Carbon credits unravelled

Murray McClintock, owner of Glazebrook Station, was asked to speak on carbon trading at the Field Day at The Throne.

He said the focus of the trading programme was to reward activities that sequester carbon and was established in 2008.

“We all pay for the system by using fossil fuels and companies may buy credits from companies sequestering carbon to offset their activities in a voluntary market. For example Fonterra uses 1 million tonnes of coal in the drying process in their milk powder plants. The credits bought will be surrendered back to the Crown to offset the greenhouse gases produced. Credits may be generated from forests both indigenous and exotic.”

To qualify, MPI must be satisfied that there was no forest there before 1990. The vegetation must be capable of reaching a height of 5 metres at maturity and have the potential for a 30% canopy cover, credits are paid annually.

In the case of indigenous forest a case can be built if the block has been actively farmed by clearing or burning on a regular basis in previous years. A price of $400 to $800/ha may be paid on regenerating bush.

The amount of credits paid is averaged throughout the growth of the forest and the current price paid is $75/tonne. Over the life of the pine forest this could amount to $20,000 to $30,000Ha.

The downside of the scheme is the credits have to be repaid when the trees are harvested if the block is not to be replanted. A block can be registered for the scheme if the area is 1 Ha or more. For blocks up to 100Ha the average carbon produced can be calculated using region specific tables for pine forests.

For areas over 100Ha a field management  approach must be used to calculate carbon sequestration. In the case of fire destroying the trees, payments will be stopped until the replacement trees reach the same age as the fire damaged trees. Conflict has arisen from investors acquiring livestock farms and planting them in exotic species permanently for carbon sequestration.

Prices paid for the land have exceeded the amount a commercial livestock farmer can afford to pay, resulting in the loss of employment in rural communities and depopulation of the area.

Legislation is being proposed to ban permanent pine forests and investment by foreign investors. It’s hoped effective legislation comes into force before more damage is done to the rural heartland.

The rules and regulations governing carbon credits are complicated, it may be helpful to obtain expert advice before embarking on such an enterprise.

By Andrew Ritchie