Stock change accounting

All post-1989 forests currently in the Emissions Trading Scheme (ETS) use the stock change accounting method. You will also use stock change accounting if you register a permanent forest. Find out about earning units as your forest grows and your obligations to repay units when you harvest.

Earning units under stock change

Stock change accounting focusses on short-term increases and decreases in carbon storage in your forest. All forests in the ETS currently use the stock change accounting method.

If you are registering a new forest in the ETS that you intend to harvest, and want to use the stock change accounting method, you will need to have your registration finalised before 31 December 2022. After this date, new registrations will either need to use averaging accounting or be registered as a permanent forest.

Earn units for additional carbon storage

As your forest grows it stores carbon and you will earn units for that carbon storage. Under stock change you will keep earning units so long as the change in carbon stock is positive when you submit an emissions return.

If you have a permanent forest, you will keep earning units until the forest reaches a steady-state.

If you have a rotational forest you'll earn units while the forest is growing but will need to pay units back after harvest.

Pay units for losses in carbon stock

If the carbon stock in your forest decreases you will need to account for this in your emissions return and pay units back to the government. Decreases in carbon stock can occur from:

  • the loss of woody biomass from logs after harvest
  • the decay in woody debris and roots on the site after harvest
  • the clearing of trees from an adverse event such as a slip.

Harvesting is the most common reason for needing to pay back units. Between 60% and 100% of the units you earned for forest growth will need to be paid back after harvest depending on the age you registered your forest. This is because you need to account for the loss of carbon from the logs and also from the decay of woody debris and roots from your first rotation. You will never need to pay back more units than you have received.

Your second rotation will start earning units once the change in carbon stock in the forest is positive – this is when the growth of the new forest overtakes the decay of the old forest. This can take up to 10 years after harvest.

If you have a rotational forest it is important that you can cover the carbon liabilities immediately following harvest. You can keep enough units in your holding account, or have a plan to purchase units from the market or auction. The surrenders must be made following the next emission return.

"Low risk" units

While you earn more units under stock change compared to averaging accounting, you'll earn fewer "low risk" units under stock change.

Low risk units are units that are less likely to need to be repaid or surrendered. Under stock change the amount of low risk units is the difference between the age of the forest when you registered it, and the carbon stock in the forest at its lowest point after harvest.

The amount of low risk units  depend on:

  • the age you first registered the forest – the older the forest is when it is registered the less low risk units it will earn (this links to when in the emissions return period you register your forest, as you can claim units back to the start of a period)
  • the amount of time you take to replant your second rotation – the longer you take to replant the lower the carbon stock in your forest will get after harvest.

Carbon stored by a forest over time – stock change

Radiata pine forest over time and the average carbon stock of the forest
An example of carbon stored by a forest over time.

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, and under stock change accounting the forest earns units during this time. The forest is harvested at age 28, at which point the forest’s carbon storage drops steeply to around 300 tonnes and around 60% of the units must be paid back at this time.

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 units are earned again.

Last reviewed: