What are your ETS obligations?
Updated: Dec 19, 2022
Once your registration for the ETS has been accepted, you have legal obligations if you would like to remain registered and continue to earn carbon credits.
Read on to discover more about your obligations once accepted into the ETS, or watch the replay here.
There are two groups of obligations: administrative and forest management. Administrative is all the things CarbonCrop does for you and Forest Management is your responsibility towards your forest.
On the administrative side, CarbonCrop does:
Monitoring of carbon stock changes - this is how much your forest has grown (or gone backwards, if something has happened). Our technology measures this and can tell if a tree has fallen over.
Emissions returns - this is the official reporting on changes in your forest and how much it has grown. Think of it like your annual income tax return, but you earn money rather than handing it over. Filing an Emissions Return is how you earn carbon credits and there are two types: Mandatory Emissions Return (MER) and Voluntary Emissions Return (VER). A MER must be filed at the end of a Mandatory Emissions Return Period (usually five years, we’re coming up to the end of the 2018 - 2022 one now). VERs can be filed each year. If you’re a CarbonCrop customer, we do this for you every year. No Emissions Return - no carbon credits to sell.
Monitoring changes in ETS legislation - we’ll help you keep on top of changes in policy and legislation, and understand how they might impact you. One less thing for you to keep track of.
External Monitoring / Field Measurement Approach (FMA) - If you have over 100 ha registered in the ETS, you must do this. You set up plots in your forest, take measurements and report the data to MPI so they can keep track of the changes in carbon in your forest. If you’re a CarbonCrop customer, we do this for you.
Your obligations on the Forest Management side depend on which carbon accounting option you choose - Permanent or Averaging.
If you have a permanent forest you must make sure it keeps growing.
You must ensure your forest remains for at least 50 years, continuing to grow and sequester carbon.
Fencing and pest control may not be necessary, depending on your site. Your forest must be healthy to grow, so ask yourself: will my forest continue to grow healthily if I don’t do this? If the answer is no, then you should look at fencing and/or pest control. For example, keeping stock out of a new area of planting will stop the tender seedlings from being eaten and trampled.
You may do a small amount of clearance in permanent forests, but otherwise, permanent means permanent. The forest must remain there forever.
Rule of Thumb: If you have a young forest, support it - an older forest, protect it.
If you have an averaging forest, you have similar obligations to permanent but:
You can harvest as long as you replant to the same forest definition (it doesn't necessarily have to be to the same density or the same species).
If the forest is cleared permanently you must pay back the units and deregister your forest from the ETS.
These are your obligations specifically for the ETS. There may be other obligations for your forest depending on what region you are based in, like fire control.
Temporary Adverse Events
Things can happen that cause the trees to die - typically this is fire, wind, or a landslide. If this happens:
It must be reported to MPI - we will do this for you, you just have to let us know what’s happened and where.
If the event occurs after 1 Jan 2023, your credits are paused temporarily until the forest catches back up - you don’t need to pay them back, but you won’t receive any extra until your forest has grown back to the original point.
You must replant or regenerate - exotics need to be replanted, native can generally be left to regenerate (with some support if it’s a tricky site for growing).
If you have a 10-year-old forest that burns down, you won’t earn any new credits until that new forest is 10 years old.
What happens to my permanent forest after 50 years?
All permanent forests are registered for 50 years in the ETS. After that, you have some choices:
Keep your forest registered as permanent for another 25 years and keep earning carbon credits. Especially true if you have native forests, as these keep growing well over 50 years.
Change your forest registration from permanent to averaging. You only earn carbon credits under averaging up until the average age of your forest. For pines that’s 16 years old, and for native forest that’s 23 years old. Both these are less than 50 years, so you’ll have to give back enough carbon credits to get back to the average age.
Exit out of the ETS entirely. You’ll have to give back all the carbon credits you earned over that 50 years though.
Giving/paying back carbon credits is called ‘surrendering’. This is easy if you haven’t sold your carbon credits and they’re just sitting in your account. If you’ve sold your carbon credits, you have to purchase them on the open market to replace them.
Read more about what happens after 50 years here.
The upside of being a CarbonCrop customer is that we take most of this off your plate, and help you keep on top of the things only you can do to meet your ETS obligations. We’re trying to make earning carbon credits as simple as possible so that everyone has the opportunity to earn money from forests on their land.
CarbonCrop runs fortnightly webinars for those interested in learning more about carbon markets before making a decision. The first step is a free land assessment, so you know how much eligible forest you have, and what it’s worth. You can then make an informed decision.
It’s worth repeating that this is free. Find out what you’ve got here.