The New Zealand Government is currently introducing new methods to Post-1989 forest carbon accounting to help reduce the harvest liabilities for landowners, therefore making the NZETS more attractive. The biggest of these changes is the introduction of the ‘averaging’ accounting method

‘Averaging’ can be defined as a carbon accounting method in which an ETS participant receives carbon credits that are equivalent to the long-term average level of carbon storage in the forest across multiple rotations.

How many units will I receive?

The average age of the forest will depend on what species is grown and when the forest is harvested. These details are currently being finalised, but it is expected that Pinus radiata forests that are harvested within a normal age bracket will receive carbon credits equivalent to 17 years’ worth of carbon sequestration. In the Bay of Plenty region this equates to 367 NZU’s (New Zealand Units) per hectare. This is a significant improvement on the 8-10 years’ worth of ‘safe carbon’ that was available on the legacy stock-change accounting method.

The units are received incrementally from planting up until the average age. The units are only received in the first rotation but are not required to be surrendered upon harvesting if replanting occurs. If the participant does not replant or decides to exit the ETS they will be required to surrender all of the units they have been allocated. Figure 1 shows a comparison of averaging and stock change accounting for a Pinus radiata forest harvested at age 28 across multiple rotations.

ETS Carbon Averaging Vs Stock Change Accounting

Figure 1 – Comparison of averaging and stock-change accounting

How is it being introduced?

Participants with CAA’s that are currently being registered in the ETS have the option to adopt averaging or stock change accounting. From 2023 onwards, averaging will be compulsory.

If your current CAA is less than 17 years old, in its first rotation and you intend to harvest in the future then it may be worthwhile transitioning to averaging.

Would you like to know more about the New Zealand Emissions Trading Scheme, contact our team.