May 5, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Recognizing that carbon sequestration by forests is one of the most highly effective investments that can be made to combat climate change, Gresham House, the largest commercial forestry manager in the UK, has made an investment in New Zealand forestry as part of a carbon sequestration strategy. 

“The Gresham House carbon-forestry strategy aims to capitalize on the growth of this market to provide attractive investment returns as well as making a positive contribution to tackling climate change,” said David Gardner, CIO, forestry, Gresham House.

Through its Gresham House Forest Carbon LP the group has acquired a 25 percent stake in a forestry portfolio consisting of eight forests covering more than 12,000 hectares.

The assets are being acquired not for commercial timber production, but are being held permanently as forests to focus on carbon sequestration, long-term native forest regeneration, and to maintain biodiversity.

Over the course of the next 25 years, this New Zealand holding is expected to generate 9 million verified carbon credits, helping New Zealand meet its commitments to be net carbon neutral by 2050, as per the Paris Climate Change Agreement.

“To be able to meet the Paris Agreement commitments and net-zero ambitions, emission reduction targets are likely to become more stringent over time,” said Gardner. “This will create increasing demand for both mandatory and voluntary carbon credit schemes.”

He continued, “We are excited to complete this investment into a diversified pool of forest carbon assets, which sequester and store carbon on a permanent basis. This continues to show our international capabilities.”

New Zealand has incentivized the process of carbon farming, or acquiring forests with the goal of leaving them permanently in-state in order to generate carbon credits that can then be sold to outside buyers to use as offsets to their carbon footprint.

However, as the price of carbon credits continues to climb and carbon farming becomes more profitable, wider areas of forests are being left untouched, leaving rural areas with less job opportunities causing economic slowdowns.

This scenario has led to questions of balance, and how the country can promote the sequestration of carbon, meet its net carbon goals by 2050, and still support the needs of rural communities. 

“We want to balance the risks created by new permanent exotic forests which are not intended for harvest,” said Stuart Nash, New Zealand’s forestry minister, in a public discussion on the topic with climate change minister James Shaw in March 2022. “We have a window to build safeguards into the system, prior to a new ETS framework coming into force on 1 January 2023.”

One solution being proposed is to exclude exotic species from being allowed to be categorized as permanent forests.

“Permanent exotic forests like radiata pine have potential environmental and ecological risks,” said Nash. “These include pests, fire, damaged habitats for native species, biodiversity threats, and a relatively short lifespan compared to well-managed mixed indigenous forests.”

“We want to balance the risks created by new permanent exotic forests which are not intended for harvest,” said Nash. “We have a window to build safeguards into the system, prior to a new ETS framework coming into force on 1 January 2023.

In the public discussion [transcript here], Nash and Shaw stated that later this year there will be consultation on proposals that would give local councils greater say on where exotic forests are planted, noting that proper management of the impact of afforestation and planning are key.

“This consultation is an opportunity for anyone with an interest in the future of forestry to have their say,” said Shaw. “We particularly want to hear from Māori landowners. Iwi-Māori have significant interests in permanent forestry and we want to ensure they are not unfairly impacted.”

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com

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