Did you know that the tree species you choose can have a significant impact on the number of carbon credits you can earn under New Zealand's Emissions Trading Scheme (ETS)?
While pines currently earn more credits than indigenous forest, it's crucial to select the right tree species for your land. Not only do you want to maximise carbon sequestration rates, you also want to ensure you’re not going to experience forest loss and can reap other benefits from your forests (such as increased biodiversity, or stabilisation of land). This post is designed to help you make an informed decision on which trees to plant or support regeneration, so you can get the most out of your forest registration.
Don't miss out on the potential benefits of choosing the right tree species for your land!
What makes a tree eligible for the ETS?
In New Zealand, trees must reach a minimum height of five metres to be eligible for carbon credits under the Emissions Trading Scheme (ETS). While eligibility depends on other factors, such as location, age, and canopy cover (to name a few), this means that many native and exotic species are eligible for carbon credits. You can learn more on the additional criteria in this post.
Not all trees are eligible for registration in the Emissions Trading Scheme (ETS).
These non-eligible trees include fruit trees (such as apples and kiwis), crops, horticulture species, non-woody species like flax and toetoe, native nursery crops such as gorse, and certain invasive species and tree weeds.
If you are considering planting trees for carbon credits, we recommend that you check out our CarbonCurious series to learn more about the requirements for the ETS.
What’s the right tree species for your land?
When it comes to planting trees for carbon credits, not all trees are created equal. You need to choose the right ones to make sure you get the most out of your investment. However, planting trees, or supporting forest regeneration, isn't just about earning carbon credits. By leaving behind a forest, we shape the landscape for generations to come, making a meaningful contribution to the future.
While the trees you choose will determine how much carbon you can sequester and how much money you can make, there are a wide range of factors that can impact on the success of your forest. Aspects such as soil type, climate, land stability, wildlife, and the suitability of the tree species are just some of the practical considerations, while values and priorities can impact on land management. When all these dimensions align, planting trees becomes a fulfilling and purposeful act that can leave a lasting legacy, both in removing carbon and improving the land.
To qualify for carbon credits, your forest must reach certain benchmarks, including 30% canopy cover and a height of 5 metres within a reasonable timeframe.
It's essential to select the right species if you want to maximise your carbon income, while also experiencing the peripheral benefits a successful forest can offer.
A planting specialist, such as Restore Native, will be able to advise you on the best trees to plant in your area and work with you on a planting plan.
Calculating your credits
The number of carbon credits your forest can earn depends on the tree species you select, so it's important to consider their carbon sequestration potential.
However, the calculation method for credits also takes into account the size of the registered forest, which means that the earning potential can vary depending on the amount of forest you choose to enter into the ETS.
Under 100ha
For forests under 100 hectares, MPI’s carbon tables are used to calculate the carbon stock of your forest to allocate the carbon credits (or NZUs). These tables are based on the average growth rate for each forest type across the country.
Over 100ha
For forests over 100 hectares, the Field Measurement Approach (FMA) is used to accurately calculate the carbon stock of your forest to allocate the carbon credits (or NZUs). With this approach there is a manual aspect to the calculations, if you register through CarbonCrop we take care of this for you.
What you could earn?
Carbon credits can offer a way for landholders to earn income by planting trees and helping to tackle climate change. But how much can you actually earn?
The amount depends on various factors, such as the type and size of your forest, the tree species you choose, and how well your forest is managed. Additionally, the value of carbon credits can change over time due to fluctuations in the carbon price. So while you may have assets in your name, their actual monetary worth could vary based on market prices and how much your credits are sold for.
For current information on the spot price of carbon credits in New Zealand, you can use platforms like Commtrade. If you're looking to sell your carbon credits, we would recommend using emsTradepoint.
Native forests
Planting indigenous forest is a long-term investment, as they often take longer to mature and start sequestering carbon than their exotic counterparts. They offer a range of benefits to the land and provide important ecological benefits.
However, it's important to note that the current Emissions Trading Scheme (ETS) does not distinguish between different types of indigenous species, so there is limited incentive to plant specific native tree species based on their sequestration abilities. With native forests, it may be prudent to work with a specialist nursery to identify the most suitable species for your land.
Here is an example of what a native forest with the following characteristics could earn
Establishment date: 2017
Forest area: 10ha
Species: Mixed Species Indigenous Forest
Canopy cover: 100%
Average estimated sequestration: 94 tonnes per year
Total estimated sequestration: 2,810 tonnes by 2050
The graph below demonstrates possible earnings from the carbon credits awarded from the above sequestration rates.
*Note: These numbers are not guaranteed as carbon prices fluctuate over time.
Exotic Hardwoods
Exotic hardwoods, such as eucalypts and Tasmanian blackwood, are known for their fast growth rates. These tree species can grow fairly quickly, but their establishment and management can be more complex, requiring more resources compared to other tree species.
Here is an example of what an exotic hardwood forest with the following characteristics could earn
Establishment date: 2022
Forest area: 10ha
Species: Exotic Hardwood
Canopy cover: 100%
Average estimated sequestration: 225 tonnes per year
Total estimated sequestration: 6,739 tonnes by 2050
The graph below demonstrates possible earnings from the carbon credits awarded from the above sequestration rates.
*Note: These numbers are not guaranteed as carbon prices fluctuate over time.
Pinus Radiata
Pines are known for their ability to sequester a significant amount of carbon in a relatively short period of time. They are also often favoured for their cost-effectiveness and ease of establishment, especially for production forestry.
Here is an example of what a pine forest with the following characteristics could earn:
Establishment date: 1996
Forest area: 10ha
Species: Pinus Radiata
Canopy cover: 100%
Average estimated sequestration: 214 tonnes per year
Total estimated sequestration: 6,420 tonnes by 2050
The graph below demonstrates possible earnings from the carbon credits awarded from the above sequestration rates.
*Note: These numbers are not guaranteed as carbon prices fluctuate over time.
How can I see what my forest is worth?
Discover what your forest is worth, for free. Apply for a CarbonCrop land assessment today to learn what your forest could be worth.