ETS revamp: averaging accounting for forests

Hon Shane Jones, Minister of Forestry

Changes to the Emissions Trading Scheme (ETS) will see 89 million more trees planted in the coming years and an extra 45 million tonnes of carbon dioxide stored in New Zealand’s forests.

Forestry Minister Shane Jones and Climate Change Minister James Shaw have today announced a second set of changes to the Emission Trading Scheme (ETS) as part of broader reforms to make the scheme fit-for-purpose.

“Today’s announcement includes the introduction of averaging accounting for all forests registered from January 1 2021 and the option to use the new accounting method for all forests registered in 2019 and 2020,” Shane Jones said.

“By taking a long-term view of the amount of carbon in a production forest, averaging means forest owners will be able to trade more carbon (NZUs) at lower risk, and not have to worry about finding units to repay when they harvest.

“It’s essential the ETS provides the right incentives for forestry over the long term so we can deliver on our One Billion Trees programme as well as our commitment to taking action on climate change and supporting the transition to a low emissions future.

“We’ve heard from the forestry sector about the need to make the ETS simpler while increasing the incentives to plant trees – simpler accounting for the carbon stored in trees will make a positive difference for anyone considering investing in forestry,” Shane Jones said.

“The timing of this decision – as the 2019 planting season is about to get under way – is important for forest owners. They can now go ahead with planting this year knowing they can choose the new system and we hope this provides the certainty they’ve been seeking as a sector. We expect to make further decisions soon on the details of averaging accounting, and whether forests already in the ETS can transition to averaging.” 

James Shaw said Cabinet had also agreed to several operational changes to streamline the ETS process for forest owners.

“We will improve the emissions rulings process where applicants can get an assessment of their land prior to investment and enable the use of a mapping instrument to make applications even easier,” James Shaw said.

“These proposals work together: the improved emissions ruling process will be in place once the legislation changes, while we develop the mapping instrument over the longer term.

“These changes to the ETS are part of a number of overlapping policy levers that aim to strike the right balance between production and protection. We need clean water and reduced greenhouse gasses. We also need food and employment, including in the regions.

“Alongside these important forestry changes, the Government is progressing more amendments to the ETS. These changes will improve the ETS to support New Zealand’s commitment to the Paris Agreement and our transition to a low emissions future. We aim to introduce the changes to Parliament around the middle of this year.

“We are also making the scheme fairer, and creating the ability for the Crown to make sure people are operating within the intended framework,” James Shaw said.

 

Shane.Jones@parliament.govt.nz

 

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