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What is EBEX ?

EBEX21® (Emissions-Biodiversity Exchange for the 21st century), or EBEX® for short, is a service for New Zealand landowners that enables them to sell carbon credits from regenerating native forests to third parties. Our landowners are expected to enter the Permanent Forest Sink Initiative (PFSI) in order to obtain Kyoto-compliant credits (Assigned Amount Units or AAUs). EBEX assesses sites for their potential to regenerate native forests, assists landowners to enter the Permanent Forest Sink Initiative, and sells the credits to businesses or individuals who want to offset their greenhouse gas emissions.

If/when a measurement option exists for indigenous forests in the PFSI we will also audit the carbon and biodiversity gains during the regeneration process.

Currently all EBEX credits are sold via Landcare Research’s carboNZero^{Cert TM} programme. Organisations, products, services and events can seek carboNZero certification for their efforts to measure and manage (reduce) their greenhouse gas emissions and then offset their remaining unavoidable emissions.

For further information about the carboNZero programme please visit:
www.carbonzero.co.nz

Why use EBEX?

At EBEX we simplify the complex issue of carbon farming. With our one-stop solution we assist with the creation of your credits – offering advice, helping with the necessary paperwork and providing the required maps and diagrams – right through to selling the credits on your behalf.

Importantly, EBEX credits have the highest levels of integrity, ensuring you get a consistently high price. Backed by over two decades of research into the regeneration of New Zealand native forests, we understand carbon sequestration, and can advise you on how best to develop shrubland into tall forest.

Our experience over eight years of creating and selling the highest quality credits from regenerating native forest is unmatched in New Zealand.

Is my land eligible for EBEX?

If you can answer yes to all the following questions then your land is eligible. Please contact us for further details.

1. Is the land naturally regenerating into native species or is your intention for it to do so, and are there native seedlings in the pasture areas that could grow to 5 m in height?

2. Is the patch of land at least 100 ha (247 acres) in area?

3. Was the land in pasture or did it have less than 30% tree cover (include only trees that exceed 5 m in height at maturity, e.g. beech) at 31 December 1989? Land that could be eligible could include pasture with the occasional scrubby bushes, or extensive patches of gorse or broom with few native plants underneath. (It doesn’t matter what has happened to the vegetation since 1990.)

4. Are there sources of native tree seed, or bush, within a kilometre of the patch of land?

5. Is the patch of land below the subalpine level?

6. Is the patch of land fenced off from stock or can stock be excluded by fencing or other means?

7. Are you prepared to seek a covenant to protect the regenerating forest in perpetuity?

If you answered ‘no’ to any of the above questions, please read on to find out why your land is not eligible, or contact MAF if you have an exotic forest www.maf.govt.nz/sustainable-forestry/ or phone 0800 CLIMATE (254 6283).

What is the Permanent Forest Sink Initiative (PFSI)?

The Permanent Forest Sink Initiative (PFSI) is operated by MAF and promotes the establishment of permanent forests on previously unforested land. It is the mechanism by which landowners earn Kyoto-compliant emission units (Assigned Amount Units or AAUs) for carbon sequestered in permanent forests established after 1 January 1990. The PFSI requires landowners to obtain a covenant on their land to guarantee the permanence of the stored carbon.

See www.maf.govt.nz/forestry/pfsi/ for further details.

What is the relationship between EBEX and the Permanent Forest Sink Initiative (PFSI)?

EBEX is a service that supports landowners from the point of carbon credit creation from native regeneration through to sale. The PFSI is the mechanism we use to make the credits Kyoto compliant.

What are carbon credits?

A carbon credit is created by avoiding emissions, reducing the amount of emissions, or removing the equivalent emissions from the atmosphere (sequestration). Credits are usually traded as equivalents of one tonne of CO₂ emissions (CO₂e).

• Carbon credits from alternative energy projects avoid carbon dioxide being emitted to the atmosphere by generating electricity or running vehicles without the use of fossil fuels.
• Carbon credits from energy efficiency projects reduce carbon dioxide emissions by reducing the demand for electricity generated through the use of fossil fuels.
• Carbon credits from forest sinks projects can be used to offset emissions, as they remove (sequester) carbon dioxide from the atmosphere.

The type of credit that EBEX trades in is called an Assigned Amount Unit or AAU. This is a Kyoto-compliant credit.

How do I get carbon credits from my pine (or other exotic species) forest?

As EBEX only deals with credits from naturally regenerating native forests we can’t process enquiries about credits from plantations.

Please contact MAF for more information:
www.maf.govt.nz/sustainable-forestry/
or phone 0800 CLIMATE (254 6283).

Why do I need to have native tree seedlings in the pasture?

The pasture must be already in the process of natural regeneration to satisfy the requirements of the PFSI. The seedlings must be of tree species that could grow to 5 m in height.

Why can’t I get carbon credits from my land that is less than 100 hectares in area?

Smaller land areas (<100 ha) are eligible for carbon credits but the costs are the same on any given parcel of land no matter what size it is (this cost covers estimating the area of eligible land from a GIS shapefile and sending people to verify the eligible area) and the smaller the land area, the smaller the revenue to cover the costs. We find that areas of less than 50 hectares do not usually earn enough revenue to cover costs and areas of 50–100 hectares are marginal. If the price of carbon increases, this will change.

Why can I only get carbon credits from my trees that have grown since 1989?

The year 1990 has been set as the baseline year for all countries that have signed the Kyoto Protocol. For the first Kyoto Commitment Period (CP1, 2008–2012) New Zealand has elected to only include native forests that have arisen since 1 January 1990, so EBEX has to work within this framework dictated by the New Zealand Government and the Kyoto Protocol.

Why do I need patches of native bush within a kilometre of the patch of land?

EBEX only deals with naturally regenerating native forest. We do not deal with tree-planting projects. Therefore, there needs to be a seed source of native trees nearby so that your land can naturally regenerate.

Why does my land need to be below subalpine level?

Trees do not grow very big and growth is a lot slower at higher altitudes. Therefore, forests do not sequester carbon quickly enough to be viable for carbon farming at these higher altitudes.

Why does my land need to be fenced and/or livestock excluded?

Fencing prevents livestock from getting in and grazing native seedlings etc. Grazing prevents the forest from regenerating at a rate that allows enough carbon to be sequestered for viable carbon farming. Further, to show your eligibility under the PFSI you need to demonstrate that the land would not have regenerated to native forest without your intervention – destocking and/or pest control are management interventions that occur once you decide the land is for carbon instead of business-as-usual farming.

Why do I need a covenant?

A covenant is a legal agreement that ensures that the carbon removed from the atmosphere by your regenerating forest is stored permanently. This ensures that the credits bought are real and permanent. Currently the only option for you to receive AAUs is the Permanent Forest Sink Initiative, which has its own covenant.

How much carbon dioxide is sequestered by a hectare of regenerating native forest?

This has been estimated for a range of regenerating forest types in New Zealand and also varies with local conditions such as species mixture, temperature and rainfall. On average, across many mixtures and a range of localities, the PFSI uses a default sequestration rate of 3 tonnes CO₂e/ha/yr to set the level of AAU allocation. Many locations are expected to sequester CO₂ at a higher rate than this but a plot-based measurement at the site would be required to confirm the actual rate of sequestration. As of September 2009, this is not an option under the PFSI.

What are the costs associated with generating and selling AAUs through EBEX (GST exclusive)?

EBEX	PFSI	Other
Preliminary assessment (which includes generation of a map/image of your land and the estimated forest area that is eligible for the PFSI) – $750 1 Onsite eligibility for PFSI audit and administration – $2,000 2 A commission is taken out of each credit sold Possible future full measurement $7,000 to $10,000	PFSI registration – $500 Submission of PFSI covenant to LINZ – $53.33 Annual emissions return – $88.89 each	Legal costs – these depend on your lawyers as to how much they charge to look over the contracts etc. Possible fencing and pest control

1 Fee for properties up to 1,000 ha in area.  The price for properties larger than this will vary on a case-by-case basis but will be agreed with landowners before proceeding.

2 This fee may vary for larger properties greater than 1,000 ha.

How much can I make growing an EBEX -type offset forest?

The carbon market is influenced by supply and demand and hence the net return will vary. 

Here is an example of returns* (GST exclusive):
Eligible area = 200 ha
Sequestration rate = 3 tonnes CO2e per hectare per year
Time period = 5 years
Possible net carbon credit price = $15 per unit
Gross return = ((3 x 15) x 200) x 5 = $45,000
Number of units = 3,000

*Example for illustrative purposes only - Landcare Research accepts no responsibility for any actions taken in reliance on it or consequences arising from the use of it.

What does EBEX do with my AAUs (credits) once it has purchased them?

We cancel the AAUs with the New Zealand Emission Unit Register (NZEUR), which means that the overall pool of credits that New Zealand has available to meet its Kyoto Protocol liability is reduced. This means that further energy saving reductions need to be made elsewhere in order to meet our collective targets. We provide evidence of cancellation to the carboNZero programme who then provide certificates showing the number of units cancelled on behalf of their clients. This also means that the units will not be traded further.

Do I need insurance?

Maybe. If your forest burns down etc. you will have to pay the Crown back in Assigned Amount Units or AAUs. This would be at the price of AAUs at the time the forest burned. However, if you assess your fire risk to be small you might decide not to seek commercial insurance.

What is the Emissions Trading Scheme (ETS)?

The Emissions Trading Scheme (ETS) is the price-based mechanism established by the New Zealand Parliament to:

• Reduce net greenhouse gas emissions below business-as-usual levels
• Comply with our international obligations, including our Kyoto Protocol obligations.

The comprehensive scheme is a key part of overall climate change policy and involves all significant greenhouse gases and all sectors including forestry, agriculture, industry, energy, waste and liquid fossil fuels.

Forestry is the first sector to enter the ETS.

See www.maf.govt.nz/sustainable-forestry/ets/ for further details.

Why does EBEX use the PFSI instead of the ETS?

EBEX credits need to meet international requirements – this gives them integrity and saleability. The PFSI allows us to do this more easily than the ETS. The PFSI requires a covenant to ensure that the carbon is permanently removed from the atmosphere. The type of credits generated under the PFSI are Assigned Amount Units or AAUs, which are Kyoto-compliant and therefore recognised internationally.

Can I transfer to the ETS at a later date?

You cannot transfer to the ETS under an EBEX contract. This is because the ETS does not provide the international integrity that the PFSI does (see above).

What is the New Zealand Emission Units Register (NZEUR)?

This is New Zealand's national registry to manage the accounting, reporting and reconciliation of emissions unit holdings and transactions as part of the New Zealand Emissions Trading Scheme and to meet New Zealand's commitment and obligations under the Kyoto Protocol.

See www.eur.govt.nz/eats/nz/ for further details.

If I was going to restore my land to native forest anyway, isn’t native forest regeneration double-counting of the credits?

Although New Zealand would have counted the credits from your regenerating forest in the national total of New Zealand forest sinks whether or not you entered the PFSI, the fact that EBEX cancels the units associated with your regenerating forest with the NZEUR means that they can no longer be offered up as part of our total and we need to make savings elsewhere to achieve our Kyoto commitments.

What is the Afforestation Grant Scheme (AGS)?

The Afforestation Grant Scheme (AGS) is a contestable fund designed to encourage more planting of trees in small forests and on farms. It was announced last year by the Government as part of its package of climate change initiatives and offers an alternative to the Emissions Trading Scheme (Forestry) as a way to encourage greater levels of greenhouse gas absorption by increasing the area of Kyoto-compliant new forest in New Zealand. This is worth looking into if your land area is smaller than our size threshold (<100 ha).

See www.maf.govt.nz/climatechange/forestry/initiatives/ags/ for further details.

Why use natural regeneration as opposed to tree planting?

Natural regeneration is significantly more cost-effective for reforesting large areas of land – we've measured up to 60,000 tree stems per hectare in naturally regenerating forests! We believe that forest restoration through planting is a good idea but at present little accurate information is available on how much carbon is stored per hectare of restoration or revegetation planting. We have much better data on the amount of carbon stored long term in naturally regenerated stands. The costs of planting trees will not currently be covered by revenue from carbon credits alone. Promoting natural regeneration is therefore the ideal vehicle to achieve new forests of large areas in suitable locations.

If you are involved in a tree-planting scheme, you may be able to get financial assistance from the Afforestation Grant Scheme. For more information go to: www.maf.govt.nz/climatechange/forestry/initiatives/ags/.

How much carbon dioxide is sequestered by one tree?

The amount of CO₂ sequestered by a single tree varies with geographical location, soil type, rainfall, the species of tree and its age, size, permanence and health. The estimation of the amount of CO₂ sequestered by individual trees is an inexact science requiring many assumptions. The Advertising Standards Authority in the UK recently ruled that there was no scientific basis for a claim by a company that the number of trees they had planted would sequester CO₂ equivalent to the company’s greenhouse gas emissions. For those reasons EBEX focuses on sequestration by hectares of regenerating forest rather than individual trees.

Do trees increase in their capacity to sequester carbon dioxide as the forest grows?

Generally, yes. The rate of sequestration changes as a forest develops. Carbon sequestration is slow during the initial establishment phase as pasture is converted to woody shrublands. Most woody shrubs, such as manuka, kanuka, tauhinu, then grow rapidly and absorb lots of CO₂ before being replaced by longer lived slower growing species. These slow-growing species tend to be bigger and therefore they absorb more carbon, but the annual rate of sequestration is less than that of the more rapidly growing shrub species. It is possible for sequestration to continue for a number of centuries.

Do wetlands sequester carbon?

Provided the wetland is in healthy condition and the muds are aerobic, the vegetation will absorb CO₂. However, small plants sequester much smaller amounts of CO₂ compared with large trees. Wetlands are making a positive contribution to biodiversity but are not included in EBEX . If the muds are anaerobic it is likely that methane is being produced, which therefore contributes greenhouse gas emissions to the atmosphere!

What is the Kyoto Protocol?

The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC), an international environmental treaty with the goal of achieving ‘stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.’

For further information:
http://unfccc.int/resource/docs/convkp/kpeng.html
http://en.wikipedia.org/wiki/Kyoto_Protocol

Wouldn’t there be many benefits to a warmer and wetter climate and higher carbon dioxide levels, e.g. increased plant growth resulting in greater CO₂ absorption / O₂ production, and bigger yields of food crops?

Climate change will cause even more extreme weather events. Even if there are better crops because some areas are warmer and wetter, many will be wiped out by the storm events. While some crops may benefit, so will many weeds, pests and diseases. A warmer climate would mean they could spread to new parts of the country, and many tropical pathogens may be able to establish here.

Overall, crops take up relatively little carbon compared with forests (they are often grown, harvested consumed and readmitted to the atmosphere on an annual basis) and we are still cutting down far more forest than is being planted. In addition, increased global temperatures may cause existing forests to lose more carbon from the soil because of increased rates of decomposition.

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