NZ Emissions Trading: Credits For Forest Owners, Debit For Taxpayers
May 4th, 2010
Taxpayers may have to shoulder a looming $700m revenue “hole” in the emissions trading scheme. It’s because Govt estimates show forest owners will be allocated $1.1bn of carbon credits in the 2010-2011 year for the emissions they have absorbed. Climate Change Minister Nick Smith says “the reality is foresters are receiving the full benefits for their trees. Emitters, business and consumers are only having to pay for part of their costs, and the taxpayer is having to pick up the difference. Those calling for the ETS to be canned ignore the fact the Govt is having to pay out the forestry credits.”
The National-led coalition halved the obligations big emitters, oil companies and power generators must meet for producing greenhouse gases when they enter the scheme in July as part of the policy to soften the impact of the ETS in its early years. The size of the claim on forestry credits has taken the Govt by surprise as more forest owners than expected opt into the scheme, and some of the credits cover tree growth from earlier years.
Smith produced updated figures in Parliament last week for the first Kyoto commitment period from 2008 to 2012 to counter those calling for a delay to the ETS. “By honouring commitments to give credits to the forest sector and softening the costs for consumers and businesses the Govt will be making a significant loss on the ETS.” By the end of the period foresters are expected to have received $1.8bn in credits while businesses and consumers will have paid about $1bn for their emissions. Dr Smith says those advocating deferral need to acknowledge they will be interfering in the property rights of foresters, who in good faith have planted trees since 1990 and offset NZ’s 23% growth in emissions since then.
NZ Energy & Environment Business Week last week reported updated estimates of Kyoto obligations till 2012 show forestry will keep NZ’s overall emissions tally in surplus by $231m. However because forestry credits go to owners and do not show in the Govt’s accounts, the Govt as opposed to the country will still be in deficit. The projections show without the ETS and its financial incentives both to reduce emissions, and plant trees, NZ would have faced a deficit of 22m tonnes of carbon, or $446m, by 2012.
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