General Consultation Questions
0.1 What do you think is working well in New Zealand to reduce our emissions and achieve the 2050 net zero target?
We have an emissions trading scheme that:
Covers the majority of emissions across the majority of sectors, with the primary (and notable) exclusion of agricultural methane and nitrous oxides.
Imposes a non-trivial price on emissions across covered sectors
Imposes (at least in principle) an emissions cap across covered sectors, and a mechanism for managing total emissions across even non-ETS sectors through total emissions budget management and ETS allocations.
Attributes the price on emissions with high accuracy and low administrative cost (especially in comparison to voluntary ‘emissions mitigation’ mechanisms).
Has the potential to be further refined to increase effectiveness and impact
Is relatively sector/emissions type agnostic (with the notable exclusion of Agriculture and EITE/’Industrial’ allocations), focussing on efficiency of emissions mitigation rather than attempting to ‘pick favourites’.
Generally, we think the ETS mechanisms are valuable and largely under-appreciated. It is to be applauded that we have a system whereby anyone in New Zealand who takes a domestic flight, fills their car with petrol, boils the kettle, uses a domestic freight service (or any one of a vast array of other actions) pays a carbon price of $60/Ton on the associated emissions (at the time of writing) without ever having to think about it.
0.2 The Government is taking a ‘net-based approach’ that uses both emissions reductions and removals to reduce overall emissions in the atmosphere (rather than an approach that focuses only on reducing emissions at the source). A net-based approach is helpful for managing emissions in a cost-effective way that helps grow the economy and increase productivity in New Zealand.
a. What do you see as the key advantages of taking a net-based approach?
The creation of an incentive mechanism for greenhouse gas removals, which are critical to adequate climate change mitigation. Globally we need to achieve a net emissions profile that is significantly negative - not just ‘zero’; and we need to achieve this despite the certainty of emissions sources remaining within the economy. Removals are non-negotiable and should be scaled as rapidly as possible.
Enabling ‘least cost’ emissions mitigation in alignment with both the actual climate outcome, and international treaty obligations.
b. What do you see as the key challenges to taking a net-based approach?
Potential to focus attention on a limited set of mitigation technologies (such as forestry), and so doing centralise the mitigation and economic risk.
Especially in the case of removals technologies with non-trivial risks of sequestration reversal, a ‘net’ based approach with a high emphasis on removals carries a higher risk regarding the future ‘net’ emissions profile than an approach which relies primarily on gross emissions reductions. Strong durability assurance measures are essential, and these measures must effectively target the beneficiaries of any incentives for removals (as an example: It is not appropriate to privatise the rewards for carbon removals with e.g. Carbon Capture and Utilisation, while socialising the liability for any reversals of storage through e.g. storage reservoir failure).
Potential to delay action on gross emissions reductions through the suppression of price signals. This is an especially high risk where different technologies are at different points on their learning curves, and exists as a risk regardless of whether a ‘net’ or ‘gross’ approach is taken, but is especially important to consider with early-stage subsidies in the case of a ‘net’ approach with current market dynamics due to the potential for some removals technologies to suppress that carbon price vs what might exist in e.g. a cap-and-trade market that focussed purely on emissions.
At large scale, some removals approaches have significant side-effects with long-term implications. These must be carefully managed, often through regulation, to ensure that removals incentive schemes still result in a positive holistic economic and environmental outcome (without a myopic approach on emissions outcomes only).
We want to note that on balance we think the potential benefits outweigh the potential risks of a net based approach, but careful management is
required to realise this net-beneficial outcome.
0.3 What, if any, other sectors or areas do you think have significant opportunities for cost-effective emissions reduction?
The emissions profile of the construction sector and built environments generally need consideration, especially as we look to potentially massive investment in climate change mitigation over the coming decades.
The industrial sector also needs specific consideration, especially high-emitting sectors such as steel, cement, and aluminium production.
In particular we strongly encourage the development of a Carbon Border Adjustment Mechanism to address the emissions profile of New Zealand's high-emissions-intensity imports, and the substitution of this mechanisms for the existing Emissions Intensive Trade Exposed 'industrial free allocation' as soon as possible.
We would like to see clear and proportional price incentives to the private sector in New Zealand for e.g. the import of net-zero aviation fuel (vs standard fuel), low emissions cement, low emissions steel etc, without reliance on their country of origin.
0.4 What Māori- and iwi-led action to reduce emissions could benefit from government support?
We do not consider ourselves in a position to speak for these groups, but our view is that their position in regards to restorative (considering climate and biodiversity) land use opportunities in particular is somewhat unique and we would support targeted outcomes-focussed incentives.
1 | Our approach to New Zealand’s climate change response
1.1 What opportunities do the proposed initiatives and policies across the sectors offer for Māori- and iwi-led action to reduce emissions?
Among many other opportunities, our view is that there is a large opportunity for Maori and iwi led organisations to scale the restoration and protection of biodiverse regenerating forest on marginal land, and that this opportunity could better realised with adjustments to the operational processes for Forestry-ETS eligibility assessment.
1.2 What additional opportunities do you think the Government should consider?
We generally support the strategic pillars as outlined.
Early stage adoption support
We think the government has a critical role to play in the early-stage support (and potentially subsidy) of technologies with the potential to deliver highly cost effective emissions mitigation in the mid-term, but which are not cost effective in the short term, especially where the short term status is due to early stage adoption. Such support should be carefully aligned with New Zealand's ability to add value however - for example we are wary of direct incentives for Electric Vehicles which might primarily serve to subsidise overseas industries in their early stage development. In contrast, we might be strongly supportive of Electric Vehicle subsidies which helped accelerate the transition of New Zealand's vehicle fleet, drive local infrastructure rollout, reduce fossil fuel import expenses etc.
Voluntary Market Clarity and Alignment
We think the government has a critical role to play in providing leadership to and supporting alignment of the voluntary and compliance sector climate mitigation actions. In many instances, especially in a country with a mature emissions pricing scheme with good sectoral coverage (such as New Zealand), we see the approach being taken to 'voluntary' emissions assessment, pricing, and 'net-zero' attainment as being duplicative to the mechanisms that already exist in the compliance space through the ETS.
We encourage the preservation of a voluntary carbon market as an environment for innovation, with the expectation that those innovations ultimately be either abandoned or incorporated into a compliance framework.
As an example, our view is that these two (simplified) situations should be considered equivalent and equally reasonable to make a net zero claim (assuming comparable emission factors and prices of the relevant removal units):
1. A company purchases fuel to run their vehicle fleet from a fuel processor with a surrender obligation under a compliance carbon market framework such as the NZETS, and electricity from a generator with a similar surrender obligation, with said fuel processor and electricity generator meeting those surrender obligations through the surrender of forestry removal units (such as PermanentPost89 NZU's).
2. A company operating outside any compliance carbon market voluntarily independently assesses the emissions associated with vehicle fleet fuel and emissions generation, and privately purchases an equivalent quantity of carbon removal units (e.g. PP89 NZU's, or other voluntary removal unit).
If anything, the company of scenario 1 under the NZETS is likely to have a stronger claim to “net-zero” given the generally stronger compliance mechanisms and accuracy of the ETS vs voluntary frameworks.
At present in New Zealand, it is routine that companies looking to achieve 'net-zero' status under a voluntary certification are doing both (1 and 2) in parallel, resulting in effective double-counting and double-pricing of their emissions. Uncertainty and vagueness in the appropriate treatment here is holding back the development of initiatives in sectors not covered by the ETS, and leading to significant waste in sectors which are covered by the ETS.
We note that guidance in relation to voluntary frameworks and Paris agreement article 6 mechanisms is for increased consistency and alignment between national level accounting frameworks and internal compliance and voluntary frameworks (i.e. the assessed/attributed emissions and removals across frameworks within a country should eventually align and be consistent with the aggregate assessed emissions/removals for the country).
The above is a simplified treatment to outline the issue and opportunity. Proper resolution would need to consider the integrity of the relevant frameworks (our view is that the NZETS is high integrity), and the mix, price, and fungibility of units within the relevant frameworks, but the point remains that consistency is attainable and should be pursued as a priority.
We note that compliance mechanisms (whether regulatory or market imposed) are currently responsible for almost the entirety of global GHG emissions pricing mechanisms.
We are delighted to see that GHG mitigating technologies which were historically the beneficiaries of subsidies are increasingly competitive on an open market basis (solar, wind, EV’s to name a few). Our view is that reliance on the voluntary market to achieve net-zero in instances where there are significant economic obstacles (which is still broadly the case) would be dangerous, and that compliance market prices/emissions-mitigation-incentives remain essential (it is not an appropriate time to ‘leave it to the market’). In general, we feel that the goal should not be to necessarily drive the growth of voluntary carbon markets, but to increasingly enable voluntary carbon markets as the incubators for innovations which will ultimately manifest in compliance carbon markets.
Long term, we expect voluntary markets to remain largely irrelevant to global emissions mitigation action (as they are today), with the majority of the task of climate change mitigation being achieved either through compliance markets (or other similar incentive/penalty/subsidy mechanisms) and, increasingly, the economic superiority of low-emissions technologies (e.g. Solar power), and various associated state:state cooperation frameworks.
We applaud the voluntary actions of various actors in this space who are driving and leading emissions mitigation activities and setting targets beyond their compliance obligations (for example corporate level emissions mitigation targets and initiatives) - this leadership is critical and hugely valuable, but will not be sufficient at a global collective level without broader market compliance mechanisms. Clarity and alignment of the voluntary markets and the NZETS will further support and enable these actors.
Export opportunity development
We feel that the government has a critical role to play in enabling future export opportunities for New Zealand originated carbon removals, and that this has the potential to resolve many of the supply/demand uncertainties in the future projections around ETS and national emissions inventory.
Our view is that New Zealand should view high-integrity/high-biodiversity carbon removals as a national export opportunity, demonstrate a willingness to make corresponding adjustments and issue ITMO's where appropriate, and generally approach the 'problem' of a 'surplus to domestic requirements' of carbon removals in the same way New Zealand approaches the 'problem' of a 'surplus to domestic requirements' of milk or timber - that is to say: We are very good as a nation at primary production, and should embrace that in new commodity categories (such as carbon) while retaining appropriate environmental and economic controls to manage risk.
3 | Strengthening the New Zealand Emissions Trading Scheme
3.1 What else can the Government do to support NZ ETS market credibility and ensure the NZ ETS continues to help us to meet our targets and stay within budgets?
Key actions include:
Build and maintain consistency between accounting mechanisms and unit flows within the ETS and outside the ETS, both for ETS covered sectors and for overall emissions budget management considering ETS and non-ETS activities.
Continue to apply and reinforce the ‘banking’ of outcomes between budgets, and ensure market mechanisms and obligations reinforce overall emissions mitigation consistency across time frames.
In relation to the above, do not introduce or signal possible intent to introduce any vintaging mechanisms in relation to emissions units that may discourage early adopters of mitigation activities.
Do not make (or signal possible intent to make) emissions entitlements available below the recommended emissions price corridor for effective decarbonisation incentivisation. If and where low cost emissions units may become available through durable and accurately assessed GHG removal activities, embrace this in the spirit of least-cost mitigation.
Maintain skepticism as to the assessed illiquidity of the ‘unit stockpile’ - leave this assessment primarily to the market and participants. Treat the stockpile for what it is - a volume of entitlements to emit, and expect market dynamics to inform if/when those emissions may occur. We are encouraged to see the upward revisions in the assessed ‘liquid fraction’ of the current stockpile and the recent changes to auction volumes to reduce this stockpile, though our view remains that at current prices the liquid stockpile fraction remains underestimated.
Avoid playing favourites with technologies or providing significant incentives to activities which are already incentivised by the ETS. Our view is that some past such incentives including many GIDI funding allocations were either entirely unnecessary, or would have been unnecessary in the presence of high ETS market confidence and demonstrated long term government commitment.
Maintain and expand appropriate regulatory and incentive mechanisms to address potential side effects of the ETS incentives, especially around potential long term land use change and potential non-carbon environmental impacts.
Continue education about the climate mitigation mechanisms of cap-and-trade frameworks such as the ETS, and the role of carbon removals within such frameworks.
Minimise any unnecessary segmentation/fragmentation of the ETS and cap/trading mechanisms. Use other policy/incentive mechanisms if/where necessary to help drive sector-specific progress as required, but do not introduce market friction through segmentation of emissions or other activities that may result in inefficiency or differential pricing.
Clearly communicate the scope and function of the ETS. We are routinely frustrated by commentary suggesting that the ETS is “not fit for purpose”, when for the most part (and aside from poorly considered interventions) it is behaving exactly as one would expect. It is not the fault of the ETS that large categories of New Zealand’s emissions are outside the scope of the ETS.
Continue work to identify and implement appropriate mechanisms for emissions mitigation in non-ETS sectors; whatever form those mechanisms may take. We are concerned that some forecasts (including those in the ERP2 technical annexes) seem to anticipate forestry carbon removals supply significantly in excess of forecast ETS demand. It is unclear to us what incentive mechanism is expected to support the realisation of this supply, and our expectation under current mechanisms is that the supply will NOT be realised as forecast.
3.2 What are the potential risks of using the NZ ETS as a key tool to reduce emissions?
Potential to focus attention on a limited set of mitigation technologies (such as forestry), and so doing centralise the mitigation and economic risk.
Especially in the case of removals technologies with non-trivial risks of sequestration reversal, a ‘net’ based approach with a high emphasis on removals carries a higher risk regarding the future ‘net’ emissions profile than an approach which relies primarily on gross emissions reductions. Strong durability assurance measures are essential, and these measures must effectively target the beneficiaries of any incentives for removals (as an example: It is not appropriate to privatise the rewards for carbon removals with e.g. Carbon Capture and Utilisation, while socialising the liability for any reversals of storage through e.g. storage reservoir failure).
Potential to delay action on gross emissions reductions through the suppression of price signals. This is an especially high risk where different technologies are at different points on their learning curves, and exists as a risk regardless of whether a ‘net’ or ‘gross’ approach is taken, but is especially important to consider with early-stage subsidies in the case of a ‘net’ approach with current market dynamics due to the potential for some removals technologies to suppress that carbon price vs what might exist in e.g. a cap-and-trade market that focussed purely on emissions.
At large scale, some removals approaches have significant side-effects with long-term implications. These must be carefully managed, often through regulation, to ensure that removals incentive schemes still result in a positive holistic economic and environmental outcome (without a myopic approach on emissions outcomes only).
Additionally:
An excessive focus on the emissions profile and mitigation opportunities of sectors inside the ETS, and insufficient focus on emissions mitigation of sectors outside the ETS.
Absent other mechanisms, a risk of partitioning of activities inside/outside the ETS such that economically efficient opportunities to neutralise non-ETS emissions using ETS-removals may be lost (for example, the neutralisation of ag-sector emissions with forestry-sector removals).
3.4 Do you support or not support the Government’s approach of looking at other ways to create incentives for carbon dioxide removals from forestry, in addition to using the NZ ETS?
Yes, we support.
3.5 Apart from the NZ ETS, what three other main incentives could the Government use to encourage removals through forestry?
We strongly support exploration of alternative/additional incentives for forestry CO2 removals outside the ETS (as well as within the ETS). Our view is that this must be done in such a manner so as not to compromise existing forestry removal investments within the ETS (to do otherwise would destroy future investment confidence) and also not undermine investment within the ETS in such a way that endangers future ETS removal supply.
Assuming the above, our view ETS-external forestry removals as a huge opportunity for both:
1. Mitigation of ETS-external emissions, and
2. NZ carbon removal export opportunities.
The three main incentives we see are:
Recognition and support for ongoing carbon removals and restoration in regenerating indigenous scrub/forest assessed as Pre1990 (in parallel with a review of the current approach to Post1989 classification of regenerating native forest with a view to significantly increasing the fraction of appropriately managed NZ indigenous scrub/regenerating forest designated Post1989 forest)
Recognition and support for the restoration and preservation of stored carbon reserves in mature indigenous forest assessed as Pre1990.
Recognition and support for the potential increased carbon storage in pre-1990 exotic forest especially through commitments to formally retire such forest from future potential production applications and manage it for transition to biodiverse forest.
We view the above as having particular potential for sourcing carbon removals to meet the requirements of sectors outside the ETS, without an opportunity cost vs the status quo (in contrast to a change in the treatment of post89 forestry removals and any associated ETS market access restriction).
3.6 Please provide any additional feedback on the Government’s thinking about how to use the NZ ETS to reduce emissions.
Increase the ability of actors whose emissions are covered by ETS mechanisms to use their ETS compliance as evidence in support of various 'climate positive' claims - resolve the current compliance/voluntary inconsistency.
Develop and implement a Carbon Border Adjustment Mechanism, and have this substitute the current EITE allocations as soon as practicable. In particular, use this to support effective pricing of embodied emissions in imports, including for the construction sector.
Be open to direct redistribution of ETS proceeds (or CBAM revenues) to taxpayers to manage any potential cost-of-living pressures of increased ETS emission prices.
Per earlier comments, resolve the issue of removals sourcing for non-ETS sectors, and so resolve the future supply/demand questions within the ETS.
4 | Scaling private investment in climate mitigation
4.1 Do current measures work well to unlock private investment in climate mitigation?
Partially.
4.2 What are the three main barriers to enabling more private investment in climate mitigation?
Limited confidence in the regulatory and associated economic environment. Periodic suggestions of disruptive (i.e. deviating materially from current) changes to pricing frameworks or market access are profoundly damaging to confidence.
Absent network effects or enabling conditions, coordination problems among actors, slow approval processes. Examples: restrictive distributed generation regulations; renewable generation consenting and grid connection obstacles; electric vehicles-vs-charging-infrastructure.
Absent incentives. New Zealand's largest emitting sector does not currently face any direct cost of emissions, and in parallel is facing significant pressure on profitability. It is difficult for even the most progressive and aspirational actors within the sector to justify the necessary investments in emissions mitigation under these conditions, where voluntary action may put them at a commercial disadvantage vs local competition at a time where balance sheets have limited capacity to absorb such disadvantages.
4.3 What are the three main actions the Government can do to enable more private investment in climate mitigation for the next 18 months?
Continue to invest in and clearly signal commitment to market and regulatory integrity, consistency, and predictability. Ref other comments under 3.1
Review the approach to and criteria for ETS post-1989 assessment of regenerating native bush. Change the mindset and emphasis on appropriately managed and protected post-1989 regenerating native bush to emphasise its being an NZ national asset in consideration of our international climate change mitigation responsibilities, and not a government liability in consideration of the domestic ETS internal unit supply.
Create or expand market-wide incentives (or penalties) for sectors not currently covered by the ETS. This would create an even playing field and align economic incentives, and would enable increased action.
4.4 What are the three main things the Government can do to enable more private investment in climate mitigation in the longer term
(beyond the next 18 months)?
Introduce a CBAM to provide commercial incentives to the private sector in alignment with embodied emissions, in particular for the construction sector.
Provide credits or exemptions as appropriate for low-carbon chemical fuel products, such as (for example) some non-fossil-origin hydrocarbon fuels.
Actively explore the mid-term potential for NZ as an exporter of high integrity nature-positive carbon removals. Be open to corresponding adjustments as needed at a national level to create adequate market demand, on the assumption that New Zealand has the potential to over-delivery vs its national level 'fair share' of carbon removals, in the same way it delivers beyond its international 'fair share' of wool.
4.5 Please provide any additional feedback on the Government’s thinking about how to enable more private investment in climate mitigation for the next 18 months.
We strongly support reporting initiatives to help the private sector understand climate risk exposure and emissions price risk exposure (as clarity on
commercial risks can help drive elective investment in decarbonisation).
As previously mentioned, our view is that voluntary carbon markets are unlikely to have meaningful large scale impact, and the focus should be on consistency/alignment/integration with national and international compliance markets and frameworks, and in the process the enablement of carbon
removal export opportunities.
7 | Agriculture
7.1 What are the three main barriers or challenges to farmer uptake of emissions-reduction technology?
Economic obstacles due to higher direct costs and the absence of emissions mitigation incentives, or due to the nature of the technology and investment
model, capex vs opex, discount rates applied to future mitigation benefits.
Technology readiness and early adopter risks around both performance in the emissions mitigation role, and potential side effects.
Capacity to explore and evaluate new technology. Farmers generally have a lot to juggle already, including numerous new responsibilities which are
obligatory. New elective initiatives are always going to be a harder sell, especially if the economic case is uncertain or unclear and there are direct or
indirect risks associated with the new technology.
7.2 How can the Government better support farm- and/or industry-led action to reduce emissions?
Address the economic barriers by developing and introducing appropriate incentive frameworks. Use regulatory powers to solve the coordination
problem/commons problem that acts as an obstacle to (/penalises) unilateral action.
Together with the banking sector, develop and provide access to appropriate financing mechanisms.
Provide suitable grants/early adopter incentives to support rollout of unproven technologies which may be commercially risky in various forms.
7.3 How should Government prioritise support for the development of different mitigation tools and technologies across different parts of the agriculture sector?
We do not have a strong view here, other than that recognition and incentivisation of all ongoing durable greenhouse gas removal within a farms boundaries should be part of any initiative to attach a cost to all ongoing greenhouse gas emissions for that farm - and note that this is already the way various voluntary frameworks assess net emissions at an organisational level.
Other than that, we'll focus on helping farmers realise carbon removals as part of a mosaic farming system, and defer to the farmers and other experts on the farming practices and emissions mitigation side.
7.4 What are three possible ways of encouraging farmer uptake of emissions-reduction tools?
As above. Address the economic barriers by developing and introducing appropriate incentive frameworks. Use regulatory powers to solve the coordination
problem/commons problem that acts as an obstacle to (/penalises) unilateral action.
Together with the banking sector, develop and provide access to appropriate financing mechanisms.
Provide suitable grants/early adopter incentives to support rollout of unproven technologies which may be commercially risky in various forms. Deliver showcases, support proof-of-concepts and development of relevant delivery infrastructure/tooling. Directly support technology developers in pre-commercial stages through existing R&D incentive frameworks.
7.5 What are the key factors to consider when developing a fair and equitable pricing system?
Holistic environmental, social, and economic outcomes; beware of the externalities that may result from narrow incentive frameworks.
Future industry activity concentration risk. We want to retain diversity in our productive sectors especially since they represent such a large fraction of our national export.
Equality of access: first-in quota based schemes or similar should be avoided.
Efficiency: Schemes should enable efficient collaboration between farms in achieving outcomes. Any system that would (even in theory) incentivise the reconfiguration of a farms operational or business boundaries is probably flawed.
Equality of recognition: The effective penalisation of early actors/early adopters should be avoided. There is a history of perverse incentives, especially in the climate space, which can result in rational actors actively delaying action in order to retain access to potential future incentives.
As an example: A system which recognises (with incentives) a tree planted next year by a farmer who delayed action, but denies those same incentives to a tree planted last year by a more proactive farmer, sends precisely the wrong message to the industry around innovation and leadership.
As a similar example: A system which incentivises relative emissions reductions, against an arbitrary date-based baseline, risks rewarding those farmers who delayed the longest and did the least (lots of low-hanging relative emissions reductions options) and penalising those who acted earlier and bolder (easy emissions reductions may already have been achieved - a further e.g. 50% reduction may be extremely difficult).
Generally our view is that the focus should be on absolute performance rather than relative performance (across all sectors, not just farming.
8 | Forestry and wood processing
8.1 How could partnerships be structured between the Government and the private sector to plant trees on Crown land (land owned and managed by the Government)?
Our view is that activities to increase carbon removals on crown land should be kept outside the ETS, as they are today (with e.g. Post89 forest on crown
land contributing to the national GHG inventory, and potentially supplying removals to the ETS indirectly through making supply available for unit
auctions, but not being eligible for direct registration in the ETS).
With the currently forecast potential surplus of removals within the ETS (setting aside whether that is realistic given current incentives) and more importantly the predicted shortage of adequately incentivised removals outside the ETS, any new category of removals should be prioritised for non-ETS recognition (where doing so does not result in material disenfranchisement or effective nationalisation of a private asset).
Our view is that crown land planting partnerships should therefore be focussed on creation of forest, for the crown, with the carbon benefits accruing primarily to the crown to mitigate potential international NDC liabilities. The private sector should be leveraged for the establishment and management of that forest where appropriate.
8.3 How large should the role of wood in the built environment play in New Zealand’s climate response?
More than currently
8.4 What other opportunities are there to reduce net emissions from the forestry and wood-processing sector?
Per 3.5
Recognition and support for ongoing carbon removals and restoration in regenerating indigenous scrub/forest assessed as Pre1990 (in parallel with a review of the current approach to Post1989 classification of regenerating native forest with a view to significantly increasing the fraction of appropriately managed NZ indigenous scrub/regenerating forest designated Post1989 forest)
Recognition and support for the restoration and preservation of stored carbon reserves in mature indigenous forest assessed as Pre1990.
Recognition and support for the potential increased carbon storage in pre-1990 exotic forest especially through commitments to formally retire such forest from future potential production applications and manage it for transition to biodiverse forest.
Additionally, incentives (through a CBAM or otherwise) that appropriately recognise the durable carbon sequestration benefits of wood products, particularly structural timber.
9 | Non-forestry removals
9.1 What are the three main opportunities for non-forestry removals to support emissions reduction?
Given non-forestry removals are defined to include on-farm vegetation, and management of pre-90 forests, our earlier answer is applicable, and we
encourage the following:
Recognition and support for ongoing carbon removals and restoration in regenerating indigenous scrub/forest assessed as Pre1990 (in parallel with a review of the current approach to Post1989 classification of regenerating native forest with a view to significantly increasing the fraction of appropriately managed NZ indigenous scrub/regenerating forest designated Post1989 forest)
Recognition and support for the restoration and preservation of stored carbon reserves in mature indigenous forest assessed as Pre1990.
Recognition and support for the potential increased carbon storage in pre-1990 exotic forest especially through commitments to formally retire such forest from future potential production applications and manage it for transition to biodiverse forest.
Any dewatering of wetlands should result in proportional carbon unit surrender liabilities recognising the emissions risk and the value of these carbon sinks, in addition to existing regulatory obstacles/prohibitions and various biodiversity/water-quality considerations.
ETS framework support for durable non-forest sequestration technologies should be introduced based on assessments of potential scalability and economic viability. We do not have a strong opinion on the most viable approaches of those listed, though encourage research around enhanced rock weathering and ocean alkalinity enhancement technologies in particular as being approaches with the potential to achieve multiple-gigaton-per-year scale.
9.2 What are three main barriers to developing more non-forestry removals?
Lack of incentives due to lack of recognition of carbon removal benefits. Our view is that the two following activity categories in particular represent 'low hanging fruit' for improvement:
Recognition and support for ongoing carbon removals and restoration in a significant fraction of regenerating indigenous scrub/forest through a review of the current approach to Post1989 classification of regenerating native forest with a view to significantly increasing the fraction of appropriately managed NZ indigenous scrub/regenerating forest designated Post1989 forest.
Recognition and support for the potential increased carbon storage in pre-1990 exotic forest especially through commitments to formally retire such forest from future potential production applications and manage it for transition to biodiverse forest.
Technical readiness and maturity. This is particularly significant for earlier stage approaches such as enhanced weathering, ocean alkalinity enhancement, direct air capture, CO2 reservoir injection etc. Our view is that New Zealand should be realistic around the extent to which we expect to be involved in research vs deployment of key technologies, as with any other technology.
Relatedly, some approaches have a lack of implementation expertise. This would be resolved through a market response to the introduction of suitable incentive frameworks (true also for the forestry-related methods outlined in the first barrier).
Public education and sentiment around gross-vs-net emissions mitigation and the social license of removals. Effort must be maintained in educating the public that removals are essential and we have already overshot on our CO2 concentration target and need to be planning to put emissions into reverse in the long term. Removals are a necessary companion to gross emissions reductions; they are not 'cheating'.
9.3 It is important to balance landowners ability to use their land flexibly with the recognition of the role of non-forestry removals. How can
this balance be achieved?
This can be achieved through fair and equitable incentive frameworks which consider holistic economic/social/environmental impacts. Generally our view is that landholder flexibility and autonomy should be maintained to the maximum possible degree except to the extent that results in negative externalities.
Most recognition of forest/non-forest removals is complimentary to landholder flexibility; it is the absence of recognition of some critical categories of forest/non forest removals that creates a conflict with landholder flexibility and fair recognition for activities.
9.4 What three main benefits beyond emissions reductions could be created by developing more non-forestry removals?
Environmental co- benefits including freshwater, biodiversity
Increased farm revenue diversity and resilience.
Increased broader climate resilience (in addition to mitigation) in particular through improved incentives for biodiverse forest with lower pest/disease/weather/climatic risk.
9.5 What risks and trade-offs from incentivising land-use and management change to reduce net emissions need to be considered?
Potential to concentrate sector activity and reduce export diversity, which increases market risk. For example, if someone where to invent an ultra-low-cost direct-air-CO2 capture and geologic storage system, it would have been a shame to convert highly productive NZ farmland to forest. The 'regrettable afforestation' is largely a false dilemma though if we focus on the long term creation of high biodiversity forest on the land least suitable for grazing. Afforestation of this land is desirable for biodiversity/water-quality/climate-resilience benefits even in the absence of the carbon sequestration benefits, and there are large areas of this land in New Zealand.
Potential to shift farm production profiles with economic implications for associated sectors. Broader cost-benefit analysis (beyond farm boundaries) should be considered in the implementation of incentives in either direction.
See section 1/2/3 answers for other considerations.
Comentarios