Is Forestry the Answer?

In late 2015, the New Zealand Government made a commitment at the Paris climate negotiations that by 2030 New Zealand will reduce greenhouse gas (GHG) emissions by 30 percent compared to the 2005 levels. This overall commitment includes methane and nitrous oxide emissions from agriculture.  These agricultural emissions are converted for carbon-accounting purposes to the equivalent tonnes of carbon dioxide.  The daunting and unique challenge for New Zealand is that agriculture emissions comprise some 50 percent of total emissions.

Given the fundamental biology of ruminant animals, there are limits as to what can be done to reduce livestock emissions without drastic destocking. And destocking would have a major impact on the whole economy.  Also, in a global context, and unless everyone goes to a vegan diet, eliminating New Zealand’s pastoral agriculture would not make a great deal of sense. This is because New Zealand is one of the more efficient producers of milk and meat on a relative GHG intensity basis.

Alternatives such as reducing the number of cars on the road, or the numbers of kilometres they are driven for, is not going to solve the problem.  A car that is driven for 15,000 km each year produces about 2.7 tonnes of carbon dioxide. This is very similar to the carbon dioxide equivalent emissions of a dairy cow.   There are simply not enough cars on the roads to make enough difference.

Whether or not New Zealand should or should not have agreed to these GHG reductions is not a topic I want to get into here. Some groups are already arguing our commitments are insufficient; others will say we have gone too far.  Those are arguments for another day. The key point of this article is that our Government has signed up to a 30 percent saving by 2030, and there is no obvious wriggle room. So it would seem that 30 percent is what we will have to achieve.

When I look at the numbers, the overall task in front of us is not achievable unless a lot more trees are planted.  We need to reduce our annual net emissions by about 18 million tonnes.  Over a 30-year rotation, each hectare of trees will, on average, soak up between 20 and 25 tonnes of carbon dioxide each year.

However, it is not quite that straight forward. In the early years of growth, the sequestration of carbon is less than later in the cycle, so by my calculations we need to be planting about 80,000 hectares of new pine forests each year and starting right now. This is in addition to the replanting of existing forests that are harvested.

In recent years, the economic incentive to plant pine trees, or any other type of forest, has been very limited. Some new forests were planted between about 2008 and 2010 based on calculations that the value of carbon credits would make it a worthwhile endeavour, but that system has been a fizzer.  The original estimates were that carbon would be priced between $15 and $25 per tonne, but after 2011 the prices crashed.  This crash was at least in part a result of allegedly fraudulent credits which New Zealand and other countries purchased, largely from the Ukraine and Russia.

Looking back over the last ten years, and indeed 20 years, there had been lots of huff and puff but little real action. Whatever action has occurred, such as the emission trading scheme (ETS), has largely been flawed and ineffective.  In the next five years, the talk will have to change to action.

Given the pickle we are in, it would make sense for lots of trees to now be planted. But it is not going to happen without a change in Government policy. The history of the last ten years has shown that making private forest investment decisions in an environment where carbon markets are at the mercy of political decisions is not a smart move. So private landowners will continue to sit back and watch.

If the Government were serious about providing solutions, they would start purchasing North Island hill country and turning it into forest. Government would then own the credits which could be sold to emitters. Any surplus could be sold overseas.  However, there is currently little if any talk of this occurring.

Alternatively, the Government could underpin the carbon market at a minimum price of say $25 per tonne with a long-term guarantee. Whether that would be a sufficient price to encourage hill country farmers to plant trees, or for corporates to enter the land market to make their own investments, would need to be tested. Once again, the credits could be sold to carbon emitters, either in New Zealand or overseas.

These ideas may well be too radical for many people to support. My response is for those people to come up with a better alternative. If we don’t plant more trees then we either have to kill the cars, kill the cows, or most likely kill both.

One thing I do know is that private investors will want a considerable risk premium before investing in carbon, given the fickle nature of politics. Without cast-iron guarantees they will not invest.

A further problem with forestry is that if and when the trees are harvested, the carbon credits have to be repaid. That means that the carbon credits are really just an interest-free loan. So what will the timber value be in another 30 years?

Over the last 20 years, the lumber value of the timber has gone backwards. Current prices are almost the same in nominal dollars as 20 years ago. Adjusted for inflation, the price has dropped by well over 30 percent. The reason there are currently so few new forests being planted is that it makes no economic sense. Without substantial carbon credits, it will stay that way.

Meeting the 2030 targets will not mean we are at the end of the road.  To keep earning carbon credits to offset other carbon emitting activities, we will need to plant more and more of our hill country into forests, be that pine trees or allowing native forests to regenerate. However, by then the world may be a very different place.

The key long-term energy technology that I am watching out for is thorium. It is nuclear but it can be safe.  China, Russia, India and Canada are amongst the leading countries researching these possibilities. Thorium nuclear power technology already exists, but it has to be scaled-up to commercial levels, and that presents its own challenges. However, there is enough thorium fuel to last many thousands of years, the radioactivity is short-lived, it does not make nuclear bombs, and it does not create greenhouse gases.

In the meantime, we have to plant trees. Given the commitments our Government has made, there is no alternative.


About Keith Woodford

Keith Woodford is an independent consultant, based in New Zealand, who works internationally on agri-food systems and rural development projects. He holds honorary positions as Professor of Agri-Food Systems at Lincoln University, New Zealand, and as Senior Research Fellow at the Contemporary China Research Centre at Victoria University, Wellington.
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8 Responses to Is Forestry the Answer?

  1. Paul says:

    Hi Keith. The key issue to me is it us the long term gases (CO2 & N2O) that the world need to focus on. NZs GHG profile is only ~50% from Ag because of the current counting period used of 100yr GWP. This time period very much overstates the CO2 equiv of methane (25x GWP of CO2) because it has a lives pan of less than 20yrs.
    I agree action must start, and NZ Ag must be part of the action. But to support that I’d want to see:
    Focus on long term gases first, and a 500yr GWP count period used to reflect our GHG profile more accurately.
    Private landowners can use there pre 1990 QE2 and other forest area to offset their emissions.
    Overseer or other relevant modelling tool adequately equipped for emissions to be counted at individual farm level, not based on processor and industry average inventory method to calculate carbon liability.

    • Keith Woodford says:

      About 8 years ago I wrote an article for the journal ‘Primary Industry Management’ where I made exactly that point about the need to treat short life gases differently than long life gases. From memory, the residence time for methane is only about 12 years – or at least that was the accepted figure when I wrote that article. The politically-minded environmentally-focused folk viewed that article as an attempt to ‘get agriculture off the hook’ and therefore criticised that line of thinking. In this current article, I have been looking at what we need to do within the currently accepted carbon accounting systems.

      • Paul says:

        Thought that might have been the case with people in policy / energy sectors trying to put more burden to Ag.
        I think under Paris agreement we have the opportunity to get this corrected from the current ETS / Kyoto. I hope those environmental people are listening to the key global messages on GHGs – ‘The first focus needs to be on long term gases’. Lets ensure our policy & accounting framework for GHGs represents this.

  2. Hi Keith,
    You have not embraced any discussion on soil carbon. Take a look at the 4per1000 French initiative. I thought NZ had signed up? Plenty of room in our soil for biochar if farmers are paid to be carbon farmers. And then there are the N retention, water quality benefits. And the GHG reduction from soils. And the reduced fertilizer needs. How about reduced methane emissions from animals fed biochar supplements. Why has biochar research investment dried up in NZ when it is proliferating around the world.

    • Keith Woodford says:

      I cannot answer your last question about funding decisions as I have no involvement in those decisions. In my current article, I have focused on what we can do within the accepted carbon accounting systems. Can farmers currently get credit for biochar initiatives?

  3. Pingback: Rural round-up | Homepaddock

  4. Ben McNeill says:

    I am a farmer with 40% of my farm in trees, all post 1990 under Kyoto rules. I chose not to enter ETS because the liabilites of ETS forestry are potentially extreme for farmers and outweigh the advantages.

    You mention the fact that the carbon credits need to be repaid. This is fine if the forests are marketed, but this not always the case, a possibility which may well increase with climate change. Potential problems involve windthrow from extreme storm events, diseases, fire, etc. If I was to suffer a catastrophic event it would be bad, but then needing to repay carbon losses could end my farming career very quickly. Sure there might be carbon insurance to cover these losses, but once the first few big payouts are made the price of this could easily become totally unrealistic in a short time frame. This potential for loss is less serious for big commercial forestry companies who spread their risk over many geographically seperated forests, but it is a different story for small farmers. Also, unlike farmers, commercial forestry managers are not putting their personal family business and homes on the line!

    My forests are mixed hardwood, with silvicultural practices that differ from pine monocultures. I am already harvesting thinings for durable fenceposts, firewood etc. Under ETS rules I think this needs to be accounted for (although I got different answers from different advisors). Who needs this extra paperwork?

    I did a calculation when the ETS first came into force that showed in my coastal Hawkes Bay site, at the then predicted $25/t C price, and at forestry land values, then if all the carbon credits granted for the forest were sold at full price the value of credits sold would exceed the land value within 7 years. This liability stays with the land title, even if the forest is destroyed. This would be devastating for a farmer. Obviously only selling “safe carbon” is the conservative answer if the site is to stay in forest, but this brings in all kinds of extra calculations, and also assumes no possibility of land use change.

    I conclude the ETS forestry rules are ok for commercial pine forestry companies with risk spread over a wide area and simple management. It is much more complicated, expensive and risky for small growers with alternative species using alternate strategies such as continuous cover forestry and selective harvesting. I agree the country needs a lot more trees, but under the current rules the only farmers who will be planting under ETS rules will be the very large businesses who can spread the risk, or fools who have not looked into the implications of locking themselves into a single risky landuse. Ironically the need for the trees is predicated on climate change expectations, but the more you believe in climate change and it’s implications on future forest security (and therefore economic security), the less likely you will be to enter a forest into the ETS.

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