Carbon credits update

7 July 2010

The pre-1990 forest land allocation plan has now been released, detailing who can claim a free allocation of carbon credits under the ETS.

From July 20, 2010 owners of pre-1990 exotic forests (or former owners) can make a claim. To compensate landowners for the reduced land flexibility and consequent reduced land value, a one-off allocation will be made of New Zealand units per hectare of qualifying forest. The allocation plan sets out the final rules on eligibility criteria for pre-1990 exotic forests, effective July 20.

Oliver Roberts, a Partner with law firm Duncan Cotterill, said that this was distinct from post 1989 forests which have a choice whether to join the ETS and will receive carbon credits for each year of growth.

“It is the landowner at the date of release of the allocation plan (20 July 2010) who may claim the free units. Where deforestation has occurred since 1 January 2008 then it will be the owner at that time who is entitled (as they carry the deforestation liability),” Roberts said.

“Sale & Purchase Agreements spanning July 20, 2010 need to consider carefully the settlement date and who will remain the landowner on that date. It is the person on the land title on July 20, 2010 who will be the eligible person entitled to claim.”

Roberts said the free allocation should be factored into the price if the vendor remained the landowner on July 20, 2010.

“In such a case, it is the vendor who remains entitled to claim credits despite sale of the forest. There is no ability to choose eligibility between vendor and purchaser.”

For further information, please contact:

Oliver Roberts, partner, Duncan Cotterill, 03 379 2430, 021 860 041, o.roberts@DuncanCotterill.com

Location http://www.duncancotterill.com/index.cfm/1,159,624,0,html