Cullen comments on Trans-Tasman scheme welcomed

The Flexible Land Use Alliance has welcomed reported comments by New Zealand Finance Minister Michael Cullen and Australian Treasurer Wayne Swan that the New Zealand and Australian Emissions Trading Schemes (ETSs) will be made compatible over time.

A spokesman for the Flexible Land Use Alliance, Ross Green, said it made sense for the two schemes to be integrated to improve their liquidity and to allow for trading between the CER partners’ different economic sectors in order to reduce trans-Tasman emissions.

He noted that Dr Cullen’s position was in line with data about New Zealand public opinion towards the scheme, released by Exceltium and DigiPoll last week, which indicated that 77.7 percent of New Zealanders believe New Zealand should work at the same pace as other countries that are determined to make a difference, or be a fast-follower on the issue.

The study also suggested that two-thirds of New Zealanders are comfortable to see climate change policy develop in tandem with the country’s CER partner.

Mr Green said there were significant differences between the two proposed schemes’ handling of pre-1990 forestry, with the Australians excluding such forestry from their ETS, in line with the Flexible Land Use Alliance’s first policy preference, in order to maintain land use flexibility.

In contrast, the New Zealand Government was planning to impose massive retrospective liabilities, estimated to be in the vicinity of $65,000 per hectare, on those who harvest their pre-1990 forests and don’t replant the exact same land. In New Zealand, these liabilities will have to be paid even if the forest owner plants a new forest, with equivalent carbon sequestration ability, elsewhere in New Zealand.

Mr Green said it made sense for the treatment of pre-1990 forestry to be aligned across both CER partners.

“We would urge New Zealand to adopt the Australian position,” he said.

“If that is not possible, we would urge Dr Cullen to support a Forestry Offset Scheme, under which a pre-1990 forest owner could meet their deforestation liabilities either by replanting the exact same land or by planting a new forest elsewhere in New Zealand with equivalent carbon sequestration ability. This position already has the support of the New Zealand Opposition and key smaller parties in Parliament.”

Mr Green said that unless the two schemes are better aligned with respect to pre-1990 forestry, he believed forestry investors would prefer the more pro-forestry environment in Australia over that in New Zealand.