KEY POINTS:
Forest owners are up in arms over Government proposals on land use and climate change.
Hitting the owners of forests established before 1990 with a cost if they opt to switch to pasture after harvesting their trees is one of the options under consideration in a discussion paper issued yesterday.
The Government is also sticking with the policy of retaining the ownership of the credits generated under the Kyoto Protocol for forests planted since 1990 on land not already forested.
Without those credits the cost to the taxpayer of complying with the climate change treaty would be more than twice the $600 million now recognised in the Crown's books.
Forest Owners Association chief executive David Rhodes said he had had pretty unambiguous feedback from forest owners briefed on the policy.
"They're incensed," he said.
Roger Dickie of the Kyoto Forestry Association, which represents the owners of post-1990 forests, said forests owners had been shafted.
Although the policy envisages giving investors who establish new forests from 2008 an incentive - either in cash or tradeable forest sink credits - Mr Dickie said that overlooked the fact that most of the people who invested in new forestry ventures had interests in existing ones.
Climate Change Minister David Parker said the proposed deforestation cost, when land was switched out of forestry, might take the form of a charge for "all or some" of the liability under Kyoto rules.
For a mature stand of pine deforestation is equivalent to emitting 800 tonnes of carbon dioxide a hectare, which at current prices on international markets where emission rights are traded would cost $13,000.
It makes no sense, the Government believes, to impose that cost on the taxpayer when the value of the land itself, if switched to pasture, is much less than that.
Mr Parker said the Government's preferred option would not be a flat charge for land use change, however, but a system of tradeable deforestation permits.
Just as a fishing company needs quota to catch certain species of fish, a landowner wishing to switch from trees to grass would need to hold enough permits to cover the liability.
Mr Rhodes said it was impossible to estimate what that would cost forest owners until they knew how much deforestation would be allowed and how the permits would be allocated.
The discussion document also outlines possible ways of tackling emissions from the agriculture sector, which is the source of nearly half of the country's greenhouse gas emissions.
The options include a tradeable permits regime for agricultural emissions and a scheme that would allow farmers to meet obligations for any growth on on-farm emissions through "offsets" such as planting trees or producing biofuels.
About a third of agricultural emissions are nitrous oxide arising from the use of chemical nitrogen fertilisers and the bodily functions of livestock.
The Government is keen to encourage the use of nitrification inhibitors that convert "bad" nitrogen compounds which are pollutants into "good" forms which soils can use.
It proposes a financial incentive for farmers to use the inhibitors, which might be paid for by a charge on nitrogen fertilisers.
The Government accepts that the larger source of agricultural emissions - methane belched by cattle and sheep - differs from other sources of greenhouse gases in that there is no technological fix available, though research continues.
Agriculture Minister Jim Anderton said that just as there should be no windfall profit for those who knew little about climate change or Kyoto when they planted their trees, neither should there be an immediate liability for farmers who didn't know anything about climate change when they were encouraged to intensify their production.
GREENHOUSE POLICY
* The Government is considering creating tradeable permits for foresters who want to cut down trees and turn land into pasture.
* It is also looking at taxing nitrogen fertilisers - the mainstay of the nation's pastoral agriculture - in its bid to tackle greenhouse gas emissions and sustainable land use.
