Dan Williams, Partner at Anderson Lloyd, discusses Climate Change Responses Act and New Zealand’s emission trading scheme.
The Climate Change (Forestry) Regulations 2022 (CCFR) are set to replace the current Climate Change (Forestry Sector) Regulations 2008 from 1 January 2023. The form of the CCFR has now been approved and will bring about several changes to the New Zealand Emissions Trading Scheme (ETS) introducing measures such as:
- a new category of ‘permanent post-1989 forests’;
- a new carbon accounting approach called ‘averaging accounting’; and
- an exemption from carbon liabilities for forests that are cleared.
Permanent post-1989 forests are forests that may not be clear-felled for at least 50 years after they are registered in the ETS. If a permanent forest is clear-felled a forest owner must surrender New Zealand Units (NZUs) corresponding to the area that was clear-felled and may face a penalty calculated upon the $ / tonne figure. There is no penalty if the owner can show that the clearing was unforeseeable and beyond the owner’s control. At this stage the permanent forest category is open to all types of forest (including exotic forests).
Averaging accounting allows forests to earn NZUs by taking the average of the long-term amount of carbon that a particular forest is expected to store over multiple rotations. Generally speaking, only forests in their first rotation will earn NZUs; this includes unstocked forests that have been left for 15 years. Under the CCFR, the average age of each of the five main forest types has been specified. There will be three measures of carbon stock for land in the carbon accounting area using an averaging accounting approach. From 1 January 2023 all forests newly registered in the ETS will be required to utilise either averaging accounting or enter the new permanent post-1989 forest category.
The temporary adverse events exemption allows forests that suffer an ‘adverse event’ such as fire, windthrow or disease to ‘pause’ their participation in the scheme instead of having to surrender their NZUs.
Dan Williams is a partner at Anderson Lloyd and is a forestry law specialist. Dan advises some of the largest commercial plantations owners in New Zealand, iwi forestry groups, conservation trusts and large corporates on forestry and ETS related issues. Connect with Dan via LinkedIn
