EBEX21® Newsletter Issue 14, February 2009

Policy Update

On 11 September 2008 the New Zealand Labour Government passed legislation  introducing the New Zealand Emissions Trading Scheme (NZ ETS). Forestry was the first sector to enter the NZ ETS and by October 2008 the Ministry of Agriculture and Forestry (MAF) had published A Guide to Forestry in the Emissions Trading Scheme1. It is pleasing that most of the concerns EBEX21 had about the draft regulations released in May 2006 have been alleviated in the latest outline.

However, following the change of government in November 2008 there has been uncertainty about the NZ ETS. This leaves the Permanent Forest Sink Initiative2 (PFSI) as the only current option for forestry landowners wishing to produce Kyoto-compliant carbon credits. If the NZ ETS is retained, it is our understanding that the rules regarding the inclusion of forestry are unlikely to change, so we have included those in this newsletter for comparison.

PFSI and NZ ETS compared

The following table shows a revised3 comparison of the schemes, using only those factors relevant to owners of indigenous forests. The table also shows which parts of each scheme can be completed by EBEX21 on behalf of the landowner.

Factor	NZ ETS (indigenous regeneration)		PFSI (indigenous regeneration)	Services provided by EBEX21 and extra requirements
Eligibility	Indigenous forest that is established after 31 December 1989 on land that was not forest land on 31 December 1989		Indigenous forest that is established after 31 December 1989 on land that was not forest land on 31 December 1989	Land eligibility determination
Covenant	No covenant required. Land use can be changed if all credits are bought back		PFSI Covenant required; can opt out after 50 years if all claimed credits are bought back. PFSI Covenants are carbon-specific	EBEX21 would require a QEII or Conservation Covenant in addition to ETS (not PFSI) registration, plus additional contracts with EBEX21 to cover the certification of carbon credits
Administration costs	Application	$550	$562	Streamlined application process to ensure applications are in correct format and therefore will not require extra MAF time, such as in providing the mapping service required
	Emissions return filing	$100 per return	Unknown but assume $100
	Hourly rate	$130	$130
	Travel and accommodation	Hourly rate + actual and reasonable	Hourly rate + actual and reasonable
Process	Obtain NZEUR account Register Determine area Calculate carbon accumulation File a return		Obtain NZEUR account Register Determine area Obtain covenant Calculate carbon accumulation File a return	This process is completed by EBEX21
Carbon measurements	If area is greater than 50 ha, field measurements are required, otherwise can use default values. This may change for indigenous forests		Interim lookup table for sequestration rate. Future measurement options to be finalised	Field measurements are done by EBEX21 and include a biodiversity assessment
Credit types	NZUs. NZUs can be converted to AAUs		AAUs only	Can sell NZUs and AAUs as long as they have gone through EBEX21 audits
Selling credits	MAF does not facilitate credit sales		MAF does not facilitate credit sales	Sells credits – largely through the carboNZeroCertTM programme
Audit requirements	Records must be kept by landowner for audit		Records must be kept by landowner for audit	EBEX21 archives all records
Reporting or filing a return	Every 5 years, but can do voluntary returns annually		Annual or once a commitment period	Covered by EBEX21
Liabilities (when landowner is expected to buy back credits at the current market value)	Land use change Natural disturbance, e.g. fire		Land use change Covenant termination Natural disturbance, e.g. fire	EBEX21 insurance pool covers natural disturbances
Land area requirements	More detail from landowners required if over 50 ha		More detail from landowners required if over 50 ha	Greater than 50 ha
Transferability	Unknown		Can transfer to ETS (cannot be in both)	Will help in transfer

As you can see the main difference between the PFSI and the NZ ETS is that you require a covenant for the PFSI. It should be easy to transfer from the PFSI to the NZ ETS later if required and the PFSI Covenant would be annulled at that time. EBEX21 requires a covenant (can be PFSI or other such as QEII if in the ETS) so that our credits are internationally credible and hence have a higher value.

Afforestation Grant Scheme

A complementary scheme is the Afforestation Grant Scheme4 (AGS). The goal is “to encourage the establishment of new forest land in New Zealand in order to stabilize the greenhouse gas concentration of the atmosphere.”5 The AGS is best suited to landowners with less than 50 ha. Landowners would need to apply for this on their own as EBEX21 only covers land areas of more than 50 ha. This is a tender-based scheme and is a grant for planting or assisting regeneration, as opposed to a scheme that produces carbon credits.

Scheme and landowner-type compatibility

The table below shows the suitability of the three schemes (ETS, PFSI and AGS) for different land areas.

Scheme	Less than 50 ha	More than 50 ha
ETS	Uncertain at this stage	Uncertain at this stage
PFSI	The rigorous EBEX21 certification precludes this option, but landowners can still sign up on their own behalf and accept the default sequestration rate	Only current option and can move to ETS later
AGS	Good option	Get better returns from the PFSI

If you wish to learn more about all the schemes go to: www.maf.govt.nz/sustainable-forestry/

EBEX21 update

EBEX21 continues to work with landowners certifying and brokering the sale of EBEX21 units for carbon sequestered prior to 2008.  These are known as voluntary carbon credits.

We will endeavour to keep you up to date on policy changes when they occur. At the moment it is unclear what the new government will do.

Footnotes & links

1A Guide to Forestry in the Emissions Trading Scheme www.maf.govt.nz/sustainable-forestry/ets/guide/
2Permanent Forest Sink Initiative (PFSI) www.maf.govt.nz/forestry/pfsi/
3Current after the passing of legislation in September.
4Afforestation Grant Scheme (AGS) www.maf.govt.nz/climatechange/forestry/initiatives/ags/
5Ministry of Agriculture and Forestry 2008: Afforestation Grant Scheme Guidelines. Ministry of Agriculture and Forestry (MAF). Wellington.

Photo by Larry Burrows (EBEX21 team member) showing the potential for native regeneration (right hand side of fenceline) with the removal of domestic stock and the control of wild animals.