Mixed bag of forestry plans

By PAULA OLIVER

Two years of negotiation between forestry leaders and the Government have ended abruptly with what industry insiders describe as a mixed bag of proposals.

There had been high hopes within the industry that the talks would yield big concessions in return for the Government's decision to hold on to the sector's valuable Kyoto Protocol forest sink credits.

Under the protocol, trees planted since 1990 gain credits because they absorb carbon dioxide as they grow.

For now the credits have an unknown value, but the amount New Zealand forests could earn if the protocol gets up and running is potentially hundreds of millions of dollars.

Forest owners have been upset since the Government revealed in 2002 that it planned to hold on to those credits itself.

Doing so allowed the Government to sweeten other parts of its climate change policy, particularly for the farming sector.

In turn, though, the Government also took on liabilities which arise under Kyoto's rules if land is switched from forestry back to pasture.

Forest industry leaders were summoned to the Beehive on Tuesday night to hear what the Government proposed to do to give the industry recognition for its contribution in addressing climate change.

What they got was described yesterday as a mixed bag.

Under the tag of a budget announcement, Forestry Minister Jim Sutton and Economic Development Minister Jim Anderton said the Government would:

* Spend $12 million over five years to a generic market development programme, provided the industry backed the idea and also gave $4 million itself.

* Spend $1.4 million over five years to continue market access work, provided the industry also made a contribution.

* Spend $2.75 million over five years funding 'bioenergy' initiatives.

* Spend $5 million over five years to fund a wood-processing training 'centre of excellence'.

A commitment was made to continue transport funding in Northland and Tairawhiti until 2007-2008.

The offer also included a guarantee that owners of forests planted after 1990 would not face any liabilities for chopping trees down should the Government retain the forest sink credits.

If a post-1990 forest was to be permanent, the owner could enter into a contract with the Crown to receive carbon credits in return for not chopping the trees down without replacing them.

Most post-1990 forests do not, however, fall into the category of being permanent.

For forests planted before 1990, the Government said it would accept part of the liability for deforestation - up to a cap of 21 million tonnes of emission units for the period 2008-2012. It valued that at $525 million.

The Government's offer is contingent on the forestry industry signing a memorandum of understanding for what is known as the Forest Industry Framework Agreement (FIFA).

One industry insider said the offer looked to be a "take it or leave it" situation.

Forest Industries Council chairman Devon McLean said the proposals had good and bad points.

He said yesterday that he hoped to pull together an industry response within two weeks.