Marty Verry: Faltering forestry risks NZ's climate strategy

China takes 80 per cent of our log exports. Photo / Mark Mitchell

COMMENT:

Global headwinds are lining up against New Zealand's number one climate change mitigation strategy – the one billion trees policy. The coming weeks will tell if the Government has given up or is committed to making that policy a success by backing it with its procurement.

But first let us recap on what is at stake. The country's plan is to use trees to sequester carbon dioxide over the next 30 years while it finds ways to reduce emissions from our other main pollutant sources: transport, buildings, energy and agriculture. If the forestry strategy fails, we will need a more aggressive approach to meeting carbon zero by 2050 – something consultancy EY calculated in 2018 would cost the country $30 billion. New Zealand cannot afford to add that to the $60b Covid tab, so the forestry strategy simply must succeed.

So let's look at the prospects for forestry. For New Zealand, the battle ground is China. Like it or not, it takes 80 per cent of our log exports. All our logs are in that basket, you could say.

Entering the new century, the Chinese government initiated the Great Western Development Programme. That was a boom for our foresters, where logs are mainly used for building foundation formwork. But as the urbanisation programme tapers, so will demand for our logs. Problem number one.

Also, at the turn of the century, China implemented its Natural Forest Protection Programme which locked up its forests and set ambitious targets for self-sufficiency. This was dramatically highlighted by China deploying 60,000 soldiers to plant trees. The lock-up policy created demand for our logs, but eventually that tap will turn back on. Problem number two.

Meanwhile, the rest of the world has announced a plethora of billion-tree policies, and a UN trillion-tree policy backed by the USA. Some will be permanent forests, but many – like the 88 per cent of ours – will be planning to harvest and sell surplus wood to, you know who, China. Problem number three.

But that's all a way off. In the next decade, the displacement threat in China comes from Europe, Russia, South America and the southern USA. All countries have surplus low-cost forest resources, but Europe's case is special. Log prices have plunged to near harvest-cost levels because of the urgent need to use trees killed by beetles during the past two years of hot dry weather.

Countries affected include Poland, Switzerland, Slovakia, Italy and Sweden, but the most severe losses have been in Germany, the Czech Republic and Austria. Research firm FEA estimates 279 million cubic metres of trees have been affected so far. That alone is eight times more than New Zealand's annual harvest.

The resulting wood tsunami is hitting markets already depressed by Covid-19, and has crashed the China log market twice in the past year. Germany alone quadrupled its exports to China last year. Problem number four.

So the predicament for New Zealand's foresters – and therefore New Zealand's climate-change strategy – is quite serious. What the world needs, and what New Zealand can take a lead on, is to massively boost the demand for wood by accelerating the move to climate-clean construction with sustainable building materials, and the bio-circular economy.

This addresses climate change in two ways; firstly, it gives confidence to forest investors that there will be demand for their logs. Secondly, using wood reduces some of the emissions resulting from the use of steel and concrete, which are estimated to contribute 13 per cent of world emissions.

There will always be important roles for concrete and steel, especially in New Zealand's huge infrastructure spend-up planned, so jobs there are assured. As the NZ Green Building Council put it in its Zero Carbon Roadmap of Aotearoa's Buildings paper, "Steel and concrete have great physical properties but, where those properties are not required, we should aim to replace them with plant-based products, such as timber, to reduce the net embodied emissions from construction."

The rest of the world has announced a plethora of billion-tree policies. Photo / File

Fortunately, with the global development of mass timber solutions such as glulam and Cross Laminated Timber (CLT), practically any building type can be built cost-effectively in wood, and New Zealand has the engineers, suppliers and construction firms that specialise in this area.

The concrete lobby will say the decision is best left to design professionals, but in truth designers make decisions based on system familiarity, and are not asked to think about what is best for New Zealand Inc in terms on jobs, waste, traffic, balance of payments, pollution and New Zealand's climate change strategy. That is where government procurement policy comes in.

That policy, now known as Carbon Zero Construction, was a pan-coalition promise at the last election. It is recognised across the forestry and wood processing sector as the government policy with the most potential to deliver transformational step-change. Not surprisingly the Chambers of Commerce have come out in full support.

With forestry's global headwinds and mills closing monthly with more to come, the sector needs it now more than ever. But more importantly, so does the planet and so does New Zealand if we are to avoid the $30b cost of harsher climate-change adjustments.

We can only hope the Government has not given up on the sector. We will find out soon enough.

• Marty Verry is CEO of the Red Stag group of companies invested in forestry, NZ's largest sawmill and advanced wood solutions