Trees are worth more than cows as carbon price skyrockets

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New Zealand’s carbon market is acting bizarre and some fear this may lead to the conversion of more farms to pine forests, writes Justin Giovannetti in The Bulletin.

The price of carbon in New Zealand is at an all-time high, which means planting pine trees will now make more money for farmers than raising sheep and beef. This is according to an Analysis of Interest warning that the country’s farmers, as well as its timber industry, are now facing the pressure of soaring carbon prices. The result could be that productive land currently used for livestock and timber is turned into forest plantations that absorb carbon emissions. Dairy production, as well as the cultivation of fruits and vegetables, is always more profitable than trees. Carbon farming, as it is sometimes called, is not a new idea, but the economy has changed dramatically in recent years.

Interest in tree planting is growing on the land. BusinessDesk reports that a carbon agriculture investment fund plans to spend $ 15 million to buy 1,500 hectares of land to plant pine trees. The group estimates they can create a New Zealand unit, which is the term for a ton of emissions, for between $ 20 and $ 25. These units were recently selling for around $ 65 on the emissions trading system, doubling in less than a year. The business proposition for carbon farms is simple: you make money selling the emissions credits and doing some forestry work in parallel to keep the money flowing.

Waiting period: a quick explanation of the emissions trading system. Many companies must have credit, purchased on ETS, for every tonne of emissions they create in a year. Called a cap-and-trade system in other countries, ETS is a marketplace where these credits are bought and traded. The number of credits that can exist is limited, which means that New Zealand’s overall emissions cannot exceed a certain level and the price of credits fluctuates according to demand.

A number of farm sales have taken place in recent months for tree conversions. A 20 square kilometer sheep and cattle farm on the South Island has been sold to an Austrian company that intends to cover most of its pine forest, reports the Otago Daily Times. Four other farms were sold in July to be converted into forests. Local leaders have called on the government to take a closer look at the sales as this is a fairly large land-use change that could be indefinite as pines take decades to mature. According to The Gisborne Herald, Maori landowners have shown a preference for an evolution towards native trees.

The whole idea is not without criticism. Some farm groups have been unhappy with a program that turns farmland into forests and the Climate Change Commission itself is not keen on the idea, as I reported in The Spinoff earlier this year. . In an opinion to the government, the commission said there should be more emphasis on planting native trees, which take centuries to grow, and only in areas that are not suitable for agriculture. However, he concluded that large-scale tree planting would not help us meet long-term climate goals, so we shouldn’t invest too much in it.

The country’s main mechanism for tackling climate change (for now) is the Emissions Trading System and it has acted a bit oddly in recent weeks. For starters, the price of carbon credits has skyrocketed. As Newsroom reports, an auction earlier this month saw the price polluters had to pay to buy credit for a ton of emissions cross an artificial cap set by the government. By going over $ 50, the government tried to flood the market with new credits to keep prices low. It didn’t quite work and the prices are over $ 60. The country will also have to find a way to reduce emissions in the future by 1.6 million tonnes, because these new credits have to come from somewhere.

New Zealand will face a push later this year to cut emissions. The United States and the European Union are preparing to reduce methane emissions by at least 30% by 2030, according to Newshub. The two will try to convince a number of countries to join a pact, including New Zealand. Methane is a powerful greenhouse gas, with a warming potential up to 34 times that of carbon dioxide. Gas is also a by-product of cows and is one of the main reasons New Zealand’s emissions have increased in recent years, with agriculture now accounting for almost half. Planting trees could reduce the country’s overall emissions in the short term, but it won’t help in the face of a methane pact from the rest of the world.


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