ETS changes remove 'carbon farming' incentive
Wed, 04 Jul 2012 4:36p.m.
Changes to the emissions trading scheme will stop investment in one of New Zealand's most important sources of future carbon emissions reduction - forestry "carbon farming", says Carbon Farm chief executive Murray McClintock.
As a provider of forest management services to the fledgling industry, Mr McClintock says "the net result of these changes will be there is very little incentive to supply New Zealand units (NZUs) into the New Zealand carbon market".
"We are trapped now in a price-taking situation where the future pricing will be set by the price in Europe," he said.
European carbon prices have already collapsed and appear likely to stay low for at least the next four years while the 27 European Union member states agree on measures to undo a glut of carbon credits.
That fall had already undermined the economics of carbon farming, said Mr McClintock, and the Government could have created a buffer to that by requiring a certain proportion of credits to be sourced as domestic NZUs.
This week's Government decisions have created pressure on large emitters to dump NZUs, which they had been stockpiling at current low prices, in anticipation of increased carbon offset obligations.
However, Climate Change Minister Tim Groser put those proposed increases on hold this week.
The decisions announced Monday leave the ETS in a semi-permanent state of transition, with no changes to existing obligations on large emitter industries and no target date for including the agriculture sector in the scheme.
Forestry planting would be discouraged, yet the Government expected carbon farming to become a substantial source of offsets for future carbon liabilities.
"We could have made some modest changes that gave some encouragement to the supply side," Mr McClintock said.
While the conditions for a carbon market were likely to improve at some future time in New Zealand, the experience among early investors of gearing up for a market that has been postponed would slow its development in the future.
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5/07/2012 9:01:01 a.m.
What happens when plants compost?They produce methane.Currently the ETS doesn't allow for the methane production of plants. The biggest methane producer in the world is the amazon jungle, with all that plant matter composting. The ETS is unfair, and the worst carbon polluters in the world are in the EU and they are not applying ETS to biologicals.Why does our ETS look to tax biologicals for methane, but not tax plants for methane? If we tax methane production, reguardless of if it is biological or plant, then no forrestry in NZ would be a carbon soak as the composting rate with the 17:1 of methane vs carbon would offset any carbon soak. It is this 17:1 rate that is killing biologicals in the ETS and why it has been postponed.We need a fair, and global ETS. One that targets higher emissions like the EU's with the highest carbon emissions per sq km in the world. We need to allow pre 1990 forresty in our ETS - why is it excluded? And if our pre 1990 forrestry is excluded, we also need to exclude our pre 1990 levels of biologicals - most of our dairy production! Our ETS doesn't correctly allow for NZ growth rates and uses EU growth rates which are almost 4x slower - why? Not to mention that plant matter composting produces methane ...To be green, if ETS counted methane production from plants, we should ban all composting!
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