Storm damage to trees - what does it mean for the Emissions Trading Scheme?

Property

Under the Emissions Trading Scheme (ETS), forest owners may have obligations to account for Emissions Trading Units (ETUs) if they deforest their land or change land uses. These obligations can extend to natural disaster events which cause damage to forests.

Under the Emissions Trading Scheme (ETS), forest owners may have obligations to account for Emissions Trading Units (ETUs) if they deforest their land or change land uses. Owner’s obligations vary depending on the age of the forest with the key date being 31 December 1989.

These obligations can extend to natural disaster events which cause damage to forests. The storms that occurred throughout Canterbury and North Otago in the winter/spring of 2013 caused wide-spread damage to a number of forestry plantations and wood-lots. Early estimates indicate that at least 2,000 ha of planted forest were damaged in Canterbury alone.

The effect of this damage is not limited to the loss of timber alone with forest owners also needing to consider whether they have any obligations to account for potential liabilities under the ETS. The extent of these liabilities will depend on when the forests were planted (before or after 31 December 1989) and whether owners have entered into the ETS. Recent changes to the rules for surrendering carbon units announced in the May 2014 budget have also complicated matters as the ability to use cheaper international Kyoto units as a means of discharging carbon liabilities is now restricted.

Forest owners who have suffered wind damage and losses due to such storm events or other natural disasters may need to seek specialised advice regarding their obligations under the ETS.

If you have any questions or concerns about your obligations as a forest owner affected by storm damage, please contact our Rural specialists, Richard Parkes on 03 339 5610 or Caroline Mason on 03 339 5606 who will be more than happy to assist you.

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