Which tree species earn the most carbon credits?
Comparing natives, pines and other exotic tree species under New Zealand’s Emissions Trading Scheme (ETS)
Tree species is an important topic for anyone registering forest for carbon credits. It’s also a controversial topic, given that pines currently earn 2-3 times more credits than indigenous forest under the ETS. Forests sequester carbon at different rates, so your choice of tree species will influence how many carbon credits you can claim.
If you're considering planting trees or supporting regeneration, we hope this post will help you understand some of the key differences between tree species and make the right decision for your land. We’ll cover:
Estimate your carbon credits
At CarbonCrop we offer a free land assessment to landholders across Aotearoa and can forecast carbon income for future tree planting. Just let us know your plans and we’ll customise your assessment.
Which tree species are eligible for carbon credits?
As a rule, most trees which can reach at least five metres in height will be eligible for carbon credits in New Zealand. This includes most native forest species, including manuka and kanuka, as well as a wide range of exotic trees, from willow to larch.
Trees that cannot be registered in the ETS currently include:
Fruit trees such as apples and kiwis
Cropping and horticulture species
Non-woody species like flax and toetoe
Native nursery crops such as gorse
Certain invasive species and tree weeds
Also be aware that for some sites that are very exposed, shrubby species such as manuka may struggle to reach the 5m height threshold.
Besides the height requirement, your forest must be able to reach 30% canopy cover within a reasonable time period. Different species have different canopy spans, so the number of trees required per hectare can vary tremendously. When planting trees we recommend factoring some tree loss into your planting calculations to ensure you can maintain 30% canopy cover over time, as planted forests typically experience 1% mortality every year.
You can learn more about our top 6 factors for eligible forest in the post: Is my Forest Eligible for ETS carbon credits?
If you are considering planting trees, CarbonCrop will provide a carbon forecast for what you can earn, and advise on the number of stems required per hectare to meet the 30% canopy cover requirement.
How to choose the right tree species
The act of planting trees - or supporting regeneration - may be one of the most significant acts of our lifetimes. It can be seen as part of kaitiakitanga. An act of guardianship and environmental protection. Long after we’re gone, the forests we leave behind will shape the landscape for future generations.
Rather than cutting straight to the carbon credits, it feels important to acknowledge the wide range of considerations which should inform this long-term decision. Not only must the trees be suitable in terms of soil and situation, but every landholder, family or trust must choose a land management approach which aligns with their particular values and priorities. Carbon is just one dimension after all.
Will the trees thrive?
Ensure that your choice of tree species will suit the climatic conditions, soil type and topography. If the forest is already established, ensure that it is healthy and growing well.
From a carbon forestry perspective, credits are awarded for every tonne of carbon sequestered, so unsuitable trees may jeopardise your carbon income. When registering land we must convince the regulator that your forest will reach 30% canopy cover and 5 metres in height within a reasonable time period.
Here are some examples of characteristics to consider:
If your land is prone to landslides or soil loss, choose species which support erosion prevention. Many landholders favour poplars, spaced at low-density, as the current ETS requirements for number of stems is low and can yield a large number of credits. Native regeneration may be a good choice here too.
At higher altitudes, snowfall can severely damage some tree species. If planting in an area which regularly receives snow, species like douglas fir may be a smart choice over pinus radiata. In fact, some parts of the South Island have the highest growth rates of douglas fir in the world.
Many of the most common trees such as pinus radiata and most eucalyptus species will struggle in ground that is very wet. For a commercial timber crop it may be worth considering wet ground specialists such as bald cypress or sitka spruce. Kahikatea is another great choice in swampy ground for those considering native forest.
Chalky, stony or sandy soil
Eucalypts can be particularly well suited to these conditions where other species, such as natives might struggle, especially if prolonged dry conditions are experienced when the trees are very young.
If you seek to continue grazing stock, consider choosing species which produce palatable foliage. Poplars are a very solid choice as they can be pollarded to make the foliage accessible to grazing animals. Many farmers have success with certain acacia species as well. It is common in Australia for sheep to ‘self-medicate’ by browsing on acacia foliage to control intestinal parasites.
Species such as douglas fir, larch and some pine species can pose a risk of wilding conifer spread. You must complete the Wilding Tree Risk Calculator when planting new forests or replanting with a conifer species not previously planted. If your score on the Risk Calculator is too high, then you will need resource consent to continue.
Some sites - and some exotic species - are particularly prone to forest fires or windfall. If risks are high, make forest resilience a priority. Insurance may also be worth considering.
Will wildlife thrive?
Supporting indigenous wildlife is a significant motivator for many landholders who register for carbon credits. At CarbonCrop we work with all kinds of different farms and forests, however the majority of our projects include areas of native regeneration.
We highly recommend taking time to understand the environmental impact of different tree species, including wildlife, habitat, biodiversity and water quality. Generally speaking, a variety of native species propagated from local seed sources will deliver optimal environmental outcomes.
Tip: If you’re keen to plant exotic trees, consider planting multiple tree species with different characteristics. The ETS allows for this, so why not mix it up?
Complex questions remain around species transition, and whether native species can regenerate under a canopy of pines. We plan to return to this question in future posts.
How will the local community respond?
Your forest has social, cultural and aesthetic implications too. Many rural communities understandably balk at the idea of ‘monoculture pine forests’ on their doorstep, especially if the land is currently used as productive farmland.
It rarely makes sense to plant out productive pasture, compared with reforesting marginal farmland, steep sites, or areas which are already regenerating.
Especially if you're new to the land, we recommend researching the local area and understanding historical land use. Find out which species thrive locally and how tree planting might impact local people.
How are carbon credits calculated?
Once you've got your short-list of suitable tree species, it's time to find out how many carbon credits they could earn. Here it's worth bearing in mind that the amount of land being registered will affect the way that carbon credits are calculated.
If registering under 100 hectares of forest, the ETS uses region-specific tables for pine forest and a national table for each of the other species to estimate average sequestration rates. These averages take into account your tree species, forest area and forest age.
If your registered area is over 100 ha, you must use the Field Measurement Approach (FMA) to accurately calculate your carbon sequestration. We take care of this if you choose to register through CarbonCrop.
For the purposes of this post, we've chosen to give an example area which falls well below the 100 ha threshold, in order to give you a ballpark guide to how different species would perform.
The good news for any lifestyle block owners out there: You only need one hectare of eligible forest to register for ETS carbon credits!
How many carbon credits could you earn from 10 hectares?
Let's imagine that you bought a plot of unforested land and planted out 10 ha in 2022. How many carbon credits would you get for pines vs exotic hardwood vs native forest?
We’ll share average returns through to 2050, however if the forest is still growing you would likely continue to earn credits after this point too. For simplicity, we’ll also assume the trees will thrive and that your land meets all the other ETS eligibility requirements!
Pines generate high short-term carbon yield and have a reputation for being relatively cheap and easy to establish.
Planted in 2022, 10 ha of pinus radiata could earn an average of around 221 credits per year through to 2050. If sold at a price of $65 per credit, this would equate to around $14,365 per year, on average.
The amount of carbon credits earned in a given year will vary as the trees grow. To illustrate this, take a look at the shape of this carbon sequestration chart for pines, borrowed from one of our land assessments. Notice the initial growth spurt, then a dip around the 10 year mark? This coincides with thinning operations that have been modelled into the growth rates for this species.
Exotic hardwoods also tend to grow rapidly. This category of trees includes eucalypts and tasmanian blackwood.
Planted in 2022, your 10 ha plot of exotic hardwoods could earn an average of around 204 credits per year through to 2050. If sold at a price of $65 per credit, this would equate to around $13,260 per year, on average.
As you’ll see from the shape of this example chart for exotic hardwood, carbon sequestration increases sharply initially, then falls steadily over time:
Indigenous forest takes longer to ramp up, when it comes to carbon sequestration. Despite the rich variety of native species, the ETS currently lumps all indigenous species together - from kanuka to kauri - which provides no incentive to plant particular types of native trees. Note however, that there are plans to redesign the lookup tables and this opens up the exciting possibility that faster growing native species will be recognised for greater rates of carbon sequestration.
Native planting can be expensive (depending on the species), yet tree planting may not be necessary for ETS registration if your land is already regenerating.
As things stand, if 10 ha of native forest was planted or started regenerating in 2022, it would earn around 76 credits a year on average, between now and 2050. If sold at a price of $65 per credit, this would equate to around $4,940 per year, on average. The following chart shows the slow, sustained build in carbon credits which is typical of native forest:
Will carbon credit policies change in the future?
At CarbonCrop we have faith that carbon credits will be around for decades to come, but we don’t yet know how New Zealand's Emissions Trading Scheme policies will evolve.
From a climate change perspective, we desperately need to remove carbon from the atmosphere as quickly as possible, which explains the current incentivisation of fast-growing exotic species which maximise short-term carbon sequestration. On the other hand, the long-term benefits of healthy native forest are substantial. Indigenous forest is slower to establish but continues sequestering carbon for a very long time. It supports native wildlife and biodiversity and tends to be more resilient to forest fires and weather events, compared with certain exotic species. Our advice to landholders:
Wherever possible, choose the kind of forest that you would like to be on your land in 50 years’ time.
Some people are calling on the regulator to re-evaluate how ETS carbon credits are awarded, to introduce more differentiation between tree species and incentivise landholders to prioritise native forest rather than exotic species.
At CarbonCrop we’re watching these developments closely and will keep our registered landholders informed of changes in ETS policy.
In the meantime, we hope this introduction to tree species and carbon credits will support your decision-making and if you have more questions, do let us know.
Considering registering for carbon credits?
If you own land in New Zealand, request our free Land Assessment to understand your eligibility for carbon credits.
If you're considering planting trees we will provide a customised quote for future planting - just leave us a message when you apply and one of our carbon account managers will follow-up.
CarbonCrop analyses your land remotely using aerial imagery and remote sensing technology. There's no charge and no commitment to proceed with ETS registration.