Provincial Growth Fund turns green

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The Government’s forestry moves announced yesterday are really what the billion trees programme is all about --- climate change.

While Forestry Minister Shane Jones likes to talk about its potential to get the “nephs off the couch” and into work, the Labour-led Government clearly sees it as a green tool to soak up carbon emissions.

And as if to further reinforce its "green" credentials Jones announced yesterday that he expects two-thirds of another $240 million worth of plantings announced yesterday to be native trees.

Up until now, plantings have been roughly an even balance between pine and native trees.

Jones hinted that this might not have been his first choice with a reference to having been pressured by his colleagues to agree to this.

But the Government is also making it more attractive for farmers and others to take part in the scheme.

Last night Jones and Climate Change Minister James Shaw announced plans to change the Emissions Trading Scheme to make it easier for plantation forest owners to access carbon credits which form the financial basis of the new forest plantings.

And POLITIK understands work is underway on a Cabinet paper to open up the scheme to farmers who have less than the current limit of 200 ha of land to put into forest.

That limit is now expected to move to 5 ha.

The overall goal is to have one million hectares in forestry and with each hectare capable of sequestering up to 25 tonnes of carbon a year.

That area of land should be sufficient to sequester the 83 million tonnes of carbon that New Zealand needs to sequester to meet its promises under the Paris Agreement.

The moves announced yesterday put a whole new face on the Provincial Growth Fund and the proposal to use it to finance the planting of one billion trees by 2028  and make it much more of a green fund.

“The effective impact of this programme has the potential to be far-reaching and will make sure that we are achieving a number of this Government's goals and priorities," Prime Minister Jacinda Ardern told her weekly press conference.

“The programme will, for instance, deliver sustainable jobs.

“It will also contribute to reducing climate change.

"It is, as Minister Jones has said before, a form of nation-building."

Jones announced yesterday that the Government Cabinet had approved the creation of a new $118 million grants programme and $120 million partnership fund to get more trees in the ground and provide training and employment opportunities over the next three years.

Jones said the priority areas for the grants would be for the so-called surge regions; Northland, East Coast, Hawkes Bay, Manawatu-Whanganui and the West Coast of the South Island.

But his first problem may be finding the workers that the scheme was originally intended to be designed for.

Jones said the forest industry wanted to bring in 500 overseas workers, but the Government wanted them to be done by New Zealand workers.

“The challenge, which we will not shy away from, is that these are not jobs that you can live in South Auckland to do.

“So it’s a matter of transitioning a lot of the people, who in the Maori case may be descendants of the owners, to go into the provinces, train them up and relocate them to work in those areas.”

But it will be the climate change contribution from the trees programme that will ultimately be the most significant.

In effect, the Government is offering to subsidise farm owners, particularly those with low-grade marginal hill country land, to switch from farming livestock to trees.

Once the trees are planted, using the grants announced yesterday, the farmers will get income provided by cashing in Emission Trading Units which they will be allocated according to how many trees they plant.

Over a 25-year lifespan, an exotic Pinus Radiata plantation forest could generate between 20 and 30 tonnes of carbon credits per hectare per year.

In another move announced yesterday Climate Change Minister James Shaw and Jones announced that they were considering putting a cap on the total number of Emission Trading Units (ETUs) that the Government would issue each year and were considering that rather than having a market where prices jumped around they were proposing that the units be issued at a standard price of $125 each.

Both moves would eliminate the possiblity of a sudden plunge in ETU prices and thus increase certainty in the market.

But using the $25 figure, a hectare of pine forest could return as much, if not slightly more, than running sheep and cattle on the same hills.

It is no secret in the Beehive and in Wellington policy circles that the Government wants to see a lot of marginal hill country turned into forest, and the main reason for that is to meet climate change targets.

“The Government is committed to making sure the ETS delivers a stable, reliable carbon price that provides the incentive to reduce emissions and is in step with carbon prices in other countries,” Shaw said.

"Growth in the forestry sector is potentially one of New Zealand's largest and most effective options for offsetting emissions. The ETS needs to encourage new forests and discourage deforestation,” said Jones.  

“We’re putting forward a number of improvements to help foresters make informed and confident decisions about how to maximise the carbon stored in their forests over the long term.”

Though Jones explained that so far the provincial Growth Fund has committed half a billion dollars to forestry, that money is spread over three years he is sure to face questions in Parliament about how the Fund has seemingly morphed from being a job creation vehicle into a climate change mitigation vehicle.

But he was unapologetic about the spending yesterday.

“I don’t think anyone ever doubted that to enable the Crown to lead a one billion tree outcome it was going to cost a power of dough.”

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