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Council eyes potential $1m of carbon credits

Opinion Piece

Gisborne District Council is looking to sell some of its carbon credits at a time when they are at their highest level for years.

The council owns some forests that were planted prior to 1990 and this land cannot be deforested without a significant penalty. It also has post-1989 forests on which credits must be surrendered if the stored carbon level drops.

After listening to a presentation last week, the finance and audit committee instructed the council chief executive to obtain the sale level for post-1989 forests and look at realising some of the pre-1990 credits. It appears the council has about $1 million it could realise.

Carbon credits have been a controversial topic in this district, with some pastoral farmers fearing they could lead to the district becoming a carbon sink for the rest of the country.

That fear fell along with the prices, which dropped as low as $2.50 in early 2013 — but the credits are now valuable again, worth just under $20 a unit.

There is one significant change, however. A landowner can now allow their property to revert to native vegetation or plant another species; they are not committed to pine trees.

The Pamoa Forest, a joint venture with Juken New Zealand, is nearing harvest while Gisborne Holdings Ltd is obtaining carbon credits from its Tauwhareparae forest holdings.

On the national scene, Green Party leader and Climate Change Minister James Shaw is reviewing the Emissions Trading Scheme and expects to establish a climate commission before Christmas. One of the things he will look at is the present $25 per tonne price cap which emitters pay for credits. Shaw has said he believes this should be raised.

Carbon prices are likely to remain high, at least in the short term, with foresters flush with cash from high log prices and reluctant to sell. Reportedly there are not many credits available now.

For the council, $1 million is not really a large sum. Would it be better to sit on its credits and hopefully watch prices go up?