KEY POINTS:
The Flexible Land Use Alliance has mustered widespread political support for its proposed forest-offset scheme.
The group, launched yesterday, is made up of Fonterra, Carter Holt Harvey, Landcorp, Blakely Pacific, Forest Enterprises, PF Olsen, Wairakei Pastoral and the Forest Owners Association.
They would prefer land under forests planted before 1990 to be exempted altogether from the Government's proposed emissions-trading scheme.
They say the deforestation liability those landowners would incur if the forest were felled and not replanted in trees is prohibitive and would in effect lock them into what might be a sub-optimal use of the land.
But both the Government and the National Party dismiss that option as a non-starter on grounds of the fiscal cost.
Officials have estimated that over the longer term 280,000 of the 1.2 million hectares of pre-1990 forest might be potentially suitable for conversion to another use.
David Rhodes, of the Forest Owners Association, put the range at 150,000 to 200,000ha over a time frame of 50 years or longer.
But with an average carbon build-up of 800 tonnes a hectare by harvest, multiplied by a carbon price which is unknown - but for which a conservative short-term estimate might be $25 a tonne - the numbers for the potential national liability run into billions of dollars.
So the alliance has a fall-back option.
It argues that it makes no difference to the global climate whether a particular hectare is replanted, only that a new generation of trees grows somewhere which will take up the same amount of carbon from the atmosphere.
It points to an estimated 800,000ha of erosion-prone hill country of little use for anything else which could usefully be afforested.
Planting a forest there rather than replanting land that might be more productive as, say, a dairy farm, ought to be sufficient to avoid the deforestation liability, it says.
There is still a cost associated with offsetting, the group's spokesman, Ross Green, said.
"It's not a free lunch. You have still got to acquire and plant that land."
Forestry Minister Jim Anderton said the concept had been considered already and the conclusion was that the disadvantages outweighed the benefits.
But the Government was happy to look at it again, have the proposal evaluated and discuss it with stakeholders, he said.
"There are some difficulties to be considered such as how to ensure that the new land use, which will usually be agriculture, pays the full emissions costs of the new activity. No one can argue that the taxpayer should subsidise the felling of forests and also the new emitting activity on the land as well."
It is already Government policy to include agriculture within the emissions-trading scheme from 2013 on.
The Greens, New Zealand First, United Future and Act all said they supported the offsetting idea.
National's environment spokesman Nick Smith said his party was still discussing the issue. "But I think the offsetting idea has merit. The key would be that it [the new forest] would have the same carbon-capture capability."
That might require a larger area since land suitable for conversion to another use might well have higher rainfall and more fertile soil.
The rules of the Kyoto Protocol, which runs until the end of 2012, do not recognise offsetting as an "out" from its deforestation provisions.
But New Zealand is expected to press for that to change in whatever agreement succeeds Kyoto.
