Selling carbon credits and de-forestation

Last month we talked about how you could use your forestry land to earn carbon credits, but how do you calculate carbon credits, what happens when you want to sell those carbon credits, and what happens when you clear your forest land?

Calculating carbon credits

Each year you’ll need to submit emissions returns to report on the amount of carbon in your forest land. To calculate the amount of carbon in your forest land, you need to know what species the forest is as different tree species remove carbon from the atmosphere at different rates. It also differs depending on the region the forest land is in. There are carbon tables that help you do the calculations and will tell you how many tonnes of carbon (carbon dioxide) are in forest land per hectare, based on the characteristics of the forest.

An example, one hectare of five-year-old Pinus radiata can range from 15-77 tonnes of carbon dioxide per hectare, depending on the region the trees are in. When the trees are ten years old, the range is 125-219 tonnes of carbon dioxide per hectare.

When it’s time to sell your carbon credits

Ensure you're registered with the New Zealand ETS. This is necessary for participating in the market and managing your carbon credits. Each carbon credit represents the reduction or removal of one metric ton of carbon dioxide (or its equivalent) from the atmosphere. They can be purchased to offset emissions produced by various activities. Your credits are stored in your NZETR account and are called ‘units’. You can sell your units through the carbon market – anyone who has an NZETR account can buy and sell units. Currently, each carbon unit is worth $53.17.

What happens when you clear your forest land?

When forest is cleared, the carbon it stores is released which contributes to the country’s emissions. You may need to pay units for these emissions, depending on the kind of forest land you have and whether it's in the ETS.

Pre-1990 forest land

If you deforest pre-1990 forest land, you must pay 1 New Zealand Unit (NZU or unit) for every tonne of carbon dioxide released by the deforestation (also known as surrendering units). There are exceptions if the land is exempt, or you have an approved application to offset it by planting another forest elsewhere.

Post-1989 forest land

If you have post-1989 forest land, you must pay units if you deforest the land and/or remove it from the ETS. Depending on your method of carbon accounting, you may need to pay units if you clear the forest, even if you replant it (or it regenerates).

For more information on the Emissions Trading Scheme see https://www.mpi.govt.nz/forestry/forestry-in-the-emissions-trading-scheme/