Carbon offsets

This page describes the basics of planting trees to earn carbon credits in the ETS, and provides links to more comprehensive information.

Trees for offsetting carbon

Planting trees can help ‘offset’ emissions from your farm business. As trees grow, they store carbon in trunks, branches, leaves, and roots. When trees are cut down, much of the carbon leaves the forest as logs to be turned into wood products. The remaining carbon is released back into the atmosphere over time as stumps, roots and woody debris decay. If a forest is replanted after harvest, the overall carbon stock will continue to decline for a short time before the second rotation growth overtakes the decay from the first rotation. If a forest is converted into a different land use (i.e. deforested), all carbon is released back into the atmosphere over time. So, planting trees may permanently reduce emissions, but it can go a long way in the short term.

However, the trees you plant must meet specific criteria to be 'counted', and their carbon sequestration rates may vary. It's crucial to understand all financial implications before starting any offsetting programmes.

The ETS

The ETS is the Government’s main tool for reducing greenhouse gas emissions in New Zealand and meeting our international and domestic targets. It puts a price on greenhouse gas emissions in the form of New Zealand Units (NZU), with one NZU representing one metric tonne of carbon dioxide. Sectors that absorb greenhouse gases, such as forestry, can earn and trade NZUs, while industries that emit greenhouse gases must purchase and surrender NZUs to the Government.

All sectors of New Zealand’s economy, apart from agriculture, pay for their emissions through their ETS surrender obligations. The agriculture sector reports emissions in the ETS but does not have surrender obligations. This means carbon dioxide is the only gas currently priced.

For more information, visit New Zealand Emissions Trading Scheme and the DairyNZ page on climate legislation.

Forests in the ETS

The ETS provides a way for owners of newer forests, that meet specific criteria to be rewarded for the carbon dioxide stored through photosynthesis by their forests as they grow. If you own forest land or have rights in forest land, you may also have ETS obligations.

The ETS has a specific definition of what a forest is, known as the ‘forest land definition’. This is to differentiate between land managed as a forest and other trees in the landscape. For a forest to qualify to earn carbon credits in the ETS, it needs to be:

• At least 1 hectare or more of forest species (a ‘forest species’ can grow to at least 5 metres in height at maturity where it is located, and can be planted or regenerated).
• Able to achieve tree canopy cover of at least 30% in each hectare at maturity.
• Able to achieve an average tree canopy width of at least 30 metres at maturity.

The current definition excludes shelterbelts (unless they are wider than 30 metres), fruit trees and nut crops, and forests that existed before 1990. Small forest plantings and riparian strips are also excluded. However, the Government is looking at on-farm sequestration of this kind as part of its development of a farm-level pricing mechanism for agricultural greenhouse gas emissions.

Forest land is classified differently in the ETS, depending on when it was first established. Forests established before 1990 are considered 'baseline' while forests established after this date are considered 'new' forest. This creates two types of forests in the ETS, ‘pre-1990’ and ‘post 1989’. Different rules apply to each type of forest.

Dairy farmers who own exotic or indigenous forests first established after 31 December 1989 may be able to register their forests in the ETS to earn NZUs. If you’re thinking about applying to register land in the ETS, you’ll need to work out if your forest is eligible. For more information on forests in the ETS, see visit the Ministry for Primary Industries website.

For more general information on the benefits of planting trees, see the Government’s Canopy website.