KEY POINTS:
The Government has strongly defended the land-use climate change policies it announced before Christmas. Forestry Minister Jim Anderton has compared the development of a former pine plantation near Taupo for dairy farming to the destruction of tropical rain forest in the Amazon Basin.
He possibly forgot that much of this is the work of the government's company, Landcorp. And that former Climate Change Minister Pete Hodgson said farming was a better use for this land.
Now, Climate Change Minister David Parker says forest owners are hysterical and never had a right to the carbon credits generated by their trees.
Everyone agrees trees will play a big role in combating climate change, so why are tree growers and the Government at loggerheads?
Since the 1970s, forestry blocks have been an attractive nest egg for tens of thousands of Kiwis. Successive governments encouraged this, for the jobs, exports and environmental benefits.
In the late 1980s it became clear that forestry had yet another value - as a mitigator of global warming, a threat talked about by scientists since the 1950s, but which was now being taken seriously.
In 1992, global warming was the focus of the Rio Earth Summit. At the summit and during the negotiation of the Kyoto Protocol a few years later, New Zealand officials - often backed by forest industry representatives - succeeded in having carbon sinks from plantation forests recognised as an offset for increased greenhouse gas emissions.
With carbon now a potential income stream, yet more investors were attracted to forestry. They were in no doubt about who would own this carbon. It's a well established principle that all benefits and liabilities arising from land ownership belong to the owner.
In 1998 the planting boom peaked at nearly 100,000ha, much more than the 40,000 new hectares a year New Zealand needed to have a positive greenhouse gas ledger in 2012.
By 2000, log prices were in decline and forest owners and other exporters began to doubt the wisdom of New Zealand ratifying the Kyoto Protocol ahead of its trading partners, a view they conveyed to the Government. Climate Change Minister Pete Hodgson thought otherwise. He famously told Parliament that failing to ratify would be akin to setting fire to a cheque worth several hundred million dollars, and New Zealand ratified the protocol in February 2004.
How wrong he was. With farming now more profitable than forestry, and with the Government deciding to nationalise its carbon, investors and land owners stopped planting trees.
In 2005, for the first time, the area in plantation forest shrank. This meant that forestry's potential contribution to the country's greenhouse gas ledger in the first Kyoto commitment period, from 2008-2012, also shrank.
While forestry would still make a contribution of $1 billion to $2 billion to the ledger, taxpayers in 2012 would now have to pay at least $1 billion for the resulting emissions blow-out. The minister's cheque was now a massive liability.
During 2005, anger grew among those forest owners whose carbon credits had been nationalised. However, later in the year the Government defused this anger somewhat by acknowledging its climate change policies were flawed and appointing David Parker as new Minister of Climate Change.
Forest owners willingly participated in the Government's policy review last year. Little did they expect that the new policies, announced just before Christmas by Anderton and Parker, would again essentially ignore their advice.
Indeed, the mix of big sticks, baby carrots and apparent lack of interest in what forestry had to offer made many forest owners more upset. As the good guys of climate change, they can't understand why the Government is treating them so harshly.
Their carbon credits, which have done so much to shore up the country's greenhouse ledger, will still be nationalised.
Those who planted forests before 1990 - when the Kyoto Protocol hadn't been thought of - will still face a retrospective tax of up to $12,000 a hectare if they don't replant their forests after harvest.
Because a harvested hectare of trees at say, Reporoa, can't be replaced with a new hectare on more suitable land say, on the East Coast, many ill-sited plantations will be locked into pine trees forever.
This is iniquitous. Forest investors and owners are shocked at being treated so unfairly, especially when major emitters like vehicles and agriculture face no carbon taxes.
An elderly associate called me just before Christmas, almost in tears - he had struggled to acquire a small block of land around 20 years ago and planted it in trees for his children. His concern now is that he may have left them with a massive millstone in a deforestation liability.
The Government has proposed to encourage planting from this year by returning to those who want them carbon credits and liabilities earned by new forests. It has also proposed an afforestation grant scheme worth $20 million a year.
The former is trumpeted as a world-first, but it is a short-term, half-hearted, politically expedient policy. Those who plant trees under the scheme won't recover even a small part of their costs if Kyoto does not provide credits for forest sinks after 2012.
The $20 million afforestation scheme is little better - it won't go far. Tree purchase and establishment costs $1500-$2000 a hectare for radiata, more for natives and other species.
New Zealand foresters want to see a long-term carbon market set up, where those emitting and those absorbing carbon can trade their rights and obligations. Such a simple mechanism would enable the New Zealand economy to transform so it meets its Kyoto targets or better still, achieves the Prime Minister's goal of carbon neutrality.
New Zealand's foresters are ready to help make it happen, but unless the Government comes up with policies which support forestry, current investors will leave the industry.
They will also send a message to the potential forest owners of the future: if the Government was willing to nationalise carbon credits in 2007, what will happen in 2017 or 2027 if a future government finds its Kyoto ledger in the red?
* Peter Berg is president of the NZ Forest Owners Association.
