Successive governments have tinkered with the ETS, creating uncertainty and price volatility. NZU prices have swung from as low as $2 to as high as $86.

This instability makes it extremely difficult to plan and invest, whether you’re:

• An emitter considering significant capital expenditure to reduce your carbon
footprint, or:

• An industry providing solutions to help others mitigate emissions.

As one commentator observed some time ago;

One bone of contention has been around the volume of NZUs in the Government registry account and whether we have too many, or too few, NZUs to fulfil our domestic needs. This again has added to market uncertainty and the price volatility. I’ve been around the ETS introduction into the forestry market since the beginning. Over this time there have been claims made that [paraphrasing] ‘we don’t have enough NZUs to meet our domestic obligations and that buying them overseas will cost future generations billions’. Later this changed to ‘ we have too many NZUs in the registry account’. Recently we hear ‘we’re not entirely sure of the NZU stocks but will reduce the supply into the market through legislation’. In circa 2015, at a presentation from MPI, I asked them ‘of the total NZUs in the registry, how many are unencumbered and able to be traded?’ They didn’t know then and still don’t have any accurate data now. This clearly means that making policy without accurate information is likely to be fraught with latent flaws. My personal view is that we don’t have nearly as many tradeable units as the registry volume suggests, with a large percentage of units in the registry being unable to be traded due to liabilities attaching.

Beef + Lamb New Zealand argue that forestry is pushing farming out of New Zealand through large-scale conversion of quality pastoral land. There’s some truth in the numbers—but context matters.

• Between 2015 and 2019, about 21,000 ha of land was planted into production
forests.

• Between 2020 and 2024, that jumped to 234,000 ha—a big increase, which
supports their argument.

However, look at history:

• 1979–1983: 219,000 ha planted
• 1984–1988: 225,000 ha planted
• 1993–1997: a massive 368,000 ha planted

Yes, there were holes in legislation between 2020–2024 that allowed afforestation of good pastoral land. Normally, converting quality grazing land to forestry doesn’t stack up economically, as forestry simply won’t work at the value per hectare good pastoral land demands. Still, some poor decisions were made, but I don’t believe them to be on the scale Beef + Lamb present.

The current government has closed most of these loopholes to prevent good land moving from being put into forestry. Going forward, new forests can essentially only be planted on marginal land which is fundamentally unsuitable for grazing, which is far more sustainable and acceptable to the public. 

So, with agriculture accounting for nearly 50% of national emissions, the ETS was set to include farm emissions by 2025—but the current government pushed it back to 2030, citing cost concerns (NZ Herald). And fair enough, as what were farmers to really do to? Quickly respond, cull half their herds? We have many a ‘greenie’ farmer in New Zealand, but also some who aren’t so conscientious towards the environment. Perhaps the industry bodies might be better off taking a holistic view of the issues and work with the sector to solve the problems, as opposed to campaigning that forestry is the deathblow to their industry. I have dealt with farmers who utilised unproductive land on their farms and opted to plant a small part into forestry. I can’t recall any complaining about the cashflow that genuinely helped their business become [more] viable, while potentially also enjoying the enhancement to the land’s ecosystem.

It’s my preference to see marginal or steep hillside in trees than left in a bare erosion-prone state. Forests bring:

• Biodiversity and vibrant ecosystems
• Pest control programs
• Employment opportunities - preparation, planting, and maintenance of forests
• Economic benefits – additional income, spending into rural communities, pay taxes, contribute to our GDP and often improve land values.

If I’m walking, cycling, or running down the road (preferably downhill!), and a truck, bus, or car goes past belching black smoke or stinking of unburnt fuel, it's foul and something needs to be done about it.

These polluters have no right to degrade our air quality, especially when it impacts the health of everyone and everything else around them.

One of the outcomes of the ETS pricing is to help ensure such pollution becomes less acceptable and less affordable. With a reported 40-50yrs of fossil fuel [oil] left in the ground, the runway is fairly short. Again, this means we must start changing behaviours.

We insured the first carbon forest in 2010 and since then have become the largest insurer of carbon and rotation timber plantations in Australasia.

One thing we have always been clear about is doing our risk assessments of plantations before taking them on. The nature of forestry insurance is such that catastrophic losses do happen and part of our role is to help foresters identify threats early on and mitigate these risks to their business. For our end, this means any ‘plant and leave’ plantations
are declined, as not only will these create an increased risk profile, but such practices are not good for the environment.

Important to us are the principles of the insured as well and the physical risk of the asset to be insured.

The ETS matters because it’s not just about compliance—it’s about driving real change in how we behave as a country. It:

• Forces accountability for pollution
• Encourages innovation and investment in clean technologies [using the cost of
compliance as the lever]
• Balances environmental health with economic opportunity

The NZ ETS is a powerful tool—but only if it is consistent, credible, and aligned with long-term climate change commitments. Fixing price volatility, ensuring transparency, properly balancing afforestation and agricultural emissions, and anchoring it to emissions targets are critical.

The ETS is not perfect and never will be, but without it New Zealand would have no structured way to meet its climate change goals—or to protect our way of life for generations to come. It is also about continuing to set our own high standards as a country and not the Labrador waiting for crumbs to fall from the main table where the
big emitting countries sit.