Recap: Forestry planted after 1 January 1990 on
land that was previously not in forest is eligible to be registered
as post-1989 forest and to receive carbon credits (New Zealand
Units or NZUs) for each year of growth and the carbon stored. It
potentially offers a financial incentive to afforestation as the
trees can earn NZUs which can then be sold. However the scheme is
complex and has failed to drive afforestation.
NZUs are now trading at or around $25 per unit, up from a low of
$1.70 in June 2013. This price point is driven by carbon emitters
(liquid fossil fuel, industrial processes, stationary energy and
waste sectors) who are required to purchase NZUs to account for
their emissions. However they have had a reasonably soft ride until
recently. For the first few years of the Emissions Trading Scheme
(ETS) they enjoyed a two for one deal (they only needed to
surrender one emission unit for every two tonnes of emissions).
This 2 for 1 deal has been phased out so
