Planning ETS forest land
If you are planning to establish or purchase a new forest, it’s a good idea to think about whether registering it into the Emissions Trading Scheme (ETS) could work for you. The ETS enables you to earn New Zealand Units (NZUs or units) for your carbon storage, but there are also responsibilities and risks to consider before you register.
This video explains some of the things you should consider before joining the ETS for forestry. This includes finding out whether your land is eligible, whether you will earn NZUs or “units”, considering the costs involved and which carbon accounting method to use, and what your responsibilities are if you register forest land in the ETS.
(Aerial footage of hills covered with young pine trees.)
Title: What to consider when joining the Emissions Trading Scheme (ETS)
(Ministry for Primary Industries and Te Uru Rākau – New Zealand Forest Service logos.)
Caption
Te Uru Rākau – New Zealand Forest Service is a business unit of the Ministry for Primary Industries
(Analyst operations Zhicheng Gao (Jack) from the Forestry ETS Operations team speaking to camera, with shots of aerial footage of pine forest throughout the video)
“You may be thinking about registering forest land in the New Zealand Emissions Trading Scheme, or ETS.
“The ETS is an important part of how New Zealand meets its climate change targets. It’s based on trading New Zealand Units (known as NZUs or ‘units’). If you register in the ETS with eligible forest land, you may earn units over time as the forest grows.
“The information in this video covers some of the things you should consider before joining the ETS for forestry. It is not a comprehensive list.
“If you aren’t familiar with the ETS, it’s a good idea to hire a relevant expert or consultant to advise you. They can also manage certain tasks for you if you decide to join the ETS and appoint them as your representative.”
Title: Find out if your land is eligible
(Jack speaking to camera)
“There are 2 main kinds of forest land in the ETS, pre-1990 and post-1989 forest land.
“Pre-1990 forest land includes certain kinds of older forest that was established before the first of January 1990. You cannot earn units from pre-1990 forest land. You may have to pay units for deforesting the land.
“Post-1989 forest land includes forest that was established after 31 December 1989. If you have post-1989 forest land, you can choose to register in the ETS with this land. You need to own the land, or hold a forestry right or lease over it.
“It must meet the definition of forest land, which means it must be a certain size, height, and crown cover, or be expected to in the future.
“There are other rules about when the land was forested. Check these rules on the MPI website.
“To work out if your forest is eligible, you need to find out and show us when it was planted or when natural regeneration of the forest started.”
(Screenshots of aerial imagery from the Basemaps and Retrolens websites.)
“To find this, you can look at imagery on the Basemaps and Retrolens websites provided by Land Information New Zealand. These have the highest resolution imagery that’s available. There are other sources of imagery too.
(Jack speaking to camera)
“If you can't work out whether you have eligible post-1989 forest land, consider hiring a consultant and asking them for advice. You can also apply for an emissions ruling about your forest land eligibility.”
Title: Earning NZUs or “units”
(Jack speaking to camera)
“There are benefits to registering with eligible forest land in the ETS.
“You may be able to earn units as the forest grows. These units can be kept as an investment or sold. The value of units may go up or down over time.
“If you want to sell your units, do it through the carbon market.”
Title: Consider the costs
(Jack speaking to camera)
“Before you register an eligible forest in the ETS, make sure that joining the scheme makes financial sense for you. It may not be cost-effective to register.
“Some forest owners receive enough units to make it worthwhile to register their land in the ETS. Others don’t – especially those with small forests.
“You may also need to pay back units sometimes, for example when harvesting or removing land from the ETS. If you've sold the units, you’ll need to buy units to pay what you owe. If the value of units has increased since you sold yours, this may cost you additional money.
“Costs in the ETS include registration and processing fees, and hiring specialists to do complex tasks.
“If you have 100 hectares or more of forest land registered in the ETS, you need to organise measurements at specific locations in your forest, which can be costly.”
Title: Consider which accounting method to use
(Jack speaking to camera)
“How you earn units for forest depends on how you decide your forest will enter the ETS – as “standard forestry” or as “permanent forestry”. These have different methods of accounting for the amount of carbon in the forest.
“In standard forestry, you only earn units until your forest reaches a certain age. You won’t earn units for second and subsequent rotations. This means it’s possible to register land that won’t earn any units.
“In permanent forestry, you’ll earn units as your forest grows, but you must pay units if it’s cleared. There are limits on the amount of forest you can clear-fell for harvesting. The forest must remain in the ETS for at least 50 years.”
Title: Responsibilities
(Jack speaking to camera)
“There are some responsibilities involved if you register in the ETS. You must submit regular emissions returns. This is a report of the amount of carbon in your forest, and will show us if any harvesting has occurred.
“You must tell us about other changes to your forest. For example, if forest land in the ETS is sold, or land agreements change, or if any land is not eligible any more.
(Shot of a white utility vehicle with a Te Uru Rākau – New Zealand Forest Service logo parked next to a pine forest.)
“If you don't meet your legal responsibilities, you could receive a penalty or infringement notice.”
(Jack speaking to camera)
“You may be charged a fine or a fee.
“Read more about any of the topics covered in this video on the MPI website.”
[End of transcript]
Can you register, and what does it involve?
The ETS has a specific definition of forest land, and only some kinds of forest can join the scheme. Forest land is classified differently depending on when it was first established. The two main kinds of forest land in the ETS are post-1989 forest land and pre-1990 forest land. There are other eligibility criteria, including that the forest must be a certain size.
How forest land is defined in the ETS – Ministry for Primary Industries
Eligible post-1989 forest land can be registered in the ETS. If you want to register land in the ETS, you’ll need to understand how to apply and how to map the land. You need to map your forest land before applying to register it in the ETS, and when you do a range of things that add or remove land from your registration.
You need to tell MPI if you’re buying, selling, or transferring forest land that’s registered in the ETS.
You cannot earn units for pre-1990 forest land, but you may need to pay units if you deforest this land. You do not need to tell MPI if you’re buying or selling pre-1990 forest land, but you should be aware of your responsibilities in the ETS if you deforest this land.
Read more about deforesting pre-1990 land – Ministry for Primary Industries
Can you register native regenerative forest in the ETS?
The same rules apply to native regenerative forest as other forest types in the ETS.
There are things you need to consider when planning to if you want to register the forest land in the ETS. Find out more in this guide:
Native forest reversion and the Emissions Trading Scheme (ETS) — Guide
Is the Emissions Trading Scheme right for you?
There are benefits to registering your land in the Emissions Trading Scheme (ETS), but there are also obligations and risks for you to consider. Find out what to think about before you join the scheme.