ecosystems. Read the full article here.

The NZ ETS Review discussion document has finally been released and it signals a more positive future for carbon forestry going forward. While Agriculture has been left off the table again, the 50% subsidy on polluters surrender obligations is targeted as a priority issue.

The paper estimates that 140 million surplus NZUs have been banked and the Government acknowledges that oversupply has led to price volatility, undermining of emissions reductions, and presents fiscal risk to future Governments. Removal of the '2 for 1' emission subsidy would double the annual ETS demand from around 20m to 40m and go a long way in soaking up excess banked units. The document indicates full surrender obligations could be implemented before the end of 2016.

Submissions on priority issues close 19 February 2016.

Other review issues relating to the future direction of the NZ ETS are on a slower track. Issues flagged for consideration include managing price stability, the use of international units, and auctioning of NZUs by Government. All of these issues have the potential to undermine effective carbon pricing and are a major concern. However, the paper recognises this, and lists options such as implementing price floors, limiting the use of overseas units, and delaying auctioning until the medium to long term once banked NZUs have diminished.

Submissions on other issues close 30 April 2016.

To read the ETS Discussion Document and/or make a submission click here.

While the ETS Review discussion on forestry is limited in scope it appears more significant proposals will be released over the next 12 months.

Associate Minister for Primary Industries Jo Goodhew released a press statement yesterday to coincide with the ETS review outlining some of these changes such as:

• accounting methodologies for post-1989 foresters, including averaging, harvested wood products, and emissions from adverse events;
• the exemption provisions for tree weeds for pre-1990 forests;
• the transfer of participation for post-1989 forestry; and
• the penalty and prosecution regime.
  

Both averaging and harvested wood products could have a significant impact on the attractiveness of carbon forestry by reducing the amount of carbon liability to be repaid upon harvest and reducing perceived risk.

The Press Release can be read here.

Climate Change Minister Tim Grosser appears on TVNZ Q&A program to discuss the 'New Zealand Proposal' he is taking to the UN climate conference in Paris. He also confirms the ETS review consultation document will be released this week.

Watch the Q&A program here.