N/Z Big guns aim at Govt climate policy

5:00AM Thursday February 28, 2008By Brian Fallow
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New Zealand's largest company, its richest man and a state-owned enterprise are among the parties combining to lobby against the way the Government plans to treat deforestation in its climate change policy.
A body called the Flexible Land Use Alliance, to be launched in Wellington today, brings together Fonterra, Graeme Hart's Carter Holt, Landcorp and the Forest Owners Association, among others.
They are opposed to plans to devolve, to the owners of land under commercial forests which already existed in 1990, the deforestation liabilities which the country incurs under the Kyoto Protocol.
Under Kyoto's rules if such forests are harvested and not replanted the carbon stored in the trees is deemed to be emitted then and there. The amount varies with the species, age and geographical location of the forest but averages about 800 tonnes a hectare.
At a carbon price of $25 a tonne the liability would be $20,000 a hectare.
Small holdings would be exempt and there would be a partial offset in the form of a free allocation of credits. But if the allocation was done pro rata it would leave those deforesting needing to buy units to cover 95 per cent of their liability.

The proposed regime is seen as potentially locking into forestry land that might be better suited for pastoral farming, especially dairying.
The Business Herald understands the group's first preference is for the Government to drop plans to devolve the liability altogether.
That would leave the liability with the taxpayer. If the regime is imposed, they want to be fully compensated for the loss of value of their land.
At the very least, they argue, the regime should allow for offsetting. This would allow people to avoid the deforestation liability if they planted a new forest somewhere else instead of replanting the existing one.
It might be necessary to require a larger area to be planted if, as is likely, it was on less fertile land and would accumulate less carbon.
About half the land covered by the proposed regime, including much of the land most suitable for conversion, is either owned outright by Maori or set aside for Treaty settlements.
"Our preliminary modelling is showing that Maori will probably take a $2 billion hit on our balance sheet, and that's not acceptable," Federation of Maori Authorities chief executive Paul Morgan said.
FOMA supported the alliance's first two options - leave us alone or compensate us fully - but not the third as it still involved an unacceptable degree of regulation of land use.
The economic case for not impeding the best use of land was indisputable, Morgan said.
Most of the land also in forestry would remain in forestry in any case. It would be better for the Government to focus on how to incentivise the afforestation of erosion-prone land.
Forestry Minister Jim Anderton denies the proposed regime is a retrospective tax, in as much as it applies only because people have planted forests in the past and have received no carbon credits.
"Legislative and regulatory controls of all types affect us in ways we may have been able to avoid with foresight but if governments could never take measures that affected people who had made past decisions, then governing would soon become impossible," he said.