Issue 2 - 5 May 2008
Consultation on the draft forestry regulations under the ETS
The Ministry of Agriculture and Forestry has released for consultation the exposure draft of the regulations under the New Zealand Emissions Trading Scheme (ETS) for both pre-1990 and post-1989 forests. This is your chance to make your views known about some of the specific aspects of the scheme.
Submissions close on 30 May 2008.
A submission form, with details about how to make a submission, is included in the attached commentary.
Background
New Zealand ratified the Kyoto Protocol in December 2002. Its obligations under the Protocol are reflected in the Climate Change Response Act 2002. In September 2007, the Government announced that it was developing an emissions trading scheme to cover all sectors of the economy and all greenhouse gases. Legislation is required to implement such a scheme. The Climate Change (Emissions Trading and Renewable Preference) Bill (the Bill) currently being considered by Parliament will amend the Climate Change Response Act 2002 (the CCRA) and introduce the New Zealand Emissions Trading Scheme (NZETS). Regulations are needed to support and implement the entry of a range of industry sectors into the NZETS.
The Bill covers:
- activities that will automatically give rise to obligations under the ETS, for example, deforestation of land that was forest land as at 31 December 1989 - "pre-1990 participants".
- activities where people can elect to become participants in the Scheme, for example, forest owners who own or hold forestry rights/leases for forests planted after 31 December 1989 - "post-1989 participants".
Forestry will be the first sector to come into the ETS. The Bill, as introduced, provides that the provisions relating to forestry have effect from 1 January 2008 (prior to the Bill’s enactment).
The Climate Change (Forestry Sector) Regulations 2008 will help give effect to the forestry components of the ETS. These provide an update of the exposure draft regulations released on 13 February 2008 as part of the Select Committee process to inform submitters on the Bill.
Releasing updated draft regulations [285K PDF] and commentary [127K PDF] at this time, ahead of decisions by Parliament on the Bill, will provide post-1989 forest owners with the information they need to provide feedback on the proposals. However, landowners should be aware that the forestry regulations may change due to changes in the Bill and as a result of feedback from the consultation process.
The draft forestry regulations contain provisions for:
Fees and charges: a power to collect fees and charges.
The costs of developing, setting up and promoting the ETS will be funded by the Government because the scheme provides benefits to New Zealand as a whole. The cost of administering the participation of pre-1990 forest landowners will also be met by the Government, because participation is mandatory for this group (unless exemptions apply) if land is deforested.
In contrast, for post-1989 forest landowners, fees are proposed. This is because participation for this group is optional and there are direct benefits for scheme participants. The fee structure proposed has been designed to focus on the recovery of direct costs associated with administering the scheme for post-1989 forest landowners with forest landholdings over 100 hectares; but with partial recovery of the direct costs of administering the scheme for post-1989 forest landowners with forest landholdings of between 1 and 99 hectares.
The fees have been developed in line with Treasury Guidelines to achieve a balance of the following objectives:
- Fees should not be set at a level which acts as a disincentive to participate.
- Fees should equate to the effort or costs incurred in administering the scheme and delivering services.
- Fees should be simple to administer.
- Fees should not exceed the cost of delivering the scheme.
- Forest owners should have some certainty around the costs of participation to allow them to make decisions on whether to participate.
Details on the options being considered for recovering these costs are outlined in the commentary (pages 6 to 10) and in the draft regulations.
Land status notification: a process by which the Chief Executive (CE) will notify the Registrar-General of Land, the Registrar of Deeds or Registrar of the Māori Land Court of the status of pre-1990 and post-1989 forest land and exempt land.
Please refer to the commentary (pages 11 and 12) or the draft regulations for more information
Carbon assessment methodology: information to be collected by participants and submitted with an emissions return and a prescribed method for calculating emissions and removals.
In an emissions trading system, consistent methods are required to verify information and to calculate the value of products being traded. In terms of the forestry components of the NZETS, this means that consistent carbon assessment information must be collected and reported to maintain the integrity of the scheme.
The first draft of the forestry regulations (13 Feb 2008) described the look-up table approach for deforestation of pre-1990 forests. The updated proposals extend the look-up table approach to emissions and removals from post-1989 forests. The commentary also discusses a measurement approach to carbon assessment that is not yet covered in the draft regulations, but will be included in the forestry regulations in relation to post-1989 forest land at a future date as technical details are finalised. We would like your thoughts on the approaches being proposed.
Please refer to the commentary (pages 12 to 19).
Mapping requirements for exemptions for pre-1990 forest: information to be provided with an application for a pre-1990 forest exemption.
We would like your views on the business impacts and practicalities of the proposed regulations as they relate to your forest holdings.
A correction to the diagram from the last issue:
