New Zealand company City Forests says its Government should abandon the Kyoto Protocol, rather than commit to revised rules it fears could lumber forestry companies with “massive” additional costs. City Forests chief executive Grant Dodson said changes to the Kyoto Protocol agreed last year, and due to come into force next year, included the removal of the “fast forest fix” rule. Source: The Otago Daily Times
The rule allowed forestry companies to claim credits for carbon sequestered – or stored in forests, and sell the credits, but only for carbon stored since 2008. Companies were also required to pay when those trees were harvested, but also only for credits claimed since 2008.
City Forests in 2010 sold 150,000 carbon credits accumulated in 2008 and 2009 for $3 million to an unnamed New Zealand company. It said at the time it expected to be in a position to sell more credits during the 10-year period to 2010.
Without the rule, officially called the “afforestation-reforestation debit credit” (ARDC) rule, forestry companies would be obliged to pay for all carbon stored in trees when harvesting them, meaning additional costs.
The Government has not decided to commit to the new rules but if it did companies would be left with “massive liability” that could threaten the viability of the emissions trading scheme according to Dodson.
The bill for City Forests would reach “tens of millions” of dollars, and “across the sector you’re talking hundreds of millions of dollars,” Dodson said. “If that came to pass, we’d be stuffed, really. We’d have no choice but to pull out of the emissions trading scheme.”
City Forests owns 16,000ha of forested land, including 4000ha planted after 1989 and therefore covered by the fast forest fix rule.
New Zealand Forest Owners’ Association chief executive David Rhodes, of Wellington, said the issue was a concern for some members, who were calling “quite strongly” for clarification of the Government’s position.
It was possible the Government could decide not to sign the next round of Kyoto commitments, while remaining part of the United Nations’ overarching – but less prescriptive – Framework Convention, he said.
New Zealand could then still commit to other Kyoto rules, while opting not to recognise the removal of the fast forest fix rule.
Alternatively, the Government could decide the Kyoto rules had changed in unexpected ways, and adjust New Zealand’s emissions targets accordingly, protecting both the Government and the domestic forestry sector, he said.
New Zealand Climate Change Minister Tim Groser said in a statement that New Zealand had unsuccessfully argued for the rule’s continued inclusion and that the Government was considering whether to make its future carbon mitigation commitment through the Kyoto Protocol or the Framework Convention.
