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NZ may block overseas carbon credits
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 The number of international carbon credits coming into New Zealand could be cut. Collapsing European carbon prices have forced the price of New Zealand Units down to single digits, as local emitters meet their obligations under the Emissions Trading Scheme with cheap international credits.
But in briefing papers released last week, the Ministry for the Environment has raised concern about the impact that the purchase of international credits is having on the New Zealand carbon market and the economy.
“Because overseas abatement can be achieved at a lower cost than abatement in New Zealand, high levels of purchasing of international units are expected under the ETS to 2020,” the briefing says. This is expected to lead to “significant" offshore cash flows between 2015 and 2020.
“It is likely to be desirable to reduce levels of international purchasing under the ETS in the short term,” the briefing says. “Any mechanism to do so should be flexible enough to ensure that New Zealand could quickly and efficiently adjust settings to deliver future international obligations, which may require use of international markets.
"This could be achieved by auctioning additional New Zealand Units to a cap set at an appropriate level of ambition. This would ensure that carbon prices in the ETS continue to be set by the market, but would significantly reduce offshore cash flows.”
The ministry says that the Government might also consider switching the alignment of the ETS away from the international Kyoto agreement to regional or bilateral agreements, especially with trading partners. Source: Carbon News 2012
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NZ Forestry Exports rise 13.9%
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Total forestry export earnings increased NZ$32.7 million (3.0 percent) to NZ$1.1 billion in the September 2011 quarter. Export log earnings continue to be strong rising by $NZ77.2 million (25.8 percent) due to strong demand and high log prices, partially offset by a NZ$31.4 million (13.6 percent) fall in saw timber export earnings.
China continues to dominate New Zealand’s log export market, with volumes rising 32.6 percent, to a record high of 2.2 million cubic metres since the series began in 1988. There are, however, indications in recent months that this demand is easing.
Total roundwood removals were up 395 000 cubic metres (6.2 percent) to an estimated 6.8 million cubic metres this quarter.
Sawn timber production fell 113 000 cubic metres over the quarter due to a combination of high log prices, weak domestic demand and a high exchange rate.
The annual value of forestry exports increased 13.9 percent to NZ$4.6 billion over the year ending 30 September 2011, due to continued high demand for logs from China. Forestry accounted for 10.1 percent of total merchandise exports, compared with 10.0 percent in the year ending 30 September 2010.
The September 2011 quarter NZ Forestry Production and Trade Statistical Release is now available on MAF's website. Key highlights from the September 2011 quarter: (compared with the September 2011 quarter, unless otherwise stated) The statistical release provides a comprehensive review of New Zealand's domestic production and overseas trade of forestry products on a quarterly basis. The full report can be found on the MAF website at www.maf.govt.nz
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Log prices have bounced around over the past couple of months with many saying that this is the sort of behaviour we should expect to see in this market for the foreseeable future. There is still strong demand for New Zealand logs in China even as there are reports of slowing growth. However, the government is trying to cool the rampant property market by building more affordable housing. This is of course doing wonders for the demand for building materials such as timber.
Even with large volumes of logs coming out of the Pacific North West, New Zealand is remaining very strong in the Asian log market. Market share for New Zealand has slipped a little over recent months but volumes have increased and record volumes of logs are being exported to China from New Zealand each month.
January has seen another lift in the CFR price for logs in market. KS logs are now up to US$124/JASm³, KI logs are US$119/JAsm³ and A Grade logs are US$130/JASm³. This is a more substantial lift than seen last month.
China is well balanced heading into the Lunar New Year, off-take is down as expected but so are deliveries. This means port inventories in China are steady at around 2.5Mm³. 0 3Mm is the level that tipped the market over last time. A careful watch on how quickly these inventories grow over the CNY and the impact on the market it could have. It will set the market tone for the next 3-6 months.
India has a sufficient inventory and now needs this to drop before there will be any lift in demand. It’s expected that prices for February could also lift again but at the least should remain at current levels. However, once again the Chinese New Year could have an impact on the market and force inventories to go high.
Sea freight rates out of New Zealand have remained soft for the past month in-line with global freight prices. Over the past month shipping rates have plummeted with the Baltic Dry Index now below 1000 for the first time since January 2009. This index is an indication of global trade activity; low shipping rates indicate surplus shipping due to less demand for freight services globally.
The Agrifax Log Index is up again this month as prices between regions closed up slightly. While some regions experienced no change or even a drop in prices others had significant gains. There is a possibility that the lift in log prices this month could be undone next month should inventory levels in China swell over the Lunar New Year period. Exports out of the Pacific North West were up in December after a decrease in logs leaving this region in November. These December exports should reach markets in early January and coincide with the holiday period in China.
For more detailed reports contact NZX Agrifax at www.nzxagri.com/agrifax
The Agrifax log price data is a weighted average of prices collected each month from a range of New Zealand log buyers and sellers. Log prices shown in the table will vary regionally and by supplier and should only be used to provide a broad trend of log price movements.
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Nick Smith Speech: ETS Performance and Outlook
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Opportunities for NZ in Australia's carbon scheme - 26 July 2011
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The Australian government has just announced its Clean Energy Future Plan. This package includes a carbon tax on the 500 biggest emitting companies as well as billions to be invested in renewable energy, energy efficiency and agricultural emission reductions. Households are to be compensated for likely cost increases.
It has proved incredibly controversial across the Tasman in much the same way as New Zealand's Emissions Trading Scheme did a few years back. Yet the sky did not fall in as a result of the ETS and it is now an established part of doing business here.
Our ETS, which is criticised by many for being too soft, is actually more comprehensive than the Australian scheme which exempts many sectors including transport fuels for households and small businesses.
If the Australian government succeeds in getting its measures all passed into law, it could have a positive impact on New Zealand in three main ways.
First, the Australian carbon tax, an interim measure with a price of A$23 per tonne, will convert to a full ETS in 2015. This gives New Zealand's ETS greater credibility. If there was any prospect of our ETS being abandoned, it has now gone and the markets have responded accordingly: there has been a reported upsurge in sales of forest credits as ETS confidence builds.
Secondly, at the point that both Australia and New Zealand have similar schemes, there could be opportunities for linking them to create a larger, joined-up market for carbon trading across the Tasman. Later we might link with the European ETS and other schemes around the world. This would be a big boost not just to those providing forest sinks but also to our burgeoning clean tech sector - those who sell low carbon technologies that achieve real emission reductions.
Thirdly, the Australian Scheme includes an A$10 billion Clean Energy Finance Corporation, an A$3.2 billion Renewable Energy Agency and an A$200 million Clean Technology Innovation Program. Together these are expected to stimulate A$100 billion of investment in the low carbon economy. It's not clear the extent to which New Zealand companies might be able to directly access those funds but at least there will be opportunities for businesses providing specialised advice: New Zealand has expertise in areas like geothermal power and agricultural emissions.
Transitioning to a low carbon economy will be a huge challenge for Australia. More than 80% of its electricity is coal-powered. In contrast, New Zealand generates 70% of its power from renewable sources. With all that investment Australia expects to get to just 40% renewable by 2050; New Zealand in that time frame could get close to 100%.
The key difference between the two approaches to addressing climate change is that Australia is not just relying on a carbon price. It has also proposed a massive investment in complementary policies. New Zealand could learn from this approach and put in place more incentives for businesses to invest in science, innovation and clean energy solutions. The government's Green Growth Advisory Group will hopefully address some of these policy opportunities when it finally reports later this year.
Whatever governments may do, businesses are taking the initiative themselves and providing leadership. BusinessNZ has set up its Sustainable Business program. A group of prominent New Zealand business people has kicked off Pure Advantage, an initiative to foster green growth. Hundreds of clever start-up ventures are already greening our economy.
There are some anomalies remaining. Solid Energy is expanding coal production and products in the absence of any viable carbon capture and storage scheme and full ETS coverage. Genesis Energy still runs the Huntly Power Station on coal even though it can run on gas. Agriculture accounts for 50% of our emissions and is still not in the ETS. The price signal from our scheme is half what it should be so the incentive for renewables is weak. There are many exemptions. And although we agreed to prepare one, New Zealand still doesn't have a Low Carbon Development Plan showing how we intend to get to the 2050 reduction target.
So while both Australia and New Zealand have started the job they still have work to do. It will take the combined effort of governments and business over many decades to avoid the worst excesses of climate change.
Article taken from nzherald.co.nz.
Written by Gary Taylor
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Impact of soaring Chinese demand for logs and lumber - 18 July 2011
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China’s total wood demand is anticipated to keep growing from 250 million m3 in 2010 to 350 million m3 by 2015 (a conservative projected growth rate of 8% per year), possibly moving as high as 450 million m3 by 2020. The projected wood deficit (or the role of imports) is expected to grow from 100 million m3 to at least 150 million m3 in 2015 and up to 200 million m3 in 2020 (roundwood equivalent).
Some interesting trends about China were presented at the WOOD MARKETS’ Global Wood Products Conference in May that helped explain the reasons for the projected dramatic growth of wood consumption in China, including the following:
• From 2005 to 2025, the McKinsey Global Institute estimates that China’s urban population will grow by 350 million people (an amount larger than today’s entire U.S. population);
• The urbanization movement in the next 15 years may lead to the building of 40 billion square feet of floor space in five million buildings, of which 50,000 are expected to be skyscrapers.
• By 2025, China is expected to have 221 cities with populations in excess of one million people (Europe has 35 today);
• China’s middle class is projected to double in the next 10 years (increasing by 350 million people);
• A new 100 square metre (1,000 square foot) apartment in Beijing can cost 30 times an average salary. The government has introduced policies to reduce housing-price increases to a maximum of 8%–10% per year.
• The Chinese government has announced that it will build 36 million affordable (low-income) housing units by 2015.
Chinese Customs’ statistics for Q1/11 indicate that log imports increased by 23% and lumber imports by 58.3% versus the first quarter of 2010. If this trend continues, lumber imports could rise to over 22 million m3 (9.3 billion bf net) in 2011 compared to 14.7 million m3 (6.2 billion bf, net) in 2010. At this rate of increase, there is potential for China to become the world’s largest importer of sawn lumber in 2011, surpassing the U.S.!
Source: International Wood Markets Group, www.woodmarkets.com
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New Zealand Log Prices - June 2011
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Prices in the market for New Zealand radiata logs have moved downwards this month. Inventory levels in China have swelled. Record numbers of logs have entered Chinese ports in the past three to four months and more are expected to arrive as Russia and North America approach peak production. New Zealand has also exported record volumes into the Chinese market in the first part of this year.
In-market (CFR) log prices in China have slipped more than US$10/JASm3 as a result. A snapshot for June has the price of a KS log at US$144/JASm3 and a KI log at US$140/JASm3. These prices are expected to continue falling through the New Zealand winter. But the last quarter of 2011 should see a return to improving prices Activity in China will again lift towards the end of the year coinciding with supply from Russia and North America undergoing seasonal decline.
There will also be a clearer picture of what effect rebuilding activity in Japan is likely to have on demand by this time. Demand from India continues to grow and Korean demand remains steady.
The Agrifax Log Price Index, which measures returns from the whole forest, has recorded its second monthly fall in June. The index fell NZ$4/t back towards NZ$90/t. The unpruned component of the index recorded large falls. The pruned and pulp components remained mostly unchanged.
North Island
• Domestic: Grades are steady to up $5/t.
• Export: Grades are down NZ$8/t to NZ$12/t.
South Island
• Domestic: Prices are steady to up NZ$5/t.
• Export: Prices are down NZ$10/t to NZ$15/t.
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Pine preference for wind turbines - 24 June 2011
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Windflow Technology, have designed wind turbines where the blades are made of laminated New Zealand Pinus radiata. A publicly listed New Zealand based wind turbine design and manufacturing company, Windflow Technology is focused on production in NZ, product innovation and export opportunities.
The company’s two-blade 500kW turbine, the Windflow 500, is much lighter than competing three-bladed turbines, which makes it less expensive to build. The wind turbine combines three advanced technologies:
• The combination of those three features means the design is very cost-effective and robust.
• Windflow’s patented torque limiting gearbox, which reduces fatigue on the supporting structure;
• Two bladed pitch-teeter rotor Synchronous generator which connects the turbine directly on-line to the grid.
Where wood is used in the product – the blades are made of laminated New Zealand Pinus radiata. Other wind turbine manufacturers overseas use various components for wind turbine blades, but a composite is most common, usually carbon fibre, glass fibre and the like. Wood is not very commonly used.
When Windflow designed its blade, it was necessary to make strong, light-weight blades and preferably using sustainable materials. It was decided to test Pinus radiata to see if it would be strong enough. Many test coupons, four test blades and many thousands of test hours later, the Windflow Technology blade has been certified by Lloyd’s Register as meeting the requirements of IEC Technical Specification TS61400-23 for a design life of twenty years in high wind and high turbulence conditions.
Each blade is sixteen metres long, two metres wide at the root with an all-up weight of approximately 900 kg. The veneers are rotary peeled from pruned logs of Pinus radiata, and are supplied dried to 10% moisture. There are two veneer thicknesses, 6.25 and 3.2 mm, both with a tolerance of +/-4%. The veneers are laid up as two halves in moulds, joined together and finished with an epoxy urethane paint.
The wood veneers are supplied by Carter Holt Harvey, and the blades are manufactured by Windflow subsidiary WindBlades. Main testing was done by the University of Canterbury in Christchurch and IRL in Auckland. Both Windflow Technology and WindBlades have ISO9001 certification and both have been audited by Lloyd’s Register to ensure their manufacturing meets additional IEC requirements for wind turbines.
Source: Timber Design Society Journal
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Industry hopes to unlock carbon dollars in lumber - 17 June 2011
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The international forestry and wood products industry is working on the detail of a proposal to have the carbon in wood products recognised in international carbon accounting rules. Under the Kyoto Protocol which expires at the end of 2012, harvested logs are deemed to be converted to carbon dioxide at the moment of harvest – a rule that fails to recognise the carbon that is locked up in wood and paper products, often for many decades.
FOA chief executive David Rhodes says New Zealand and Australia have been lobbying with considerable success at successive United Nations climate change negotiations to have better forestry rules included in whatever replaces Kyoto. Details of how those rules might look and how to get them adopted at the United Nations climate change negotiations in Durban at the end of the year were major topics at a meeting held in Montebello, Canada, recently.
The International Council of Forest and Paper Associations’ meeting was held in conjunction with the UN FAO Advisory Committee on Paper and Wood Products. The FAO will soon complete a major report on the important role sustainable forestry will play in the creation of low-carbon economies.
Mr Rhodes, who is a member of both bodies, says forestry waste and tree crops grown specifically for fuel will be increasingly important sources of renewable energy. Indeed, renewable energy products have the potential to be a new income stream for the pulp and paper industry as it comes out of recession.
Following a roundtable meeting of forest industry CEOs from around the world, co-chair Brad Thorlakson said the wood processing industry was now more competitive and “significantly transformed” in the wake of the global economic downturn. There has also been increased globalisation of trade, the emergence of new markets and a movement toward greatly improved environmental performance.
“These are key factors that have led to a return to strength of the industry’s core product lines of pulp, paper and lumber.” At the ICFPA meeting Mr Rhodes profiled efforts by the New Zealand Paper Forum which concurrently launched a stewardship scheme to position paper as a renewable product of choice.
Forum members include major NZ manufacturers and distributors of paper and paper products, print companies and associated groups. The scheme involves measuring and benchmarking recovery and recycling rates; developing a best practice guide for the sector; and educating buyers and users of paper in good environmental practice.
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Another Record Month for NZ Exports - 27 May 2011
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New Zealand log exports for March were over 1.3 million cubic metres and set another record. The previous monthly high was recorded in December 2010 at just over 1.09 million cubic metres. The Chinese market soaked up the majority of the increase, accounting for 66% of total exports for March. The other major market to record a year-on-year increase in volume was India. Compared to a year ago, Korea and Japan recorded declines in volume for the March quarter. The volume of logs shipped to Korea was down 6% and shipments to Japan were down 17%.
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Fonterra Confirms Payout Increase - 24 May 2011
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Email from: Henry van der Heyden [mailto:Henry.vanderHeyden@mail.fonterra.com]
Hi,
- Confirmed 2010/11 season forecast Milk Price of $7.50kgMS at Board meeting today.
- Distributable Profit forecast now 50 – 60c/share. Up 10 cents.
- Dividend still forecast to be 25 – 30c/share.
- Profit forecast includes one-offs (capital profits + tax credits/debits).
- Board’s dividend policy is paying out 65 – 75% of underlying profit (adjusted for one-offs), not total profit. This was not made clear to farmers last year. Appreciate that caused some concern.
- More information on Fencepost.
Talk soon,
Henry
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New RISI Study Forecasts China's Timber Supply Deficit to Increase by 55% by 2015 - 20 April 2011
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BOSTON, April 19, 2011 /PRNewswire/ -- RISI, the leading information provider for the global forest products industry, today reported that China's timber supply deficit (its imports of logs and the roundwood equivalent of imports of primary products like lumber, wood panels, woodchips and pulp) will jump from 107 million cubic meters in 2009 to 182 million cubic meters in 2015. This timber dependency forecast is included in a recently published Special Market Analysis Study: China's Timber Supply Outlook, 2011-2015. This report will be an invaluable resource for producers of lumber and wood panels and timberland owners as they gauge how increased Chinese demand for timber will affect their businesses in the short and longer term. This study will provide an integrated overview and analysis of the prospects for China's rapidly developing forest products industry, based on its need for imported raw material and its ability to increase domestic timber supplies. No other report currently provides such a synthesis of product and fiber markets.
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Forestry - Russian Log Export Tax benefits New Zealand - 17 March 2011
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Since the Russian government imposed a 25% (min. €15/m3) softwood log export tax on April 1, 2008, Russian log exports have decreased dramatically. Russian log exports decreased from a peak of 51 million m3 in 2006 to about 20 million m3 in 2009 and 2010 (-59%). Major Russian log importers such as Finland, the Baltics, Germany, South Korea and Japan have almost halted Russian log imports during the last four years (from about 30 million m3 in 2005 to only five to six million m3 in both 2009 and 2010).
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Carbon - Carbon Forestry overview under ETS - 17 August 2010
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Timberland has long been recognised as a stable investment with solid returns over time. By ratifying the Kyoto Protocol, the New Zealand Government offered the New Zealand forestry a huge opportunity to diversify and increase income from their forests.
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Carbon - Glossary of Kyoto and Carbon Terms - 17 Auguest 2010
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Assigned Amount Unit. Allowances for carbon emissions allocated to developed countries up to their target level under the Kyoto Protocol. These allowances are tradable under Kyoto's international emission trading mechanisms in place from 2008 to 2012. Each AAU equates to one tonne of CO2e. .
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Forestry - Forestry worldwide Outlook Supply v demand and China - 2 August 2010
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Forestry is a sunrise industry. Forestry industry is built upon the foundation of environmental protection and sustainable development. It constantly provides renewable resources and is important to the regulation of mental and physical health of human beings. Timber is widely used in areas such as construction, furniture and paper manufacturing. Driven by the rapid economic expansion of China and emerging countries, global demand for timber is feverish as a result of surging requirements for construction, furniture and paper all over the world.
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Forestry - Seeing the Forest for its Hedge - 20 July 2010
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For decades, some university endowments, pension funds and other big investors have put part of their money to work in the woods. They've bought large tracts of timberland, viewing them as an asset class separate from stocks, bonds and other forms of real estate, The New York Times's Tim Grat writes....
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Forestry - Global Sawlog Prices Up - 14 June 2010
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In the first quarter of 2010, the Global Sawlog Price Index (GSPI) reached US$76.77/m3, the highest level in over a year, according to the Wood Resource Quarterly. Much of the increase has been the result of a wearker US dollar, but sawlog costs have also gone up in local currencies in many markets, including Finland, Sweden, Germany, Latvia, Russia and New Zealand.
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Forestry - FOA release June 1st 2010
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Perfect storm brewing for forestry. A perfect storm may be brewing for the forest sector says Forest Owners cheif executive David Rhodes. On his return this week from a world forest and wood products conference in Tokyo he said the balance of international supply and demand appeared to be changing in favour of the owners of forest plantations.
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Forestry - Forestry Bulletin - May 2010
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Rodnet decision evens playing field including forestry are subject to environmental protection rules governing earthworks, vegetation removal and modification of water courses. In the LPR and ECR sub-zones these rules are more restrictive than they are in the rural zone generally.
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