Permanent forestry
From 1 January 2023, "permanent forestry" is part of the ETS. This is for post-1989 forests that will not be clear-felled. They must remain in permanent forestry for at least 50 years.
You must use the "stock change" accounting method for permanent forests. With stock change accounting, you earn units as a forest grows and its carbon storage increases. You need to pay New Zealand units (NZUs, or units) back when you harvest the forest.
To earn units, you must submit emissions returns. Emissions returns must be submitted at the end of every mandatory emissions return period. These are usually 5 years long. There are other instances when you must submit an emissions return, such as after a change in land ownership.
The units that you earn will be tagged in the register as coming from a permanent forest. You can store or trade units through the New Zealand Emissions Trading Register (NZETR).
Learn more about stock change accounting
Find out when and how to submit emissions returns
Login to the New Zealand Emissions Trading Register
Restrictions on clear-felling permanent forest
There are specific rules around clear-felling for permanent forest land.
Limited clearing of permanent forests is allowed. After clearance, more than 30% tree crown cover must remain in each hectare of forest.
You must account for the emissions from this clearance in your next emissions return.
If you clear-fell or deforest within the 50-year period
If you clear-fell permanent forest, you:
- must pay units for the emissions from the area that was clear-felled
- may face a penalty based on the value of the clear-felled forest.
If you deforest or change the land use of permanent forest, you:
- must pay units to the government, up to the amount you've earned for that area of land
- may face a penalty based on the emissions from deforesting and the carbon price.
These unit payments and penalties may not apply if we believe:
- the clearing or deforestation was beyond your control, and
- you couldn’t have prevented it.
If you clear-fell or deforest land in permanent forestry, you must let us know as soon as practically possible. Contact us at forestryets@mpi.govt.nz
How the ETS defines deforestation
Penalties for clear-felling or deforesting land in permanent forestry
From 1 January 2023, penalties apply for post-1989 forest land in permanent forestry if you:
- clear-fell the land so that 30% or less crown cover remains per hectare, or
- deforest any part of the land.
Find out more about fines for clear-felling or deforesting land in permanent forestry
Removing land from the ETS within the 50-year period
Areas of permanent forest may be removed from the ETS before the 50-year period ends. This can only be done with approval from the Minister of Climate Change. The minister must be satisfied certain conditions are met.
You will need to pay units to the government for the removed area.
Moving land from standard forestry to permanent forestry
You can apply to move post-1989 forest land from standard forestry to permanent forestry.
After land moves from standard forestry to permanent forestry, you must complete an emissions return.
Apply to move registered post-1989 forest land from standard to permanent forestry [PDF, 307 KB]
Options after the 50-year period ends
When the 50-year permanent forest period ends, you have 3 options.
Option 1 – Keep the forest land in permanent forestry for another 25 years
You can opt to keep your forest in permanent forestry for another 25 years. This means you will continue to earn units under stock change accounting.
If you stay in permanent forestry, you must choose between these 3 options again after 25 years.
Option 2 – Move to standard forestry with averaging accounting
You may choose to move your forest land to standard forestry with averaging accounting. With the averaging accounting method, you earn units based on the average age of your forest. The average age is the age that it's expected to reach its average long-term carbon storage. Each forest type has its own average age, under the ETS legislation.
As your forest will be at least 50 years old by this time, it will likely already have passed its average age. You will have earned more units than you are entitled to for the forest under averaging accounting. This means you'll have to pay the difference between:
- the number of units you’ve earned, and
- the units you would have earned if it had been under averaging accounting the whole time.
Under averaging accounting, you can harvest your forest without paying units, as long as you replant.
Find out more about averaging accounting
Option 3 – Remove the land from the ETS
At the end of the 50 years, you may decide to remove your forest land from the ETS. If you remove land from the ETS, you must pay the "unit balance" of the land to the government. The unit balance is the net total of units earned for the forest land.
Find out more about removing land from the ETS
Permanent forestry has replaced the Permanent Forest Sink Initiative
The Permanent Forest Sink Initiative (PFSI) is closed. If you had a covenant in the PFSI, your land has been transferred into the ETS. If you did not indicate whether you preferred standard or permanent forestry, your land has been transferred into permanent forestry.
If you have any questions about the PFSI, email pfsi@mpi.govt.nz
