It is important for farmers to understand how the Emissions Trading Scheme may affect them. The Emissions Trading Scheme draws a distinction between woodlots prior to 1990 and woodlots after 1989. Any farmer who owns a pre-1990 woodlot has the opportunity to apply to the government for a free allocation of emission units.
The details of the allocation are as follows:
- The entitlement per hectare is 60 units for land owned before 31 October 2002 and 39 units for land owned after 1 November 2002.
- The units are currently trading at $18-$25.
- They can be redeemed through the New Zealand Emission Unit Register.
These applications need to be made before 30 November 2011.
Farmers need to be aware that there is a less-than-50-hectare exemption available. If there is any chance of current woodlots being returned to pasture, then the owner has the opportunity before 30 September 2011 to apply for an exemption. The exemption removes the woodlot from the Emissions Trading Scheme and allows that land to be converted back to pasture without having to pay.
If a farmer does not apply for the exemption, and the conversion of pre-1990 forestland to pasture occurs, then the landowner will be required to refund approximately 800 units per ha to the government. The position will be similar if you apply for the free allocation of 60/39 units per ha, but are required to contribute 800 units per ha. That is a potential cost of $20,000 per hectare, so your decision is very important that if in doubt, apply for the exemption.
It is important, when considering the effect of the Emissions Trading Scheme on farmland and woodlots, to understand that the date for qualification is not when the trees were planted, but what the land was being used for at the critical time. For example, trees may have been planted post-1989, but if the land had been used as a woodlot or forest on both 31 December 1989 and 31 December 2007, then it will qualify. Further detailed information on this topic is available from the MAF webpage at www.maf.govt.nz Click on the guide to Pre-1990 Forest Allocation and Exemptions link. To help you, the deadlines are:
- Allocation of New Zealand Units – 30 November 2011
- Exemption for less than 50 hectares – 30 September 2011
Native forests are not included in the deforestation provisions of the Emissions Trading Scheme, but new native forests are still able to earn carbon credits under the Emissions Trading Scheme.
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