In the lead up to the Finance and Expenditure Select Committee hearings on the Climate Change (Emissions Trading and Renewable Preference) Bill this week (starting 2 April), many industry associations and businesses are getting increasingly nervous about the cost of the proposed legislation to consumers and the economy if the Bill is passed without significant amendment.

Last week, the Petroleum Exploration and Production Association released a report that concluded the thermal ban in the Bill would result in significant increases in the cost of electricity.

(http://www.pepanz.org.nz/documents/PEPANZ%20Media%20Release.doc)

In response Minister, David Parker says industry lobbies are using “scare tactics” to support their own interests.

Catherine Beard, Executive Director of the Greenhouse Policy Coalition, which represents many large industrials on climate change policy issues, says this sort of response is just a tactic to divert people’s attention away from the strong analysis in a range of reports released in the last 6 months calling for a cautious approach to the introduction of emissions trading.

“Many industry associations have gone on record over the last 6 months with concerns about the lack of adequate analysis and the poor consultation process behind the introduction of this Bill, which is where these sorts of issues should have been addressed and the analysis undertaken. If the government is not prepared to look at all the costs and benefits of a particular policy with rigour, then the private sector is forced to pay experts to fill in the gaps”.

Other recent research highlighting economic risks and solutions includes:

Emissions Trading Scheme for New Zealand – Report to Business NZ, 26 March 2007 (businessnz.org.nz)

We’re Right Behind You: a proposed New Zealand approach to emissions reduction. The New Zealand Institute, October 2007/2, David Skilling/ Danielle Boven (www.nzinstitute.org.nz)

The New Zealand Emissions Trading Scheme: How do we make it work? Report by Castalia for theGreenhouse Policy Coalition November 2007 – available at www.greenhousepolicy.org.nz

Carbon Mitigation Scenarios, analysis by Infometrics, 5 Feb 2008 for the NZ Business Roundtable and Petroleum Exploration and Production Association (www.nzbr.org.nz)

EU Price Update

The Dec08 firmed to 21.84 Euro mark in recent trading

Forward prices for 2009 are 22.41 Euro and for 2012 are 22.30 Euro! Peak volumes dropped with the largest trades being around 6mt whereas in January trading volume spiked to nearly 12mt.

Trading range for the last 30 days has been 20.63-22.48

Forestry – a Key Weapon against Global Warming?

Tree-planting activities - reforestation and afforestation - have come in for criticism in recent times, giving rise to a debate over whether planting new forests in order to combat climate change is worthwhile, and whether it can be accurately reflected in a system of economic credits.

The criticisms focus on:

·         the validity and accuracy of methods used to calculate the climate change benefits,

·         the ethics of ‘offsetting’, that is, compensating for emissions rather than eliminating them at source, and

·         the social and environmental impacts of plantations.

Carbon Positive believes strongly that tree-planting can and will make a valuable contribution to the fight against global climate change, as well as providing a host of wider environmental and socio-economic benefits. We further believe that carbon markets in their various forms are key to providing an effective means of financing tree-planting activities on the scale needed to make a difference globally.

This article seeks to support this view by outlining the many benefits of reforestation projects, and responding to some of the most frequent criticisms made of them.

There are indeed a number of pitfalls to be avoided, by both project developers and buyers of the carbon credits which finance climate-related plantation projects.

But these are not by and large fundamental to the planting of trees, and can largely be avoided through responsible practices and adherence to appropriate standards.

 So what are the benefits of planting trees?

Planting trees is hugely beneficial to the world in the face of accelerating climate change. There is now a strong international scientific consensus that human activity is causing global warming. A substantial reduction in the planet’s forest cover over recent centuries is a major contributor to this climatic change.

As trees grow they absorb carbon dioxide (CO2), the main 'greenhouse gas' responsible for global warming, thereby reducing the concentration of this gas in the atmosphere. Forests are referred to as 'carbon sinks' for this function of CO2 absorption and storage. Planting trees to bolster carbon sink area, an example of what’s termed ‘carbon sequestration’, helps offset the loss of native forests and fights global warming.

 At a local level, tree-planting on deforested lands creates further environmental benefits. Forests play a vital role in regulating water supplies, helping to minimise both water shortages in times of drought and damaging floods in heavy rains. Trees also reduce soil erosion, thereby conserving soil quality upstream and water quality downstream. Forests also provide habitats for a wide array of plant and animal species, a number of which are threatened with extinction by deforestation.

Socio-economic benefits of reforestation projects include direct employment, infrastructure development, skills-transfer and the creation of markets for related products and services. Certain plantation forest models may also provide local communities with additional products such as fuel-wood, fruit, nuts and herbs, and opportunities for agricultural activities (inter-cropping, livestock grazing) within the forest area.

Finally, sustainable forestry can provide additional climate change and local environmental benefits in the longer term. Once harvested, the wood from the trees may be used either as a source of renewable energy, thereby reducing the use of fossil fuels, or for construction materials or furniture-making, thereby reducing deforestation elsewhere.