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Forest owners are urging the Government to ensure that its newly passed reforms to the Emissions Trading Scheme (ETS) do not come at the cost of climate progress or regional economic development.
The Climate Change Response (Emissions Trading Scheme Forestry Conversions) Amendment Bill, passed this week, introduces further restrictions on exotic forest plantings on productive farmland – including a 25 percent cap on ETS registration for Land Use Capability (LUC) classes 1 – 6 and a 15,000-hectare annual ballot for LUC 6 land.
While the forestry sector supports balanced land use and welcomes transitional protections and Māori land exemptions, the ongoing investment uncertainty created by the cap and random ballot system are of significant concern.
New Zealand Forest Owners Association (NZFOA) chief executive, Dr Elizabeth Heeg, says forestry is a key partner in the rural economy and holds an important role in the nation’s climate response. She cautions that this latest instalment of legislative change sends the wrong signal to long-term forestry investors and puts forestry’s contributions at risk.
“We support efforts to protect rural communities and ensure all land uses are sustainable, but not at the expense of policy certainty or climate ambition,” Elizabeth says. “These restrictions will discourage investment in forestry, especially for long-term owners who need stable, predictable returns.
“The 25 percent cap on productive land able to be registered into the ETS, coupled with the introduction of a random ballot system, stands to discourage forest investments, especially for long-term forest owners and investors who rely on stable, predictable returns.
“Ongoing changes knock confidence and limits forestry’s ability to attract the investment needed for growth.”
From an operational perspective, the Bill effectively pushes commercial forestry onto steeper, less versatile land, leaving the sector with mostly LUC classes 7 and 8.
Elizbeth says that narrows land use options for foresters and reduces the value of remaining eligible land.
“It undermines the viability of new planting and signals that forestry is somehow less legitimate than other rural sectors,” Elizabeth says. “Forest owners are struggling to comprehend how these limits can be put in place when there is a lack of evidence that exotic afforestation is displacing productive farmland – the issue this Bill aims to address.
“It’s a real risk that we end up constraining one of our most effective climate tools and valuable land uses, as well as our future timber supply.”
Elizabeth says confirmation that foresters with investments made before December 2024 will be protected under transitional provisions is promising, although industry will need to continue working with government to clarify the details of these transitional measures.
The new addition of a reserved ballot allocation for smaller applications will be a relief for small-scale woodlot owners and farm foresters too, who stood to be disadvantaged by the previous set of proposed measures in the Bill.
“A reserved allocation in this ballot system will ensure small-scale forest owners are not excluded from the carbon market altogether and that they’re still able to achieve a degree of sustainable income from their forests.”
While the reforms exempt Māori land, the wider policy uncertainty generated from the changes could undermine investment confidence and stall climate-focused forestry initiatives on that land too.
Elizabeth says the sector is committed to achieving practical, balanced use settings.
“We need rules that support climate action without sidelining forestry’s role in regional economies.
“In the coming months, the forest growing sector will be working with government to clarify how the ballot will function and to ensure the transitional rules give investors and forest owners the certainty they need to plan ahead.”
This statement is issued on behalf of the collective industry representative organisations – the New Zealand Forest Owners Association (NZFOA), New Zealand Farm Forestry Association (NZFFA) and the Māori Forestry Association – Ngā Pou a Tāne. These organisations are united in urging the Government to ensure that its newly passed reforms to the Emissions Trading Scheme (ETS) do not come at the cost of climate progress or regional economic development.
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