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Profit-rich foresters might quit ETS

Posted By admin On January 18, 2013 @ 10:37 am In PressRelease | Comments Disabled

Press Release – Carbon News

Forest owners who have made a tidy profit by selling carbon high and buying low are now looking to quit the Emissions Trading Scheme, Carbon News reports today.Profit-rich foresters might quit ETS

January 18, 2013. Media release

Forest owners who have made a tidy profit by selling carbon high and buying low are now looking to quit the Emissions Trading Scheme, Carbon News [1] reports today.

In 2008, the forestry sector became the first to enter the scheme.

The idea was that giving the owners of post-1989 forests tradable credits for the carbon stored in their trees would encourage planting.
And, at first, it worked. Influential forestry companies such as PF Olsen and Ernslaw One entered the market, and carbon forestry projects sprang up.
But that was when spot NZUs (the units issued to New Zealand forest owners) were worth between $18 and $24 a tonne. In 2010, they started falling on the back of cheap international prices, and today spot NZUs are worth around $2.50.

Figures from the New Zealand Emissions Unit Register show that New Zealand emitters are now using four times as many international units as foreign units to meet their carbon obligations, according to Carbon News, the country’s specialist information service on carbon markets.

In September, the heads of eight forestry companies, who between them control about 70 per cent of the country’s plantation forests, wrote to Prime Minister John Key [2] asking him to intervene directly to stop the flow of cheap carbon credits into the country.

Carbon News understands that companies that sold credits in the $20 range in the first few years of the scheme are now buying European carbon at around 40 cents a tonne in order to meet their own looming carbon liabilities from harvesting their forests.

As one source said, that leaves them with a huge profit and little incentive to stay in the scheme.
Forest Owners’ Association chief executive David Rhodes has now confirmed to Carbon News that several forestry companies are looking at quitting the scheme.

“I wouldn’t be surprised if they do,” he said, “I expect some will.”

Rhodes said that at $2.50 a tonne, it wasn’t worth the work involved in monitoring and measuring the carbon stored by forests and meeting the compliance requirements of the ETS.

ENDS

Content Sourced from scoop.co.nz [3]
Original url [4]


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URLs in this post:

[1] Carbon News: http://www.carbonnews.co.nz/

[2] wrote to Prime Minister John Key: http://www.carbonnews.co.nz/story.asp?storyid=6371

[3] scoop.co.nz: http://www.scoop.co.nz/

[4] Original url: http://www.scoop.co.nz/stories/BU201301/S00316.htm

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