NZ ETS Evaluation Modelling Reveals No Motive Why Present Forests Ought to Not Be Grandfathered

In a current open letter to Minister Shaw (Scoop,12 July), we identified basic flaws within the NZ ETS Evaluation because it pertains to current forests.

Our specific concern was that NZUs from current forests, most of which will not be out there to be bought by emitters in the marketplace, are included within the forestry NZU provide which the Evaluation concludes will result in oversupply and falling NZU costs.

Since then, Authorities officers have swiftly disclosed the modelling used within the Evaluation and hosted a webinar on lower than 48 hours’ discover.

Now we have studied the Authorities’s Abstract of Modelling and market mannequin spreadsheets.

MPI initiatives that round 80% of current post-1989 forests will probably be harvested over the subsequent decade para 5.3 the Elvidge paper).

If appropriate, this would depart lower than 140,000 hectares of post-1989 forests as of 2033.

After all, new forests will probably be established, however like all afforestation because the begin of 2023, these is not going to be inventory change accounting forests like these registered within the NZ ETS previous to 2023.

It’s these post-1989 inventory change accounting forests (and the NZUs they generate) that are the first focus of the Halt NZU Seize Marketing campaign.

In accordance with the EPA, the stockpile of NZUs from current post-1989 forests as of 31 December 2021 comprised 75.8 million items.

The Ministry for the Surroundings expects that 300 million NZUs will probably be allotted to the then remaining post-1989 forests over the 29-year interval between 2022 and 2050 (inclusive), whereas 209 million NZUs will probably be surrendered throughout that interval, primarily due to harvest liabilities (web page 16, Abstract of Modelling).

That represents a web achieve of 91 million NZUs, which might take the forestry NZU stockpile from 75.8 million to 166.8 million.

Utilizing the identical methodology as that utilized by the Local weather Change Fee in 2022 to analyse the parts of the whole NZU stockpile with a view to decide the “surplus” out there to be bought by emitters, we calculate that round 78% of that 166.8 million stockpile wouldn’t be a part of the “surplus”.

That would depart 22% or round 36.7 million post-1989 forest NZUs which might presumably be out there to emitters in the marketplace (i.e. “surplus”) over a 29-year interval.

That averages out to round 1.3 million NZUs every year. Because the Abstract of Modelling concedes, gross sales of “surplus” NZUs over time will replicate financial choices, comparable to perceptions of future value rises.

Even when the apportionment determine was to be, say 33%, as an alternative of twenty-two%, the “surplus” out there in the marketplace to emitters would on common be simply 1.9 million NZUs every year till 2050.

Admittedly, an quantity of 1.2 million to 1.9 million NZUs per yr just isn’t de minimis, however it’s not by itself sufficient to overwhelm the NZU market and collapse costs and materially affect gross emissions reductions.

Even when this 1.3 to 1.9 million NZU “surplus” is aggregated over 29 years, it is so much lower than the “sizzling air” NZUs which Authorities auctions might be anticipated to inject into the market over simply the subsequent decade.

Neither is this “surplus” ample to justify the Authorities reneging on the inducement it gave foresters to make long run commitments primarily based on the continued availability of NZUs.

And the opportunity of a few million “surplus” NZUs coming to the market on common every year is actually inadequate to condone forcing current foresters out of the NZ ETS and into an inferior scheme, the place they’ll obtain “elimination items” which can solely be capable of be offered to the Authorities at costs and at occasions and on circumstances which it dictates.

And it is no cause for the Authorities to not affirm that current forests will probably be grandfathered from the ETS adjustments contemplated by the Evaluation and thus give certainty again to the NZU market.

And eventually, small annual “surplus” NZU gross sales can not start to justify the delay and the associated fee the Authorities will undergo, and the harm that will probably be completed to the connection between the Crown and Māori, and the avalanche of litigation and Treaty of Waitangi claims that may inexorably move if the Authorities proceeds with an enormous expropriation of personal property rights as contemplated by choice 4 of the Evaluation.

For additional info see our web site: www.haltnzugrab.org.nz

Halt NZU Seize

Marketing campaign Co-convenors: H. Bradbury and S. Thomson

E-mail: [email protected]