Sheep and beef farmers are being encouraged to register their eligible forest into the Emissions Trading Scheme (ETS) as soon as possible to avoid losing an estimated $1billion worth of carbon credits.
Update: on 3 March the Government announced it will soon be consulting on changes to the ETS, in response to concerns about carbon farming, that could affect future exotic planting – we’ll keep farmers updated on this.
Beef + Lamb New Zealand’s environmental policy analyst Madeline Hall says significant areas of ETS-eligible vegetation sit on farms across the country and through the ETS, these could be generating significant returns for the landowners.
“This is not just about pine trees; the ETS incorporates a range of eligible trees and vegetation. This includes trees that have been planted for soil conservation, shelter, riparian management and biodiversity support.”
Trees like Kanuka and Manuka can generate around $700-$900/ha under the ETS (based on current carbon prices), while the area can still be grazed. So long as the tree covered areas can achieve 30% canopy cover, have an average width of 30m, are at least 1ha in size, and ‘established’ after 1990, the area could be eligible for entry into the ETS.
“This means you can have some gaps between plantings and still qualify.”
Plantings can be mixed species and even shade plantings over streams can generate a significant income provided they meet the forest land definition.
Ms Hall says if just 10 per cent of the estimated 2.8 million hectares of indigenous vegetation sitting on sheep and beef farms was registered in the ETS by the end of 2022, landowners could claim credits for the past five years of carbon sequestration. These credits could be worth $958 million dollars, based on a carbon unit price of NZD $72.
She says the Mandatory Emissions Return Period ends in 2022, so it is important farmers begin the ETS registration process as soon as possible to qualify. They can then claim back to the start of the return period which was 2018.
Another incentive to register before the end of 2022 is a change in how carbon stocks are measured. Up until the end of this year, landowners have a choice between two accounting options (averaging and stock change), in 2023, this shifts to a solely averaging system.
Ms Hall says the registration process can take between six and nine months, so time is of the essence to allow farmers to capture the benefits.
“As an organisation, B+LNZ would like to see farmers using the ETS to better integrate their new and existing plantings within the farming landscape and business.”
Farmers can register their forests online by going to the MPI website, but Ms Hall says it is important to ensure that all of the required pieces of information are complete and adequate before submitting them.
She says under He Waka Eke Noa’s proposed agricultural emissions pricing frameworks, more vegetation types could be recognized than under the ETS, but these might not necessarily generate the same rewards as the ETS.
“Depending on which option is landed on, farmers would be receiving a discount based on their eligible vegetation or be able to enter into a contract to receive a reward for their sequestration.”
Ms Hall says although a farmer could participate in both the ETS and the He Waka Eke Noa proposals, it is not intended that the same piece of vegetation can be included in both. In other words, there can be no double-dipping for the same area.
“Both the He Waka Eke Noa and ETS schemes would likely have some liabilities associated with exiting the scheme, we’re hoping that the process to enter vegetation in He Waka Eke Noa will be an easier process.”
Find out more
- Landowners interested in finding out more should visit the Ministry for Primary Industries' website.
- Farmers interested in learning more about the agricultural emissions pricing proposals in He Waka Eke Noa can see the information about the consultation on our website and submit their views as part of the ongoing engagement using the online feedback form.