Thursday, July 28, 2005

The stopgap solution II

The other day I commented on Winston Peters' plan to solve our Kyoto problems by planting more trees. It's a stopgap solution, in that you only get a one-off hit to your carbon balance, but it is a way of buying time to allow for technological change and serious emissions reduction. The downside is that in order to keep the credit, the land-use change must be permanant - the trees must never be cut down (or at least, logged sustainably, rather than clearfelled). If it is not, the credit is zeroed out, and you are no better off than before.

One thing I wasn't sure of was whether Winston's numbers added up - so I did some digging. Winston is proposing planting an extra ten million trees a year for the next ten years. Plantation forest is normally planted at a density of 2000 trees per hectare and later thinned, so Winston's proposal works out to planting an extra 5000 hectares per year. The data on sinks in the Climate Change Office's estimated first commitment period carbon balance suggests that an increase of 10,000 hectares per year of forest planting will result in an extra 3.4 Megatonnes CO2-equivalent being sequestered (assuming radiata pine; the models on this seem to be a little sketchy). So Winston's proposal would save us 1.7 Mt CO2-equivalent over the first commitment period.

That same report projects a first commitment period shortfall of 36.2 Mt CO2-equivalent, so Winston is only solving around 5% of the problem. Still, it does show us what we need to do. If we increased plantings by 50,000 hectares per year (to a total of 60,000), our shortfall would halve. This would equate (until the end of the first commitment period) with a 33% increase in the size of our plantation forests, or an 8.6% increase in New Zealand's total forest cover: a fairly significant change.

Unfortunately, its not economic to do this simply for the carbon: the cost of planting and maintaining a forest is on the order of a couple of thousand dollars a hectare, while the saving in carbon credits from that hectare would be worth less than $650 (at the current estimated carbon price of $15 / ton; it's less if you use Treasury's estimate of $6 / ton). OTOH, this provides a powerful incentive for the government to get involved in commercial sustainable forestry again; they'd get the usual financial return plus any saving on carbon taxes into the bargain. It also suggests that financial incentives aimed at raising the commercial planting rate (currently at around 10 - 15,000 hectates per year, down from its more normal 40,000) would be worthwhile. One way of doing this would be a carbon subsidy, paid at a relatively high rate to forest owners who commit to sustainable forestry, and a far lower one (based on the expected value for the time bought by that one-off hit) to other operators. And on the gripping hand, if carbon prices rise from their current $41 / ton, planting solely for the carbon looks like a distinctly viable proposition, and one the government should pursue.


There is of course the related issue of run-off. Dairy farms result, if unchecked, in large amounts of nitrogenous material (like cow poo) running into any adjoining rivers, lakes and estuaries. Creating a mess - which it typically falls on the taxpayer to clean up. (e.g. Rotorua lakes, Raglan).

Forests not only don't pollute like that, they absorb pollution.

So it would make sense for some sort of scheme to encourage forestry rather than dairying on coastal and lakeside land.

Posted by Rich : 7/28/2005 03:26:00 PM

Assuming the system works and kyoto doesnt fall over (which it will but it might take some time) carbon prices will probably go really high as petrol/transport becomes a higher and higher proportion of each persons spend (forcing down food and accomidation and other such things).

This is because as NZ is well aware energy usage and petrol and so forth are fairly price insensitive.

Poor people probably get burnt a bit worse by that

Posted by Anonymous : 7/29/2005 12:21:00 AM