New Zealand: ETS forestry regulation changes

The Ministry for Primary Industries (MPI) is proposing a number of amendments to the Climate Change (Forestry Sector) Regulations 2008 (Regulations), which govern forestry activities under the Emissions Trading Scheme (ETS). These changes are being progressed separately from more extensive potential changes to the ETS that the Government intends to consult on later in 2018.

MPI has divided the amendments into 'significant' and 'minor/technical' proposals.

Significant proposals

Deforestation of post-1989 forest land between rotations

MPI proposes to amend the Regulations to ensure that emissions from post-harvest residual biomass (eg stumps and branches) are accounted for where an area of forest land is cleared, deregistered from ETS participation and subsequently replanted and reregistered in the ETS.

Currently, where an ETS participant harvests and replants a forest, carbon released from any residual material is accounted for and offset against the calculated sequestration of the regenerating forest.

There is no mechanism for considering carbon released from residual material, however, where the relevant land is cleared and not replanted within the applicable four year period. Such emissions are effectively unaccounted for. Also, if the relevant land is replanted and reregistered in the ETS at a later time, the forest owner will then receive emissions units without needing to factor in residual decaying material. The proposed amendment seeks to 'plug' these gaps.

Reduce the need to update participant-specific look-up tables

MPI proposes to remove the requirement to submit a mandatory emissions return where land is removed from the ETS, or when a transmission of interest in the forest occurs (eg a sale of land or granting of a forestry right).

Currently, forest owners who have registered more than 100ha of forest and therefore use the Field Measurement Approach (FMA) for carbon accounting must submit a mandatory emissions return not only every five years, but also when land is removed from the ETS, or when a transmission of interest occurs. Each mandatory emissions return requires that the participant-specific look-up tables are updated to accurately record changes in carbon stocks.

The proposed changes will only require a mandatory emissions return, and associated update to the relevant participant-specific look-up table, for each five year return period.

Allow extensions of time to collect and use Field Measurement Approach information

MPI proposes to amend the Regulations to allow a waiver of the time limit for supplying updated FMA information for use in preparing participant-specific look-up tables.

The existing six month time limit for submitting a mandatory emissions return will remain. However, the proposed change provides flexibility for participants to submit up-to-date FMA information with their mandatory return, where they were unable to do so prior to the end of the mandatory emissions return period (eg if no contractors are available to calculate inventory).

Minor and technical proposals

MPI also proposes the following 'minor and technical' changes to the Regulations:

  • providing for a clearer separation between sub-areas with growing trees, and sub-areas with residual biomass from previously-harvested forest
  • clarifying that remnant areas of less than 1ha should be treated as though they were areas of 1ha or more (in line with MPI's current 'de facto' policy approach)
  • providing more detailed notices on titles for post-1989 forest land, setting out obligations if an interest in the land is transmitted (eg notifying MPI of the transmission)
  • clarifying rounding rules for emissions and removals (complementing the existing, specific rounding rules for area of forest in hectares)
  • providing simpler rules for forests with mixed forest species and/or ages:
    • allowing forest type to be determined on the basis of 'intended predominant forest species' at the time of harvest or maturity (removing the need to assess and categorise the actual forest)
    • allowing forest age to be determined on the basis of the age of establishment of the 'intended predominant forest species', or by reference to the oldest of the relevant intended predominant species trees, and
    • applying the same principles to regenerated exotic trees
  • calculating carbon stock change from decay of residual wood and roots regardless of when in an emissions return period the trees were cleared, or emissions calculated
  • requiring reassessment of the required number of permanent sample plots if the forest class of an area changes
  • amending applicable forms to identify 'pre-1990 offsetting forest land' as a specific class of land for the purposes of notification, and
  • applying existing rules for carbon look-up tables to pre-1990 offsetting forest land, and inserting a single definition of 'forest type' into the Regulations, based on the 'intended predominant forest species'.

Comment on the changes

The proposed amendments are intended to simplify the requirements for forest owners to operate within the ETS. Given the existing regulatory complexity is a barrier to entry into the ETS for many post-1989 forest owners, the changes are an essential part of a wider policy to increase forested land. Substantial increases in forested areas will be critical if New Zealand is to meet the Government's intended 2050 emissions target.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

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