Shrinking forests hit Kyoto aims

Many companies are converting forestry land to pasture and dairy farms.

The country's forest estate could shrink by up to 7000ha this year, making it even more difficult for the Government to meet its Kyoto Protocol obligations.

Forestry companies spoken to last week said they were not planting any new areas while 9000ha of Canterbury forestry was in the process of being converted to pasture and 30,000ha in the central North Island from trees to dairy farms.

Ernslaw One Otago regional manager Phil Delamare said the net effect was an expected 7000ha decline in the nation's exotic forest plantation.

Last year the area of forestry shrunk by 1000ha, the first time in two decades more land was taken out of forestry than planted in trees.

A shrinking forest estate was something the Government did not want after Treasury earlier this year predicted a billion-dollar blowout in the cost of implementing the protocol due to higher greenhouse gas emissions.

Kyoto was originally forecast to be a net $500 million earner between 2008 and 2013, but the unprofitability of the forestry sector has seen new planting decline and the protocol is now forecast to cost the economy $562 million.

Three large South Island forest owners all plan to restrict planting to land recently harvested for trees, due in part to the high price of land and low log prices but also what they consider as Government policies being a disincentive.

Otago based City Forests chief executive Grant Dodson said it was a concern that 18 months out from the Kyoto Protocol's first commitment period the forest industry was not increasing the area of land in trees.

The country could not afford to pull a carbon sequestering industry out of the ground and replace it with a carbon emitting one like dairy farming.

Dodson said the Government had a forest policy vacuum at the time it needed one most. The country needs to increase the area under forests to meet its Kyoto commitments.

Under the Kyoto Protocol, New Zealand gets tradeable credits for the area of carbon absorbing exotic forests planted since 1990. The credits can be sold globally if carbon emissions are lower than its target or new credits bought if the target is exceeded.

The Government has decided to nationalise those credits against the wishes of forest owners, but shoulder any risk from skyrocketing or plummeting prices.

Forestry executives said Government forest policies were working against the industry, adding to problems of low product prices and rising costs.

Ernslaw One Otago regional manager Phil Delamare said given more favourable policies forestry could bail the economy out of a major cost but the opposite was happening.

Government policy includes a cap from December 31, 2007 on the land that can be converted from forestry to other land uses without incurring a financial penalty. Delamare said this is causing a run on land conversion.

He also accused the Government of assisting the sector's steel and concrete competitors with programmes that exempt them from financial penalties provided they reduced carbon emissions.


KYOTO PROTOCOL

* A United Nations agreement. Countries that ratify the protocol commit to reduce their emissions of carbon dioxide or engage in emissions trading if they maintain or increase emissions.

* The treaty was negotiated in Kyoto, Japan, in December 1997. It came into force on February 16, 2005, following ratification by Russia.

* As of April 2006, 163 countries had ratified the agreement - notable exceptions being the US and Australia.

* New Zealand's participation is predicted to cost the economy nearly $600 million.

- OTAGO DAILY TIMES