The Forestry industry and owners have taken a big hit from past changes to the Emissions Trading Scheme price for carbon, a representative says Photo: RNZ / Rebekah Parsons-King
A reset of the Emissions Trading Scheme is a step in the right direction, but not enough to restore confidence in the forestry sector, the Forest Owners Association says.
When the government tightened Emissions Trading Scheme (ETS) settings late last year the unit price for carbon dropped from $88 per unit to $33.
Government has now accepted advice from the Climate Change Commission to raise the price reserve; from December the bottom price will lift from $33 to $60.
In updating the scheme's settings Minister of Climate Change James Shaw said the ETS is a key tool for New Zealand to meet its climate change obligations
"The Government has made its annual decision on unit limits and price control settings for the New Zealand Emissions Trading Scheme for 2023 - 2028, to drive stronger action on emissions reduction target.
"Annual reviews of the unit settings and price control limits provide an important opportunity to ensure the settings are fit for purpose."
Shaw said as well as lifting the price, a two-tier cost containment reserve trigger price would also be introduced in December 2023.
The Tier 1 cost containment reserve trigger price would increase from $82 to $173 in the December NZ ETS auction.
Forest Owners Association president Grant Dodson said the move in price was welcomed and showed the importance of getting the ETS settings right - as previous decisions had made a huge impact.
"Nationally there is about 95 million forestry units in New Zealand. At the peak they were worth about $8.5 billion, they then dropped to under $4 billion.
"That money is owned by local iwi, councils, farmers, foresters and investors, so it was a pretty significant loss in value."
Dodson said changes to the ETS late last year knocked confidence out of the sector and have had huge flow on effects.
"I know the company I run has pulled out of a substantial land transaction. We're expecting to plant the last of our land next year and then after that we have nothing in the pipeline and we won't be buying anymore land until we get some security.
"I'm also aware of significant seedling orders being cancelled for 2024 in nurseries across the country, so there will probably be job losses."
He said while this week's changes were good, they would probably not be enough to restart investment.
"People are definitely waiting for the outcome of the ETS overhaul before making any big decisions."
Submissions on changes to the ETS and the permanent forest category close on 11 August 11.