Carbon farming is back in the melting pot

There is considerable evidence that the Government plans to change the carbon-farming rules and to do so in the coming months. The big risk is that unintended consequences will dominate over intended consequences.

Forestry Minister Stuart Nash has made it clear that he does not like the idea of permanent exotic forests.  In an opinion piece published in the Herald on 1 February of this year, he stated there are 1.2 million hectares of marginal pastoral lands that should be planted only in native species. He says that there is another 1.2 million hectares that is also unsuitable for pastoral farming but that is suitable for production forestry.

Minister of Agriculture Damien O’Connor states his opinion somewhat differently. On January 26 he was reported in the Herald as saying that he too disagrees with permanent exotic forests, but that it is up to famers not to sell their farms to people planning to plant forests. Instead, they should sell to those who will farm the land.  Well, my experience is that this is not how markets work.

Minister Nash is convening a workshop in early March with groups described as key stakeholders. Production-forestry groups, plus Beef+Lamb, plus various local councils will be there. However, I am not convinced that there is anyone, and that includes Beef+Lamb, who truly represents the interests of the existing farmers.

The role of Beef+Lamb includes protecting the sheep and beef industries from other land-uses. In contrast, the challenge for sheep and beef farmers is to find a pathway that protects their livelihood, which is not quite the same thing.

One of the key issues is the role of indigenous species. A lot of people are part of a bandwagon saying that only native forests should be permanent. But a lot of people on this bandwagon don’t seem to understand the challenges therein.

For example, Dame Anne Salmond, who is an emeritus professor of anthropology from Auckland University, has authored multiple articles at Newsroom. Her plan would include incentivising native plantings by granting them carbon units (NZUs) at the same rate as pine forests despite the fact that native forests grow much more slowly than exotics.

This proposal would take all integrity away from the concept of a carbon unit, just like the Ukrainians did with the Kyoto units about 12 years ago. This illustrates how influencers can easily get it wrong, when they latch onto apparently simple solutions to complex problems.

If New Zealand wants to incentives native plantings, then it will have to be by direct subsidies.  All such subsidies have an opportunity cost of other activities that have to be foregone. Those activities might be less ICU beds in hospitals, less houses built for the homeless, or less police officers.

When put in this context, then the issues are no longer quite so straight forward. Nor do large-scale native plantings make sense in relation to meeting New Zealand’s short and medium-term commitments to greatly reduce the net emissions of greenhouse gases.

Native plantings are very expensive. Let there be no doubt, there is no commercial justification for large-scale native plantings. It has to be for other objectives.

These plantings may well be justified in relation to ecological issues on the most fragile lands, but that is a very different set of objectives. In most cases it is going to be very expensive.

As it stands, and here I quote some figures used by Minister Nash in his opinion piece, “New Zealand has 10.1 million hectares of forests, covering 38 per cent of our land. Eight million hectares is native forest and 2.1 million hectares is plantation forests.  Of the plantation forest, 1.7 million hectares is productive and the remainder is in reserves or unplanted areas near water and infrastructure.”

These numbers put things in perspective. We do already have a lot of land in native forests.

There are good reasons why we might put more land into native forests, but we also need to be clear that this is not the way to meet the targets that Climate Minster James Shaw promised at COP26 last year, with those targets endorsed by the Labour Government.

New Zealand will get itself into big trouble with these COP26 commitments, with Minister Shaw acknowledging that they will require large-scale purchases of carbon units from overseas. They will be purchased with hard-earned export earnings. Where will that money come from? And what will be the opportunity cost of that?

If New Zealand is truly going to meet its new commitments, then it has to be by rapid sequestration of carbon in New Zaland. And that means exotics.

In recent weeks some of my farming-forestry mates have been showing me something of the diversity of afforestation options. I have seen some magnificent native regeneration including in association with grazing.

I have also seen plantings of pine trees on steep erosion-prone country where natives trees, at least in the short and medium term, are not an option. Quite simply, on much of the fragile land, the necessary conditions for natives to thrive do not exist.  And I don’t at all like the notion that those pine trees might be harvested if permanent pine forests are removed from the ETS.

In another location, I have seen exotic plantings in which a wonderful understory of natives is now coming through.

These last two examples illustrate that implementing the ‘right tree in the right place’ is complex.

I have also seen land, currently in very productive pasture, which some years back was in pine trees. The farmer removed the pine trees because he considered they were not the right trees in the right place.

In all of these situations, knowledgeable farmers with good information have made good decisions. In contrast, I am cautious about a centralised regulatory system imposed from above.  It’s all very well to have a policy of the right tree in the right place. But who is going to make those decisions?

Within this complexity, one thing I am confident of is that the current policy of allowing overseas entities to invest in farms, as long as the dominant purpose is to convert the land to production forestry, is greatly flawed. I am aware of recent purchases of North Island land for production forestry on precipitous land that should never be harvested, where the purchasers are apparently driven by simple objectives of profit.

As foreign purchasers, these investors are required to commit to harvesting the forests that they will plant.

It was several years back, when carbon was valued much less, that I first became concerned about foreign investors. Since then, my concern has only increased as the supply of global money looking for a home has increased.

It is too late to worry about what has or has not already happened. The big issue is what is now going to happen, given current policy settings for foreign investors.

In among all of the complexity, I also see excessive difficulty in ETS-registration of land that is naturally regenerating.  It would be great if Ministers Shaw, Nash and O’Connor could get together and sort that out.  There is genuine carbon sequestration occurring that is not in the ETS simply because of the complexity.

There are other issues which need to be addressed with a nuanced approach rather than blanket bans on permanent pine forests. Perhaps one such solution would be to allow up to 20 percent of any sheep and beef farm to be planted in exotic trees as a permanent land use. Most farmers have a good understanding of the parts of their farm where this makes both economic and ecological sense.

Under this system, planting of more than this prescribed area would require meeting some consenting hurdles relating to ‘the right tree in the right place’. This would weed out the business entities, be they local or foreign, that are driven by narrow profit-making devoid of wider issues.

And some final words of caution. If anyone thinks there are simple solutions to the overall situation that we have created for ourselves, then they don’t understand the problem.

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.
This entry was posted in carbon farming, forestry, sheep and beef farms, Uncategorized. Bookmark the permalink.

19 Responses to Carbon farming is back in the melting pot

  1. Hone says:

    The idea that farmers should sell to buyers at less than the market value is absurd. Opportunist speculators would pretend that they are going to keep farming, then immediately on sell to forestry interests for a windfall gain. One of the pitfalls of centralised government control. It won’t work.

  2. John (MJP) Chapman says:

    Great summary Keith.
    Included in the list of frustrations is the Crown’s reluctance to grant consents for forestry on Pastoral lease land and associated refusal to consider providing the leaseholder access to the carbon credits. There are huge tracts of land that could be considered with low livestock farming returns but excellent forestry prospects. Careful site selection and the use of sterile species such as the Attenuata / radiata hybrid provide can manage landscape and wilding tree concerns. John C

    • Keith Woodford says:

      John,
      This is consistent with some very high IRR figures that I am seeing for forestry investigations in degraded tussock country.
      Keith

      • Hone says:

        I was indirectly involved in NZ Forest Research Institute in the High country, and the trials of radiata near Omarama showed the highest growth rates in NZ. There is a strong lobby going back 40 years, that is opposed to farming and forestry in the High country, and they have big influence in the current Government. I fought them along with the farmers for a number of years. We won the battles, but it was obvious that we would lose the war.

  3. Paul Callister says:

    An excellent article. As some involved in native plant restoration projects for many years – and watching some larger scale native planting schemes – it surprises me that so many commentators underestimate the difficulties in establishing native forests. Its hard and its expensive. We need a variety of approaches to planting – which include exotics – and i agree if we want biodiversity gains from plantings we need to recognise that up front and pay for that. But in the end we cant plant our way of our problems. We actually need to reduce emissions.

  4. trlahh says:

    It is a pity the only game in town is trees? Could we look outside the wooden box at some other carbon opportunities? Keith – as you may recall, my hobby-horse is biochar (and associated soil carbon sequestration… and often leading to soil carbon priming).

    I think many of the concerns about soil carbon stock come from the knowledge that our current industrial (urea) farming could/is slowly reducing soil carbon. Could regen farming turn this boat around? I see a bit of research starting with govt support.

    Why buy overseas credits when we can make our own in NZ from biomass residues, generate energy in their production (pyrolysis) and improve soil and the environment and increase productivity & farm revenues. Lots of inferred claims there. It would be great to see some renewed NZ investment in trying to dismiss the existing overseas evidence. If biochar was accepted into ETS as a approved CDR technology, then a lot of wins would follow.

    • Tim Tam says:

      grow.foodrevolution.org has info on this including biochar plant which uses the co2 output to feed algae ponds into a more closed system. Out puts are 1 tonne c02 sequestered per day with biochar from timber mill waste day, algae as quality fertiliser (8 ponds, 1 harvested/day in a rotation, grows exponentially).

  5. Dave Janett says:

    Well put Keith. I have put the same suggestions on permanent re % of land and anything above needs a consent with my work on this. I feel the debate is maturing a bit but it maybe to late and we will end up as you say with more central edicts that limit options and have some bad outcomes.
    The overseas one is a no brainer and like you I see some land being bought which as an older forester I wouldn’t even dream of planting for production purposes.
    Johns point on pastoral lease is very relevant – there are many areas where farmers there want to plant in a considered way which would be good for everyone.
    I also have views on the carbon price and do we need to have such a high price for forestry credits – its nice as an investor but from a NZ inc position it doesn’t need to be as higher as it is. If we had a lower price – say $50 and indexed to CPI say, it is stable and would do the trick for incentivizing planting and not distort land markets as much – I will be shot for saying that!!! Native could be at market – Ill be hung now as well!!!

  6. Tim Tam says:

    Hi Keith, great article again. This is a link to an article i had a part in writing on carbon sequestration through forestry- we have a super sequestration power with pine trees and to a lesser extent other exotics. Euan Mason deserves the credit here, pine can perform better than the MPI tables. But its all about right tree, right place, right reason https://www.newsroom.co.nz/how-we-can-see-the-woods-for-the-trees
    Government policy and public understanding is sorely lacking (wooden headed and tin eared)- would be great if decent policy could be proposed in the public area- Newsroom willing to publish. I’ve done my share of tramping and climbing and would love more native but it needs to be subsidised as you say with attendant opportunity cost. First no brainer policy is to spend big on predator / pest control of existing native forests which has been sorely lacking. Have read elsewhere protecting existing native forest can save 5-10 million tonnes co2 per annum but i don’t think government claims this credit or against rules. More research needed into optimising permanent pine forests to revert to native over 100+year timeframes-pine and exotics can harbour native quite well and then encourage native tree to go through the canopy and take over. Redwood good as can leave for centuries if wanted and harvest selectively- see the redwood forest near rotorua as great example.
    All of it needs active forest management which means jobs for rural communities. My view is govt should pay certain amount for carbon sequestration like $50/tonne and keep the rest with a regulated carbon price like $100/tonne. The revenue needs to then be earmarked for e.g. native forest restoration and promotion/biodiversity, erosion control, selective native planting, research etc- into the community and environemnt. in this sense plant 1 million+ hectares nowish and great earner for the landowner/ govt and won’t need to fund this offshore. Also if wilding pine taking over then get in there early and plant pine/eucalypt etc to maximise potential.
    Big changes coming to farming- the climate science points to 1.5 degrees by 2030 (unavoidable)and 2 degrees heating by 2040 (avoidable if we act now comprehensively). Climate effects are accelerating and intensifying, we have entered the age of consequences. Sequestration through forestry is utterly essential we get right for NZ and wider world. Would love to promote this further. Thanks Tim Enright.

  7. Grant Hunter says:

    Well-argued and set out. Within our 10ha block of very dry, rough hill county in North Canterbury, we’ve planted 2 ha of mostly exotics (cypresses, durable eucs, dryland oaks, Veronese poplar, and slow growing pines) emphasizing matching species to microsite, which we are currenting seeking to register as permanent exotic forest in ETS. Yes a tiny-scale experiment rather than a force to be reckoned with, or money-making enterprise. But we consider this a sensible and overlooked middle ground between indigenous and radiata. By most measures, we’ve enhanced the local landscape no end as well. Most species have timber or other economic potential and should be managed for such, while always keeping the stand within ETS metrics (canopy cover etc). Indigenous species are prohibitively slow and expensive and will never form a true ‘forest tree canopy’ under ETS definitions, and the issues around pure radiata are also well canvassed. Local branches of Farm Forestry Assn. offer vast experience-based advice on what they have always fostered and called ‘alternative species’.

  8. Delroy Joseph Packer says:

    Thank you for finally agreeing that there is good sense in planting Pinus Radiata as permanent forests. Most NZers think of this species as “Short Lived”, all they would need to do is ignore what is considered to the “Economic” life and compare it with cores taken from “Old Man” pines flourishing throughout NZ, or take a stroll through Wellington’s Botanical Gardens where they will find a very hale and hearty Pine tree that was a seed source for Kaingaroa. The next point I would like to make is based around the notion of “Basal Area”, this means that there would be no need to plant at same or more S.P.H. that commercial forests are planted at. Carbon Forests could mean planting at a much lower stocking and the grassland underneath retained to feed grazing animals.
    A win win for Landholders NZ. One more thing, there are many people in NZ who believe that “Wildling Pines” are a result of escapees from Commercial Forests, the truth is that the seed source trees are older than nearby Commercial Forests. The seed source for theses wildling pines (of many invasive species) is Shelter Belts grown for shelter and firewood. A project to eliminate “wildling pines” on Molesworth Station funded by taxpayers is doomed to failure unless all seed trees ( the shelter belts) are removed and farm management practices are changed.

  9. Keith Woodford says:

    Delroy,
    I have always been of the opinion that there is a place for exotics including Pinus radiata for long term non-harvested forests. What I have tried to do is to counter simplistic arguments either for or against, and thereby contribute to a debate in which there is recognition that the issues are multi-faceted. In relation to wilding pines, one of the first issues that needs to be acknowledged is that there are big differences between various exotic species, including big differences between the various pine species. Pinus contorta is particularly prone to wind-borne invasions, with this particular species having spread through much of the South Island as a consequence of misguided Government policy some 50 or so years ago. In relation specifically to Molesworth, I do not have information as to the species that predominate there and it is some years since I have been there.
    KeithW

  10. Matthew R Grierson says:

    Hi Keith, what are your thoughts on the proposed changes to permanent exotic forests not qualifying for carbon credits?
    Will this change the price of carbon credits?

  11. Keith Woodford says:

    Mathew,
    I think there will be considerable unintended consequences. But it may be another 10 days or so before I get a chance to say something on that.
    Keith

  12. John Clough says:

    Hi Keith. Great article. I’m at a loss however. Does the government intend banning all existing exotic forests from being part of the permanent forest? Cheers John.

    • Keith Woodford says:

      John,
      It is somewhat tricky to know what Government intends. But if forests are already in the stock accounting system they can continue through to 50 years. At that point it is very unclear. But that is long enough for people to take the credits, sell them as they earn them, and if there is no better option at that point, to walk away having made a lot of money. It is a crazy world in which we live.
      KeithW

      • John Clough says:

        Hi again. Thanks for your reply. Do you know how you can track how many NZUs are traded daily please? Thanks John

  13. Keith Woodford says:

    John,
    There is no published data I am aware of. However, Jarden sent their clients a newsletter late last week where they said the trade had been thin in recent days with only about 50,000 units traded per day. Jarden appear to be the main broker.
    Tomorrow (Wednesday 16 March ) will be interesting with the quarterly auction by the Government of 4.825 million units plus potentially all or part of the cost containment reserve which is another 7 million units. The cost containment reserve comes into play if the auction price rises above $70. The cost containment limit of 7 million units is for all of 2022. None, part, or all of it could be used up tomorrow.
    KeithW

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