Kyoto burden could double to $600m

Taxpayers face a bill of hundreds of millions of dollars as a result of the increasing practice of converting plantation forest land to pasture when the trees are felled.

Officials have warned the Government that deforestation could double the extent to which New Zealand falls short of its target under the Kyoto Protocol, the international climate change treaty.

Under Kyoto's rules, a country earns credits when land is switched from a low-carbon use such as grass to a high-carbon one such as forestry.

But when a forest is felled and not replanted, it is liable for the emission of that stored carbon.

That is happening more and more.

A Cabinet paper in December obtained under the Official Information Act officials said that: "Latest indications are that forest owners intend to deforest about 47,000ha during the first Kyoto commitment period (2008 to 2012).

"If this level of deforestation occurs it will add around 32 million tonnes of carbon dioxide equivalent to New Zealand's deficit, in effect nearly doubling it."

Such a figure seemed very plausible, said Forest Owners Association chief executive David Rhoades.

The deficit will have to be covered by the Government buying carbon credits - internationally tradeable rights to emit greenhouse gases.

In a turnaround from previous estimates of a surplus, the Government said last June that New Zealand was likely to fall short of its Kyoto target by 36 million tonnes and the Treasury estimated the shortfall would cost the taxpayer $300 million.

But that figure is likely to rise as the price of carbon credits rises and the New Zealand dollar falls

And it would, in any case, double if the rate of deforestation officials warn of eventuates.

Deforestation partly reflects good prices in recent years for dairy products and meat but weak prices for forest products.

Another factor, however, is widespread unhappiness among forest owners.

Under present policy they receive nothing for the credits the country gets for new forests they establish: the Government keeps the credits.

On the other side of the ledger the Government also bears the cost under Kyoto for deforestation, but only up to a point.

It will only pick up the bill if less than 10 per cent of the land cleared over the the period 2008 to 2012 is switched to other uses. What happens if, as seems increasingly likely, that cap is exceeded nobody knows.

"It is clear," Forestry Minister Jim Anderton said, "that the current policy does not send strong signals to encourage landowners to keep their land in forests and establish new forests."

The Government would take another look at deforestation issues, he said. Officials are due to report back next month.

So bad did relations between the industry and the Government become under previous Climate Change Minister Pete Hodgson that forest owners have banned officials from their land for carbon monitoring purposes.

But on January 30 the Forest Owners Association relented to the extent of advising its members to at least help officials identify which forests would qualify as Kyoto forests (they have to have been planted after 1990).

"We are now waiting with increasing impatience for the engagement with officials to start again," Mr Rhoades said.

"We are not looking for handouts here. We just want to be paid for services delivered."

The environmental benefits were not just taking carbon out of the atmosphere but reducing soil erosion and the maintaining water quality.