Forestry's temporary adverse event exemption

From rising sea levels to more frequent (and extreme) weather events, erosion and drought, the adverse effects from climate change on forests are many and varied. But recent NZ ETS rule changes around temporary adverse events came just in time to avoid exacerbating the impact of 2023’s extreme weather for some foresters whose trees were lost. Amendments which took effect on 1 January 2023 through the Climate Change (Forestry) Regulations 2022, mean they have avoided potentially significant emissions liabilities they could otherwise have faced under the old rules, allowing a chance to replant and recover.

With the prospect of climate change driving the increasing severity and frequency of such events, however, the question remains – will more changes be needed?

Post-1989 forest land and adverse events

Under the Climate Change Response Act 2002 (CCRA), a distinction is drawn between “pre-1990 forest land” and “post1989 forest land”, with each category of forest land treated differently under the NZ ETS. The recent changes only affect post-1989 forest land.

Post-1989 forest land identified in mapped “carbon accounting areas” (being designated areas of post-1989 forest land, greater than a hectare, of which the participant determines the size and boundaries) is subject to the NZ ETS. Registration of post-1989 forest land under the NZ ETS gives rise to the right to be awarded NZUs by the Crown associated with the carbon sequestration of the forest. Conversely, it also imposes an obligation to surrender NZUs to the Crown for any reduction in the carbon stock of a forest.

A new exemption

Since 1 January, if all or part of a registered post-1989 forest is cleared or lost as a result of a “temporary adverse event” such as windthrow, flood, naturally-caused fire, slips, or drought, the landowner may now apply for an exemption from emissions liabilities.

Under this exemption, the affected part of the forest will not earn any more NZUs until it reaches the carbon stock it was at before the adverse event. Similarly, there is no obligation to surrender NZUs during the suspension period. The landowner must replant the forest within four years. Once it has reached carbon sequestration equivalence with the affected part of the forest on the day before the adverse event occurred, the suspension will cease.