MPI propose changes to forestry sector regulations

The Climate Change (Forestry Sector) Regulations 2008 (Regulations) contain most of the forest-related regulations that support the Climate Change Response Act 2002 (Act) and the New Zealand Trading Scheme (ETS).

You may be aware that the Ministry for Primary Industries (MPI) has proposed 12 new changes to the Regulations.  This will be the seventh time that the Regulations have been amended.

If you are a forestry participant in the ETS, or you own forest land that may enter the scheme, you will be affected by MPI’s proposed changes.  They will:

  • Require harvested post-1989 forestry participants who seek to re-join the ETS to take into account the decay from harvest residue that remains on the land (such as from stumps and branches), which will have the effect of reducing overall increases in carbon stocks;
  • Allow a waiver of the deadline for collecting some or all of a post-1989 forestry participant’s Field Measurement Approach (FMA) data;
  • Reduce the requirement for post-1989 FMA forestry participants to update their carbon specific lookup tables to only once every 5 years; and
  • Make a range of other minor and technical changes to the Regulations that are intended to simplify the operation of the forest components of the ETS.

MPI has also signalled that it intends to propose further changes to the ETS affecting forestry participants later in 2018 and that it will consult on those proposals.

Feedback on MPI’s proposed changes is open until 5pm on 3 July 2018.  If you are affected by the proposals and support them, or if you consider the proposals could be improved, we recommend that you make a submission.

Post-1989 forestry participants who seek to re-join the ETS will be required to take into account the decay from harvest residue that remains on the land

Presently, if an area of harvested post-1989 forest land is ‘deforested’ and is then reforested, the new forest land can re-join the ETS with no consideration of the emissions from decay of harvest residue that remains on the land (such as from stumps and branches).  In contrast, if a participant had harvested and replanted post-1989 forest land, the emissions from the decay of forest residues would be taken into account resulting in a lower carbon stock change in the second rotation.

MPI proposes to address this discrepancy by amending the Regulations so that residual forest biomass from a previous forestry rotation will always be recognised when post-1989 forest land is registered.

Allow a waiver to the deadline for collecting some or all of a post-1989 forestry participant’s FMA data

FMA participants (those who have registered 100 hectares or more of post-1989 forest in the ETS) must establish sample plots in their forest and collect and supply the data to MPI who use it to construct participant-specific carbon look-up tables which the participant must use to complete mandatory emissions returns.

The Regulations currently allow participants to obtain a waiver from using participant-specific tables for a mandatory emissions return in a narrow range of circumstances.  The waiver allows use of a participant-specific table from a prior mandatory emissions return period or default look-up takes in the Regulations.

However, MPI has indicated that rather than seek a waiver, circumstances may arise in which an FMA participant wishes to take advantage of the FMA with up-to-date RMA information but are unable to do so because there is insufficient time to complete FMA requirements or because there are simply no inventory providers that have capacity to do the work.

MPI is proposing to allow a waiver of the deadline for collecting some or all of a participant’s FMA data.  This will allow FMA participants to complete the collection of FMA information after the end of a mandatory emissions return period.  This will better recognise the circumstances beyond a participant’s control which may prevent them from completing their FMA requirements.

The regularity in which post-1989 FMA forestry participants are required to update their carbon specific lookup tables will be reduced

Presently, the Regulations require post-1989 forestry participants (who use the FMA) to use up-to-date participant-specific carbon tables when making any type of mandatory emissions return.  This includes the 5-yearly mandatory emissions return and other mandatory emissions returns (such as removing land from the ETS or when transmitting an interest).

MPI proposes to amend the Regulations so that FMA participants only have to update their participant-specific carbon tables for the 5-yearly mandatory emissions return.  For other mandatory emissions returns, it will be voluntary for FMA participants to update their tables before making emissions returns.

MPI proposes to make a range of other minor and technical changes to the Regulations that are intended to simplify the operation of the ETS

MPI propose to make a range of other changes to the Regulations intended to simplify the operation of the ETS .  The changes include:

  • clarifying that sub-areas (in relation to post-1989 forest land) are determined separately for the area with growing trees, as opposed to those with residual stumps / roots from a previously harvested forest (for the purpose of carbon stock calculation);
  • making it clear that remnant sub-hectare fragments of forest land should be treated as if they were areas of one hectare or more for the purposes of calculating carbon stock changes;
  • requiring all land title notifications of status of forest land made after the Regulations to more explicitly record obligations when post-1989 forest land is transferred;
  • improving the rounding process for calculating emissions and removals;
  • introducing the ability to calculate carbon stock changes based on the ‘intended predominant forest species’, and establishing a simpler and more practical approach to determine carbon-critical parameters of mixed species and mixed aged forests;
  • calculating carbon stock change from decay of residual wood and roots regardless of when in an emissions return period the trees were cleared, or emissions are calculated;
  • requiring reassessment of the required numbers of permanent sample plots if the Forest Class of an area is changed;
  • specifying a fourth class of land: pre-1990 offsetting forest land for the purpose of registering land status notices on land titles; and
  • ensuring that existing rules for applying carbon lookup tables explicitly apply to pre-1990 offsetting forest land and offsetting forest land and place a single definition of forest type in the interpretation section of the Regulations that covers pre-1990 forest land, pre-1990 offsetting forest land, offsetting forest land and post—1989 forest land.

MPI has also signalled that it intends to propose further changes to the ETS affecting forestry participants later in 2018 and that it will consult on those proposals

MPI has indicated that MPI, along with the Ministry for the Environment, are developing advice to Ministers on other potential improvements to the ETS.  These further changes will be consulted on later in 2018.

These future changes include a “forestry package” of advice, which will include developing options to reduce the complexity of current operation ETS settings, and potentially introducing a new averaging accounting approach for post-1989 forests, as well as changes to align the administration of the Permanent Forest Sink initiative with the Act.

We can help

We regularly assist clients in the forestry sector to meet their obligations under the New Zealand ETS.  Please contact one of our specialists if you would like more information on the proposed changes to the Regulations or you would like any assistance drafting a submission.

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