Quarterly Newsletter: Autumn 2023

Forest360 News – May 2023

In this newsletter, you will find a silviculture roundup from our Forestry team; an update on the carbon price and the ETS from our Land Use team, and our popular Market Update on the domestic and export log market.

FORESTRY

The lack of any kind of enjoyable hot summer has had impacts for the Forest360 Harvesting team but is quite the opposite for the Forestry team. Usually, we are trying to get through large thinning programs whilst managing high fire risk, something we have not had to deal with this “summer”. An incredible amount of silviculture work has been completed, with up to 14 contract crews working at once for periods in the last few months. It has been a great feeling to complete some large-scale silviculture operations with their final thin, and handing the forest back to the owners, knowing all they have to do now is sit back and wait.

Whilst this work has been underway our team has been flat stick preparing for a very large planting season which will commence mid-May. With over 8000ha to establish, there has been a lot of work with desiccation spraying, track upgrades, and pest management. The relentless wet weather offers some benefits leading into the planting season with the ground already saturated and ready for trees once the temps drop a bit further. Many clients have requested starting planting early; however, the wet weather has put the brakes on this. While the ground may be wet enough, the high moisture and lack of sunlight hours this summer has played havoc at most tree nurseries throughout the North Island; as slow growth and increased fungal issues delayed nursery operations, which require dry ground.

Regardless of all of this, the jobs are prepped, the team is primed and there is a very large supply of planting labour available that should make for a productive and smooth flowing planting season. If you have a requirement for thinning and pruning operations in 2024, the next few months is the time to talk to us about having your trees assessed and added to the pipeline for next summer.

LAND USE & EMISSIONS TRADING SCHEME (ETS)

NZU Market

She has been a roller coaster on the NZU pricing front. The government NZU auction budget released at the end of last year generated widespread and vocal concern with Cabinet’s decision on pricing parameters landing far from the Climate Change Commission’s (CCC) recommendations. This is bluntly highlighted in the new advisory report released by the Climate Change Commission in March of this year.

The carbon market took the government’s decision at the end of last year as a signal that support for the ETS was waning which resulted in a sharp drop in price from over $85/NZU in late 2022 to a low of $49.50/NZU. Price has since rebounded to $52/NZU, on writing.

We have also seen the first failed auction in March 2023 where the confidential reserve price was not met by enough bids, so no units were sold. This occurred with a review on the direction of the ETS, and a review on ETS forest cost recovery, along with the failed launch of the new Forestry ETS online administration portal (Tupu-ake). These factors have all contributed to reduced confidence in the market.

Moreover, the failed auction has caused 4.75 million NZUs to not go into circulation until the next government auction in June 2023; so it is an interesting quarter to watch.

Mandatory Emission Return (MER)

If you are a Forest360 ETS client and you have not heard from us regarding the Mandatory Emissions Return (MER), or you have not submitted our online MER form we require to complete your emissions return, please email us immediately at: admin@forest360.nz

This is the return to wash up years 2018-2022 of carbon gain and loss. Delays with the introduction of the new Te Uru Rakau – MPI (TUR) online platform mean that if you wish to remain compliant, we need to hear from you as soon as possible.

Tupu-ake – MPI new online platform

Functionality is still not available to submit new ETS applications or add new planting to existing registrations. If you are considering an application this year, Te Uru Rakau have advised that they will have an update on the system functionality in July or August.

Please contact us in July so we can start to compile the details for these applications.

Staff updates

We have some exciting changes in our Land Use and ETS team. Michelle McCabe will be on Maternity Leave from May, and we are lucky to have Amy Smith joining the team as the new Team Leader. Amy joins us with a wealth of knowledge on the ETS – she was in the original ETS team at the Ministry of Primary Industries (MPI) and was recently a Team Leader within the ETS Operations and Compliance teams at Te Uru Rakau (MPI). We also welcome Grace Vilsone as an ETS Administrator, based in our Masterton office.

Please continue to direct all general Land Use enquires to the admin@forest360.nz inbox or call 0800 366 700.

You can view our entire team on our website here.