Decision trees: Forestry in the New Zealand Emissions Trading Scheme post-2020

Changes to the New Zealand Emissions Trading Scheme (NZ ETS) in June 2020 create incentives for landowners to establish new forests and register them in the NZ ETS as either standard or permanent forestry.

From 1 January 2023, two different accounting methods will apply for calculating the changes in carbon stock in post-1989 forest land, carbon stock-change and averaging accounting.

Forests registered before 2019 will retain carbon stock-change accounting and face unit liabilities at harvest. Forests registered between 2019 and 2022 can choose between carbon stock-change and averaging accounting.

Under averaging accounting, participants receive New Zealand Units (NZUs) as their forests grow up to an average harvest age and will not face unit liabilities at harvest. In contrast, under carbon stock-change accounting, participants with permanent forests will earn NZUs as carbon stocks increase.

The changes are summarised in this paper to guide participants in their choices under the amendment legislation.

This paper was reissued in October 2021 with a corrigendum detailing changes since it was first published in October 2020.

DOI: doi.org/10.29310/WP.2020.11

Citation

Cortés Acosta, S., A. Grimes, C. Leining. 2020. “Decision trees: Forestry in the New Zealand Emissions Trading Scheme post-2020". Motu Working Paper 20-11. Motu Economic and Public Policy Research. Wellington, New Zealand.