How will the deadline for the Mandatory Emissions Return Period 2018-2022 affect you?
This post is intended for landholders who wish to earn carbon credits under the emissions trading scheme (ETS) but haven’t yet registered their forest.
Missing the April 30th deadline won’t stop most people from registering forests and earning carbon credits in the future. However, it may mean that you miss out on backdated carbon credits from the period 2018-2022. There are also special implications for certain forest types, such as second rotation exotic forestry blocks.
We’ll answer three key questions:
If this is the first you’ve heard about the ETS deadline, you can find more background in our previous blog post and video.
What is the ETS deadline?
Emissions Trading Scheme (ETS) reporting is broken into Mandatory Emissions Return Periods. When you successfully register a forest for carbon credits, you’re only entitled to claim for carbon sequestered within the current return period.
As we’re coming to the end of the return period 2018-2022, forests which aren't registered in 2022 will only be able to earn carbon credits from 2023 onwards.
You might guess that the deadline to submit applications would be the end of December 2022, but the regulator has now announced an effective deadline of April 30th 2022.
Here’s an excerpt from its Sustainable Forestry Bulletin, Friday March 18th:
'Te Uru Rākau – New Zealand Forest Service is experiencing a significant increase in the number of applications to register post-1989 forest land. This is driven by the high price of New Zealand Units (NZUs) and the current mandatory emissions return (MER) period ending on 31 December 2022. ...given the incoming rate of applications, we expect to be able to finalise processing of all complete applications received by 30 April 2022 before the end of the current MER period. However, this will depend on the accuracy, volume and complexity of the applications that are yet to be received. We encourage you to take care to ensure your applications have all supporting information and meet the requirements – such as the Geospatial Mapping Information Standard – and are lodged with us as soon as possible. Please note we cannot provide the same level of certainty for applications received after this date, but we will do our absolute best to finalise all processing.’
At CarbonCrop we’re treating this as a ‘soft deadline’ because the regulator didn’t make any firm guarantees either way. This means that:
If you make the April deadline, you’re not 100% guaranteed to be processed.
If you miss the April deadline, there’s still a chance you will be processed in 2022.
Together with partners, CarbonCrop is calling for an extension to the deadline, so that as many people as possible can register their forests in 2022 and benefit from backdated carbon credits. We’re also advocating for a fast-track system to prioritise native forest applications, which would increase the chance of success for landholders with native regeneration. In essence: there’s still hope this deadline will be extended.
How will the ETS deadline affect your carbon credits?
Let’s go through the implications for landholders in different circumstances.
If you submit an application to register your forest to MPI before 30th April 2022:
You have an excellent chance of being processed before the end of the year.
If your registration is successful in 2022 you will be entitled to claim carbon credits from 2018 onwards.
If registering production forest, you can choose whether to register under Stock Change or Averaging accounting (see our blog post on Stock Change and Averaging)
If you submit after 30th April 2022:
Your application may still be processed by the regulator before the end of the year, so don’t lose hope!
If your forest is successfully registered before the end of 2022, you can claim carbon credits from 2018 onwards. If not, your forest may be registered in 2023.
If your forest is registered in 2023 instead of 2022:
Your forest will earn carbon credits for the carbon reporting period starting in 2023, provided that it keeps growing and sequestering carbon. You won’t be able to claim any backdated credits from the previous period.
Eligible exotic forests will be registered under Averaging or Permanent accounting, rather than Stock Change (again, read more here).
You can deregister at any time if you decide the ETS is not for you.
In most cases it still makes good financial sense to apply for the ETS, even if your forest isn’t approved until 2023. Most forests will continue to earn carbon credits for years to come - and for young native regeneration or recently planted trees, the impact will be minimal.
Sadly, missing out on registration in 2022 will be a deal-breaker for a small group of landholders – for instance:
If your forest is nearing maturity you may lose out on a substantial number of credits and decide that future returns are not sufficiently attractive to merit registration. If you think this might apply to you, CarbonCrop provides a carbon forecast as part of our free land assessment, which will help you understand your future earnings and support your decision-making.
If you have mature first rotation exotic forest or second rotation exotic forest and intend to harvest in future, you may not be able to claim units once registered due to changing ETS regulations.
What does the deadline mean for CarbonCrop customers?
As you can imagine, we’re experiencing very high volumes of enquiries at the moment, so have been forced to make some tough calls.
In this section we’ll explain our response to the deadline announcement and how we’re working to maximise the number of landholders successfully registered in 2022.
Here’s how we’re approaching the deadline at CarbonCrop:
1. Prioritising submissions for contracted customers
If you’ve already signed up as a CarbonCrop customer (as of Sunday 27th March), we’re committed to submitting your application before the deadline. Please help us during the submission process by promptly filling out forms and providing supporting evidence. If we work together, we’re confident we can submit your application prior to 30th April 2022.
2. Pausing new land assessments in April
You can still apply for a free CarbonCrop land assessment online, but you may have to wait longer than usual. In order to focus resources on landholders who are ready to submit their applications, we’re pausing delivery of new land assessments for a few weeks. We’re really sorry about the delay. Please keep submitting your assessment requests – our team is determined to get back to you as soon as we possibly can.
3. Continuing to register land after April 30th
We’re actively pushing for the deadline to be extended and will continue submitting ETS forest registrations long after the deadline has passed. Hopefully a number of these applications stand a decent chance of being processed in 2022, although others will not be rubber stamped by the regulator until 2023.
These policies are subject to further developments and guidance from MPI. Please keep an eye out for CarbonCrop email updates - and make sure we’re not going to your spam folder!
What have you got to lose?
Instead of charging upfront fees for our services, CarbonCrop receives a small percentage of your carbon credits, which gives us a strong shared incentive to maximise successful submissions. Plainly put, if your forest isn’t earning credits, we won’t get paid either!
If CarbonCrop submits the application on your behalf, and your forest misses the 2022 reporting period, remember that you’re free to change your mind. Provided that you give CarbonCrop sufficient notice, we can deregister your forest from the ETS before claiming any credits.
You will be assigned a CarbonCrop Account Manager when we conduct your land assessment, who can answer any questions about your obligations under the ETS, as well as CarbonCrop fees and policies.
Thanks for reading and bearing with us, as we try to help as many landholders as possible during this hectic period!
If you haven’t yet requested a land assessment, you can do so here. We’ll get back to you as soon as humanly possible (with a little help from artificial intelligence).
