You have probably heard the term '1BT', but what does it mean?
This is the government's project to encourage people to plant more trees.
But why should people do this? The reasons are actually rather compelling:
You may find that investing in forestry under the 1BT programme is a smart investment or land use option
Current timber and carbon prices provide favourable financial returns.
Carbon sequestration in trees provides early-term cashflow making project financing much easier.
Proposed “Averaging” in the Emissions Trading Scheme will increase the financial returns from carbon and lower the carbon liability risk.
Improved tree genetics and silviculture means more timber volume (better log grades) and more carbon.
Growing carbon on farms provides an offset for carbon prices/liabilities.
Forests on farms diversify income and increase financial resilience.
Forests reduce carbon footprints, soil erosion and nutrient leaching (especially N and P).
Forests increase water quality, species diversity and recreational opportunities.
And if all that wasn’t enough, the government has recently announced grants to assist with funding afforestation projects.
GRANTS AVAILABLE UNDER THE 1TB PROGRAMME
For mixed plantings of less than five hectares, at least one hectare of indigenous trees is required.
If you are planting Radiata pine, then you will not be able to register your forest in the ETS for 6 years from, and including, the year of planting.
WANT TO KNOW MORE? Call us today to arrange a no obligation discussion about how you can invest in forestry under the 1BT programme on 0508-1BTREE
There are many options and combinations of tree species and silviculture treatments that can be deployed to meet a range of land stewardship objectives. Different species can be planted within single catchments. Alternatively projects can be designed with built-in species succession. For example, indigenous (native) forest can form a long-term outcome for Manuka projects. Another good option could be to access the indigenous natural regeneration grant for retirement of sensitive head-water areas of catchments to reduce environment risk.
If another tree species is planted in the balance of the catchment there may be no need for expensive fencing. Don't feel constrained by the options presented here. They are only provided for illustrative purposes and can be modified to suit your needs or aspirations. PF Olsen can work with you to find tailored solutions for your particular land stewardship or investment objectives.
PF Olsen can
help you determine
the best tree species
*Grant less accumulated costs plus accumulated carbon and honey revenue
Cumulative Cashflow* ($/hectare)
WHAT ARE YOUR OPTIONS?
Another option not modelled here is Redwood -- Permanent. This would see cashflow from selling carbon continue after age 24 but the harvest revenue would be forgone. This would suit the environmentally sensitive parts of catchments such as National Environmental Standard (NES) red zone areas where harvesting could be too environmentally risky.
The financial summary table below provides some key financial outputs expected from five scenarios. These scenarios are based on "average" conditions in New Zealand in terms of site productivity and costs.
Carbon sequestration is based on the ETS look-up tables which are more conservative than the Forest Measurement Approach (FMA) which is used for projects of 100 hectares or greater. The cost of land is not included in the analysis.
HOW PF OLSEN CAN ASSIST YOU TO ASSESS THIS OPPORTUNITY...
Accurately map your land and assess areas that are eligible to earn carbon from forestry.
Assess implications of the National Environmental Standard - Plantation Forests (NES-PF) to forestry.
Undertake a feasibility study of proposed forestry projects showing cashflow, internal rate of return and net present value of the project.
Provide project planning, advisory and risk management services.
Assist with defining project objectives, be they financial, environmental, social or aesthetic, or a combination of all four.
Establish and manage the forests on your behalf.
HOW DOES CARBON WORK?
Trees store carbon (NZUs) and reduce green house gasses in the atmosphere, this is known as carbon sequestration. This assists New Zealand in meeting its emission reduction targets. Different tree species sequester carbon at different rates. Due to its fast growth rate, Radiata pine sequesters carbon very rapidly.
Under current Emission Trading Scheme (ETS) rules, if you harvest your forest, you have to account for the carbon released into the atmosphere.
Under this scenario you can only sell sequestered carbon up to the "safe" level, or risk having to buy carbon back at harvest time at a much higher price. However, expected changes to the ETS, once enacted, will recognise the average carbon sequestered over multiple forest rotations, allowing the forest owner to sell much more carbon (averaging) and not incur a carbon liability -- see chart below.
Radiata Pine carbon sequestration scenarios (NZUs/hectare)
The information provided herein does not constitute professional advice and should not be used for project planning, approval or implementation purposes. It represents forward-looking scenarios relevant at the time of preparation and relevant to what is considered "average" conditions in New Zealand. PF Olsen accepts no liability whatsoever in relation to any action or inaction taken in respect to the information herein. Independent professional advice is recommended for any afforestation project contemplated.
Proposed changes to the ETS could see a marked increase in carbon revenue
WANT HELP NAVIGATING THE 1BT FUNDING SCHEME?
CONTACT US ON 0508-1BTREE OR
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