Averaging accounting

Averaging accounting focuses on your forest's long-term carbon storage over several rotations of growth and harvest. Until the end of 2022 new post-1989 forests will have the option of using averaging accounting, and it will be mandatory from 1 January 2023.

Who can use average accounting? 

If you register a forest in the ETS between 1 January 2019 and 31 December 2022, you can decide whether to switch to averaging when it is introduced on 1 January 2023.

Forests registered after 1 January 2023 must use averaging accounting (unless they are registered in the permanent post-1989 forest category).

Earning units under averaging

Averaging accounting focuses on long-term increases and decreases in carbon storage in the forest over multiple cycles of growth and harvest.

Earn units up to the forest's "average age"

Forests under averaging earn units for growth and carbon storage in the first rotation up until the forest reaches its "average age". The average age of a forest is the age at which it reaches the average level of carbon it is expected to store over several rotations of growth and harvest.

The average age of a forest will depend on the forest type and the typical age of harvest for that forest type.

For example, a radiata pine forest is usually harvested at around age 28. The average amount of carbon stored by a radiata pine forest over multiple rotations is equivalent to the amount of carbon it stores at around age 16-17.

The average age for each forest type will be set out in the forestry sector regulations when they are made in October 2022.

Don't repay units after harvest

Under averaging, you usually will not have to repay units after you harvest, so long as you replant your forest.

This means that, while you earn fewer units under averaging compared to stock change accounting, you will earn more "low risk" units that you are less likely to need to repay.

Carbon stored over time – averaging accounting

Radiata pine forest over time and the average carbon stock of the forest
An example of radiata pine forest over time and the average carbon stock of the forest (illustrative only).

A line graph shows the amount of carbon stored by a forest over time. The carbon stock increases from zero to approximately 750 tonnes while the forest grows from age 0 to age 28. The forest is harvested at age 28, at which point the forest’s carbon storage drops steeply to around 300 tonnes. The forest’s carbon storage continues dropping for another 10 years as the above-ground residual wood and below-ground roots decay. Eventually the replanted forest overtakes the decay of the old forest, and carbon storage increases again.

On its first rotation under averaging accounting, the forest will earn units up until age 17. In this example, 350 tonnes of carbon has been stored at this point. This 350 tonnes of carbon is the average level of carbon storage across multiple rotations, and so is the amount of units an ETS participant can keep under averaging even after they harvest.

What if you harvest earlier or later than is typical for your forest type?

From a climate change standpoint, it doesn't make sense for slight changes in rotation length to be reflected in the ETS. Increasing rotation length by a year above the norm doesn't represent a significant increase in average carbon storage. The long-term carbon stock of the forest is only impacted when rotation length changes drastically.

To make averaging accounting more practical the possible range of harvest ages for each forest type will be split into "age bands". This means that harvesting slightly earlier or later than the typical harvest age will not affect the units you earn and will not result in additional reporting obligations.

A default rotation band will sit around the typical harvest age for that forest type, while non-standard rotation ages much earlier or later will sit in age bands on either side of the default.

If you delay harvest long enough to enter a higher rotation band, you will earn more units up to that band's higher average age.

If you harvest much earlier than normal, you will move into the lower rotation band and will have to pay some units back to the Government.

The exact number and width of ages bands for each forest type will be set in the forestry regulations.

Learn more about the process to update the forestry sector regulations

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