ETS - Time To Act For Pre-1990 Trees

Polson Higgs Partner Noel Walton says the Emissions Trading Scheme (ETS) is up and running for anyone with a forest or woodlot of more than one hectare. Apart from shelter belts, any other area planted in trees should be considered to see whether you qualify to apply for free credits under the ETS, or if you should take some other action. For trees planted before 1990, you have three options: Do nothing (and this might be a problem at clearing/ harvesting time). Register to claim free credits (registration coming up June 2010). Claim an exemption from ETS if you had under 50ha of trees at 1 January 1990. You should be asking questions such as: How many hectares of trees have I got? In 1990 and now. What will I do with the land at clearing/harvest time? Will I clear more than 2ha of pre-1990 trees and convert to another land use?

Noel Walton, full-time business adviser and part-time lumberjack on his land in North Canterbury.

The answers to these and other questions will help you decide what to do. If you have trees and choose to do nothing, the ETS will still apply to you. This outcome could result in you being liable for deforestation charges levied at clearing/harvest time. These charges could be $15,000 per ha, significantly more than the trees will yield at current prices. "I have recently helped a forest owner analyse the options. We concluded they should register to claim free ETS credits estimated to yield around $1200 per hectare at current prices," Noel said. Registration of land which is best suited to forestry which was in trees at 1990 gives access to free credits under ETS (provided the plan is to replant trees at harvest time). These credits can then be sold with no recourse provided you replant at harvest time. Other outcomes might include: Claim an exemption in June 2010 from the ETS if you had fewer than 50ha in trees at 1990 and you want to convert the land to another use at some stage. There is no guarantee the exemption will be granted. Deforest up to 2ha of pre-1990 trees as of right at any time. Do nothing - which will not cost you anything provided you don't fell the pre-1990 trees or you replant any such areas when you fell the trees. But if you are planning to replant, you are missing an opportunity to do that and collect free credits which you can turn into tax-free cash. So ensure you consider your options for your pre-1990 trees, and be ready to register under the ETS or claim exemptions from the ETS in June 2010. To claim free credits or exemptions for pre- 1990 trees, Polson Higgs can help put you in touch with expert advisers. Contacts: Noel Walton on 03 372 0353 or noel.walton@ph.co.nz Tony Wilson on 03 474 9729 or tony.wilson@ph.co.nz or contact your usual Polson Higgs adviser.

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Last updated: 11th June 2010 | 12:35 pm