On this page
- Forest carbon and New Zealand Units
- Make sure joining the ETS makes financial sense for you
- Make sure your forest is eligible before applying
- Processing applications to register in the ETS can take time
- When responsibility for land in the ETS changes
- Damage to forest land during natural events
- Participating in the carbon market
Disclaimer
The information on this web page covers some of the things you should consider before joining the ETS for forestry. It is not a comprehensive list. If you aren’t familiar with the ETS, it’s a good idea to hire a relevant expert or consultant to advise you. They can also manage certain tasks for you if you decide to join the ETS and appoint them as your representative.
Forest carbon and New Zealand Units
You may be thinking about registering your forest in the ETS or have recently registered. If you register eligible forest in the ETS (known as "post-1989 forest land"), you could receive New Zealand Units (NZUs or units).
Once you receive these units, you have options. You could hold onto them. You could decide to sell them. This may be what attracted you to the scheme in the first place.
However, be aware there are conditions attached when you receive these units. The units received are based on the amount of carbon that is stored in the forest over time. If you deliberately reduce the carbon in this forest (for example through deforestation), there are ETS rules you’ll need to follow. You may need to give units back to the government (known as "surrendering" units).
Find out more about earning and surrendering units
Stock-change accounting and surrendering units after harvesting
Video: What to consider when joining the ETS for forestry (5:25)
Transcript – show/hide
[Aerial footage of hills covered with young pine trees.]
[Ministry for Primary Industries and Te Uru Rākau – New Zealand Forest Service logos. Text on screen: Te Uru Rākau – New Zealand Forest Service is a business unit of the Ministry for Primary Industries.]
[Analyst operations Zhicheng Gao (Jack) from the Forestry ETS Operations team speaks to camera, with shots of aerial footage of pine forest throughout the video.]
Jack: You may be thinking about registering forest land in the New Zealand Emissions Trading Scheme, or ETS.
The ETS is an important part of how New Zealand meets its climate change targets. It’s based on trading New Zealand Units (known as NZUs or ‘units’). If you register in the ETS with eligible forest land, you may earn units over time as the forest grows.
Find out if your land is eligible
Jack: There are 2 main kinds of forest land in the ETS: pre-1990 and post-1989 forest land.
Pre-1990 forest land includes certain kinds of older forest that was established before 1 January 1990. You cannot earn units from pre-1990 forest land. You may have to pay units for deforesting the land.
Post-1989 forest land includes forest that was established after 31 December 1989. If you have post-1989 forest land, you can choose to register in the ETS with this land. You need to own the land, or hold a forestry right or lease over it. It must meet the definition of forest land, which means it must be a certain size, height, and crown cover, or be expected to in the future.
There are other rules about when the land was forested. Check these rules on the MPI website.
Jack: To work out if your forest is eligible, you need to find out and show us when it was planted or when natural regeneration of the forest started.
To find this, you can look at imagery on the Basemaps and Retrolens websites provided by Land Information New Zealand. These have the highest resolution imagery that’s available. There are other sources of imagery too.
[Screenshots of aerial imagery from the Basemaps and Retrolens websites.]
If you can't work out whether you have eligible post-1989 forest land, consider hiring a consultant and asking them for advice. You can also apply for an emissions ruling about your forest land eligibility.
Earning NZUs or "units"
Jack: There are benefits to registering with eligible forest land in the ETS.
You may be able to earn units as the forest grows. These units can be kept as an investment or sold. The value of units may go up or down over time.
If you want to sell your units, do it through the carbon market.
Consider the costs
Jack: Before you register an eligible forest in the ETS, make sure that joining the scheme makes financial sense for you. It may not be cost-effective to register.
Some forest owners receive enough units to make it worthwhile to register their land in the ETS. Others don’t – especially those with small forests.
You may also need to pay back units sometimes, for example when harvesting or removing land from the ETS. If you've sold the units, you’ll need to buy units to pay what you owe. If the value of units has increased since you sold yours, this may cost you additional money.
Costs in the ETS include registration and processing fees, and hiring specialists to do complex tasks.
If you have 100 hectares or more of forest land registered in the ETS, you need to organise measurements at specific locations in your forest, which can be costly.
Consider which accounting method to use
Jack: How you earn units for forest depends on how you decide your forest will enter the ETS – as "standard forestry" or as "permanent forestry". These have different methods of accounting for the amount of carbon in the forest.
In standard forestry, you only earn units until your forest reaches a certain age. You won’t earn units for second rotations or any rotations after that. This means it’s possible to register land that won’t earn any units.
In permanent forestry, you’ll earn units as your forest grows, but you must pay units if it’s cleared. There are limits on the amount of forest you can clear-fell for harvesting. The forest must remain in the ETS for at least 50 years.
Responsibilities
Jack: There are some responsibilities involved if you register in the ETS. You must submit regular emissions returns. This is a report of the amount of carbon in your forest, and will show us if any harvesting has occurred.
You must tell us about other changes to your forest. For example, if forest land in the ETS is sold, or land agreements change, or if any land is not eligible anymore.
[Shot of a white utility vehicle with a Te Uru Rākau – New Zealand Forest Service logo parked next to a pine forest.]
Jack: If you don't meet your legal responsibilities, you could receive a penalty or infringement notice.
You may be charged a fine or a fee.
Find out more
Jack: Read more about any of the topics covered in this video on the MPI website.
[Text on screen:] Email: forestryets@mpi.govt.nz or call 0800 CLIMATE (0800 25 46 28) and select option 1. Website: mpi.govt.nz/ets
[Ministry for Primary Industries and Te Uru Rākau – New Zealand Forest Service logos. Te Uru Rākau – New Zealand Forest Service is a business unit of the Ministry for Primary Industries.]
[End of transcript]
Make sure joining the ETS makes financial sense for you
Before you register an eligible forest in the ETS, make sure that joining the scheme makes financial sense for you. There’s a risk that it may not be cost-effective to register, depending on your circumstances. Some forest owners receive enough units to make it worthwhile to register their land in the ETS. Others don’t.