In this webinar CarbonCrop team members Clare Leyland and Rowan Sprague discuss changes in the New Zealand Emissions Trading Scheme (NZ ETS) and how they impact you.
In 2022 the government had a fair number of announcements regarding the ETS. We know it can be hard to determine which ones were important.
To kick off the 2023 CarbonCurious series we delved into these announcements so you know which ones you need to be aware of.
The key changes we touched on in our webinar include:
Carbon accounting methods - no more stock change
Fee changes in the ETS
Emissions return period
Tupu-ake
Agricultural pricing plan
ETS pricing controls
Carbon Accounting Methods
From 2023 on there are only two carbon accounting methods available for newly registered forests. These are:
Permanent
Averaging
You can read more on these in our blog post here.
However, if your forest was registered in 2022, under a different forest accounting system, it is possible to transfer to averaging or permanent.
Why would you consider changing?
Averaging: You want to harvest without paying back credits for this forest. This would only be for one rotation and you must replant your forest after cutting it for this to be viable.
Permanent: You don’t want to harvest, and want to protect the forest from being cut down in the future.
If you are unsure of your options, and are an existing CarbonCrop customer, talk to your Account Manager.
Fee changes
If you have been keeping up with the announcement you will have seen the fee change proposal at the end of 2022 - if not, check out our blog post here.
As of January the ETS fees have increased between 3 - 7 times (on average) from the 2022 rates.
While most categories have increased from standard forestry, to removing carbon accounting areas, but it’s not all negative. Permanent forests are now free to register.
Emissions return period
For those of you who aren’t familiar with an emission return, it’s like a tax return but for carbon credits. You report any recent changes in your forest, and complete the relevant admin to apply for your carbon credits. An emissions return period is usually 5 years, and the most recent one spanned from 2018 - 2022.
As of January 2023, we’re now in a new emissions return period. This new period goes from 2023 through to 2025.
This means if your forest was registered before the 2022 deadline, you will be required to complete a mandatory emissions return this year. If you’re an existing CarbonCrop customer, you don’t have to worry about this as we do everything for you. If you’re registered for the ETS, CarbonCrop can help with your emission returns. Enquire here.
Other announcements
Tupu-ake MPI’s new reporting system, launched just over a week ago. This system is used for admin purposes, such as registering your forest or completing emission returns. Our team is fully trained on this and as a CarbonCrop customer is not something you need to be on-top-of as we do the hard work for you.
He Waka Eke Noa / The Agricultural Emissions Pricing Plan The government announced that it would recognise more types of carbon sequestration from vegetation in the future. Sequestration from the management of native forests and from riparian plantings will be recognised after 2025. The government is open to more types of sequestration, as long as it can be backed by evidence. We’re keeping on top of this, and will continue to share information as it comes up.
Pricing controls New Zealand's carbon prices dropped following government decisions not to implement specific recommendations from the Climate Change Commission. This decision has impacted the spot price of an NZ Unit (NZU) of carbon, which has fallen to ~$77 a tonne. The market had expected the government to accept the Climate Change Commission's recommendations on tightening unit limits and higher Cost Containment Reserve (CCR) thresholds - the price point at which the Govt releases more NZUs into the market in order to keep the price from going up too fast. The cabinet instead approved a larger volume of auction units and a lower trigger price for the CCR of around $80 compared to the $171 recommended. These decisions mean that the supply of additional NZUs to the ETS will be triggered at a lower price than was recommended, making higher carbon prices less likely. The decision was taken largely in reaction to the cost of living crisis - big emitters pass on that cost to us consumers at the petrol pump, electricity prices etc. The downside of that decision is the financial incentive for big emitters to cut their emissions is reduced, and so our climate change efforts are reduced.
CarbonCrop keeps you up-to-date with the latest changes in the NZ ETS - subscribe to our blog to stay on top of things.
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