IN WHAT might at first appear an unlikely alliance, fuel firm Gull is well down the track in its joint venture with Tokomaru Bay cattle farm Nuhiti Q in buying carbon credits generated through native re-plantings on the Emissions Trading Scheme (ETS) registered property.
Meantime, the East Coast native regeneration project was also helping preserve valued tribal land that might otherwise erode into the sea.
Gull chief executive Dave Bodger said the deal was about to enter into its second year with Gull buying 12,000 units of Nuhiti’s carbon credits valued at about $220,000 or $18 a unit on today’s carbon market
Buying carbon credits was now simply part of the cost of doing business for the fuel sector, which was heading towards 100% carbon neutrality.
“We started at 50% and have ramped up from there. At the present the cost of carbon per litre of fuel is 2.5-3.5c/litre and come January 1 another 0.5c/litre will take the sector to 83% carbon neutral.”
But to achieve that the sector required companies to buy carbon credits and Gull was making a concerted effort to try to source those credits as locally as possible.
Recent changes to ETS regulations also meant the much-disputed overseas carbon credits of dubious value from countries like the Ukraine would no longer be able to be used to offset emissions.
“We need the credits the same way you need toner in your printer cartridge, if you don’t have it you can’t operate, so why not commit to the local market?” Bodger said.
The Nuhiti Q block was in a district hit hard by Cyclone Bola in 1988 with the erosion-prone country still struggling to recover.
The property entered the ETS in 2012, now having 70ha planted in native forest. Income earned from the sale of the carbon credits had been re-invested in the property for fencing improvements across 500ha and protection of 8km of erosion-prone coast owned by iwi.
The property project was the focus of a three-year study looking at the potential of native forest regeneration for carbon farming.
It examined the impact of manuka honey income and the likely increase in carbon prices as the ETS adapted to Paris Accord commitments and the need to source carbon credits of a genuine nature.
“When our carbon broker came to us with the Nuhiti opportunity we thought it was great. They wanted surety from a buyer and we could give them that,” Bodger said.
He suspected the other fuel companies would also start to seek out such deals and their demand would be significantly greater than Gull’s.
He welcomed the decision by the Government to get rid of foreign carbon credits, bringing the focus more firmly onto domestic opportunities that would benefit local economies like the East Coast.
Motu Economic and Public Policy Research was leading the study.
Agriculture and resource economist David Fleming said he hoped to better understand how landowners and carbon credit buyers could best partner up.
He and his colleagues were also looking at how a company like Air New Zealand, as a large carbon emitter, could enjoy a win-win arrangement with iwi landowners.
“They need to buy the units anyway and there is a large area of Maori land out there. The idea is to link both up. There is a very good story there for them to tell if they do.”
NIWA research supported the potential for tracts of similar land to play a valuable, dual role in restoring local ecosystems and soaking up carbon emissions.
Work by scientists had determined forest and other land areas might be absorbing up to 60% more carbon dioxide than had been previously calculated, with much of it occurring in native forests.
NIWA scientist Kay Steinkamp said indications were there was a large carbon “sink” somewhere in the South Island, with the areas most responsible for it dominated by indigenous forests.
The discovery surprised scientists who generally associated large carbon uptakes with younger, growth-phase forests.
The inclusion of a North Island carbon dioxide observing site and modelling improvements aimed to help paint a clear picture for scientists of the ability of North Island forests to also absorb carbon.
