The companies behind a first-of-its-kind model to use mature native forest to generate carbon offsets believe it has potential to allow farmers and corporates to benefit from supporting native bush right across the country.
The initiative sees BNZ lease mature native forest from state-owned farmer Pāmu/Landcorp and use it to partially offset its emissions profile.
Pāmu will then use its income from the lease to maintain and improve the bushland – a task it says has proven costly to its operations.
This bridges a gap around landowners’ inability to generate income from forests planted before 1990.
BNZ chief sustainability officer Rebekah Cain says it was already talking to a few groups about voluntary nature/carbon markets when the Government came out with an endorsement for the idea earlier this year.
“We had already been talking to a small group of people around what a voluntary carbon or nature market might look like, and what was holding the market back from doing it. Was it buyers, was it suppliers?”
Pāmu was one of those groups, and Cain says it had talked about the cost of upkeep associated with native forests on its property.
“We thought it was a really good idea to see if Pāmu, who has more expertise in-house than most farm customers, with our sustainability expertise could work through what this might look like.”
‘This is a practical step forward that addresses an existing gap, creating a win-win for landowners in the rural sector and businesses looking to account for carbon removals…. The majority of that revenue is then reinvested to restore and improve their land – for example, accelerating planting or undertaking pest control that might otherwise be delayed or avoided due to a lack of funding.’
Dan Huggins, BNZ
Pāmu chief executive Mark Leslie says the organisation has the privilege of operating a large landmass right across the country, with some areas suited for productive farming and productive forestry and others that should probably be retired.
Some of that retired land (a little over 10,000 hectares) has had QEII covenants placed on it, protecting the land for native purposes.
“They’re a big part of these farms, and they’re also a beautiful part of it, they make many of those farms.”
Farmland gets retired for a bunch of reasons such as erosion and risk to animals, “When you do retire it there’s still a cost associated with weed or pest control.”
He says the deal meets Pāmu’s needs in terms of ongoing protection but also meets BNZ’s needs.
The solution landed on was a lease, bringing native forest that would usually be ineligible for carbon credits (planted before 1990) onto BNZ’s books that would allow BNZ to sequester its own carbon.
Pāmu then handles forest management, including fencing and pest control. Local climate-tech platform CarbonCrop provides the technical aspects such as measurement and monitoring.
Pāmu nature investment officer Annabel Davies says the initiative creates more value within a farming system while activating reinvestment into nature.
“There is some strong governance written into this lease agreement, and transparency and measurable outcomes for both nature, the landowner and the leaseholder.”
The deal, which covers a 600 hectare property in the northern Hawke’s Bay, will offset an estimated 1100 tonnes of carbon dioxide equivalent a year. BNZ’s total emissions profiles sits between 4500 and 6000 tonnes.
Davies says the attraction for some corporates will be to reduce their reliance on overseas offsetting credits and invest the money in New Zealand instead.
BNZ chief executive Dan Huggins says it is a win-win that enables landowners to earn revenue from a pre-existing asset, with the majority of that revenue then reinvested to restore and improve land through planting of pest control that might not happen otherwise due to a lack of funding.
The deal is the first of its kind in New Zealand and both Pāmu and BNZ see it as something with wider potential for businesses and landowners.
According to Cain, it’s not cheaper than purchasing carbon credits – but nor is it significantly more expensive.
A focus on new growth forests would also be productive and allow for greater offsets, but Cain says that’s not the point of the project.
“We know that new plantings are much higher growth carbon sinks, but what is important here is that it protects the carbon that is already stored, prevents degradation of that carbon store and improves forest health so that it can sequester over a longer period time.”
The plot of land settled on by BNZ and Pāmu needs improved fencing and to have some wilding pines removed.
“All of the other options have been about planting new or disregarding any of that historic forest that we’ve got, and we think that it’s really important for New Zealand to come up with a way to be able to maintain and support that.”
A handful of companies that are spending money on carbon credits had shown interested in the project, “Most corporates who are reducing then offsetting what’s left are trying to find New Zealand-based projects, so this provides another pathway.
“We know there’s interest from the corporate space, we know that there is interest within our customers and also in some of the big organisations that have a lot of farming customers who have approached us to say, can you please explain what you’re doing and how you did it, and how we could possibly look to replicate something like this.”
Investing in New Zealand is something Leslie hopes Pāmu and others with native bush land can do more of, but appreciates the current arrangement is a little bit complex.
“All things start with one small step, and the current arrangements may be too complicated for some people, but as more people start thinking through there will be other options around how you can unlock it.”
He says other large corporate farms are already thinking about doing the same thing, as points to catchment groups who might be able to figure out how to meet all the necessary criteria.
“Will it work for everybody? No, but it’s at least starting it, others will hopefully start thinking differently to say, actually, how else could we do this, and catchment groups are just a logical example for me as another stepping stone into this.”
