New Reference Group to Improve Emissions Trading Scheme and Cut Costs for Forestry Sector

Todd McClay Launches Initiative to Address Excessive Costs in ETS Registry, Aiming to Restore Confidence and Support Emissions Reductions.

Forestry Minister Todd McClay has announced the creation of a Forestry Sector Reference Group to enhance transparency, cut costs, and drive better outcomes from New Zealand’s Forestry Emissions Trading Scheme (ETS) Registry.

“We are committed to working alongside the forestry sector to improve the ETS registry and address the concerns raised by forest owners,” McClay stated. “This group will help us rebuild confidence in the system and reduce operational costs, which have been a significant burden on participants."

Reducing Costs for Forestry Participants

The decision to form the Reference Group follows an independent review of the operational costs of the Forestry ETS Register, which was commissioned earlier this year. One major concern highlighted by forest owners is the annual levy of $30.25 per hectare imposed by the previous Labour government.

“I agree with the forestry sector – this cost is unreasonable,” McClay said. “The establishment of the Reference Group is part of our response to bring down costs and improve the efficiency of the system.”

In a move to provide immediate relief, the Government has cancelled the 2023/24 annual charge, which forest owners had been required to pay for participation in the ETS Registry.

Addressing Shortcomings and Restoring Confidence

The independent report, which McClay has made public today, highlights several areas where the current system has fallen short of both government and sector expectations. While many of the issues identified in the report have already been addressed, the new Reference Group will play a critical role in prioritizing further improvements, reducing unnecessary regulatory duplication, and ensuring that operational costs are kept under control.

"The 4,000-plus forestry participants in New Zealand deserve a system they can trust," McClay emphasized. "While there are costs associated with running the registry, forest owners should not be paying for mistakes made by the last government."

New Levy for 2024/25

McClay also announced that the Government will shortly begin consultations on a new Forestry ETS Registry Levy for the 2024/25 financial year. This levy is expected to reflect the system improvements that have been implemented and aim to further reduce costs for participants.

Role of Forestry in Emissions Reduction and Economic Growth

Forestry plays a crucial role in helping New Zealand meet its international emissions reduction obligations. By participating in the ETS, forest owners contribute to the country’s efforts to lower greenhouse gas emissions. McClay reiterated that by cutting the costs and improving the management of the ETS Registry, the Government aims to support the forestry sector's important role in growing New Zealand's economy while addressing climate change.

The new Forestry Sector Reference Group is expected to commence its work immediately, engaging with stakeholders and providing valuable insights to help guide the government's future actions on the ETS.