Forests play a vital role in New Zealand’s response to the climate emergency. They are also hugely significant to the NZ economy and to Māori, both culturally and economically.

Although exotic forestry helps reduce net emissions quickly and at low cost, there are likely to be significant trade-offs for the economy and environment in the long term. This includes changes in land use as landowners and investors seek higher returns by establishing permanent exotic forests as carbon prices increase.

On 1 January 2023, a new category will be introduced into the NZ ETS for permanent post-1989 forests which will not be clear-felled for a minimum of 50 years. It is anticipated that under current settings there will be a lot more permanent exotic forests (particularly Pinus radiata) planted under this category. There is also a risk that oversupply of forest offsets in the ETS could reduce the incentive for emitters to reduce gross emissions. The Government needs to ensure that land use incentives achieve the best outcomes for the environment, economy, and local communities, in the short, medium, and long term.

This discussion document outlines proposals to mitigate these risks and protect the wider New Zealand economy, while still addressing the climate crisis and supporting biodiversity.