phill Parsons
Dear Premier,
Below is a summary of the reasons why the State government and its business enterprise Forestry Tasmanian should abandon its current commitments to Gunns Ltd proposed Tamar Valley Pulp Mill.
In summary the Sovereign Risk Agreement must not be renewed and the extension of the Pulp Mill Wood Supply Agreement must be overruled and the value of forests as carbon sinks considered before a long term commitment is renewed.
In the publication the State of the Forests Tasmania 2006 the government instrumentality, the Forest Practices Authority [FPA] estimates that the forest biomass in 2005 weighed 774 Million tones [Mt]. Rudely converted this is 387Mt of Carbon [MtC].
When compared to other measures of above ground Carbon in comparable forests the FPA appears to have grossly underestimated the total of Carbon.
That same publication puts some 29% of the land area in private freehold land and 33.6% in other State Forest. Of that land area in other State Forest 20.7% or 695,000ha is production forest managed for commercial purposes.
Allocating the 387MtC by % of land area; private freehold land has 112MtC; other state forest 130MtC; and of that the area allocated to production forest contains 80MtC.
With a little work by the State government, the negotiations led by you, it would be possible to have forest biomass included as a carbon sink in the Emissions Trading scheme the Rudd government proposes to start in 2010.
Carbon is predicted to trade initially at between $19 and $35 per tonne [t] with some analysts seeing it rise to $100 per t in 2020
That trading value for other Private freehold land, were all the tonnes of C sold, would be between $2.1 and $3.9 Billion [B] Dollars.
The production forest, allowing for a harvest of 300,000 cubic metres of sawlog per annum and thus a loss of Carbon from the forest but meeting the Regional Forest Agreement requirements until 2017, I estimate is in the region of between $1.3B and 2.4B on the average of the FPA total.
Therefore, the pulpmill, to compete in terms of a financial return to the private forest owners and to the owners of the State Forest, the people of Tasmania, would have to return to the forest owners a minimum of $3.6B to the forests owners on the FPA’s figures.
I estimate the Carbon to be some 5 times the amount deduced from the FPA’s estimate of total forest biomass and therefore the minimum value to be closer to $18B, 3 times the value of the pulpmill if the minimum trading price for emissions is A$19 and forest Carbon sink are included in the trading system.
With the proposed cap and trade system for emissions trading, whatever the minimum price initially, it will rise. When that price passes the $35 mark, based on the FPA’s figures, the commercial forests Carbon will be worth more than the supposed $6B the pulpmill will bring to the state over its 30 year life.
The total of Carbon in the Tasmanian commercial forest on the private freehold and available as a forest Carbon sink from the production forest owned by the State is about 1/3 of the total of Carbon emissions that will have to be offset by Australian emissions trading by 2020, if the first target is a 20% reduction in greenhouse gas [Carbon being the greatest contributor from economic activity] emissions. 20% was the Federal government’s target when it stood for election.
A 60% reduction in Australian emissions by 2050, also the Federal government’s pre-election target, sees the total Carbon in the classifications used, Tasmania’s commercial forests, being about 1/20th of the total amount to be offset to reduce emissions
The national store of Carbon in the Australia’s commercial forests does not exceed the amount of carbon that has to be removed from our current economic activity. Including commercial forests in an emissions trading scheme has to see the removal of additional carbon above that removed by their current activities.
Of course it would be important, if as Premier you were able to return the value of the Carbon in the commercially exploitable forests to Tasmania, and that income was used to convert the Tasmanian economy to a low carbon model in line with the Tasmanian government’s objective of a 60% reduction in greenhouse gas emissions by 2050.
The social, economic and environmental pressures on a government managing the State’s economy in a time when the costs of climate instability and the measures to address the causes of that through mitigation, along with the imperative to keep the Tasmanian economy modern and thus competitive, will make huge demands on already limited resources.
Therefore, if the commercial forest was to be sold as a C sink, the income from that sale should have to be invested in mitigating the emissions of greenhouse gases as a requirement for those forests to be included in a trading regime.
Private freehold owners could have the income from such investments,
Regardless of the source of the income from the States commercial forests, be it sales of wood or Carbon traded, the annual return to government, which should be no less than the income from the Carbon trading value of the product sold, must be invested in mitigating the emissions of greenhouse gases.
It is the one chance Tasmania has for the State to assist people through the costs of a transition to a low carbon economy. The State could reinvest any income from investments in mitigation to further help those with lower incomes through that transition.
Once the trading price of Carbon exceeds $34 per tonne the Pulp Mill Wood Supply Agreement will be returning less than the production forest would were it a Carbon sink.
Regardless of the government decision about the allocation of the production from the State’s forests, Private freehold owners of commercial forests should have the option of making their forest a carbon sink and trading on the value therein.
If, as Premier, you and your government are going to allow market forces to decide the fate of Gunns Tamar Valley pulpmill you should not miss the opportunity to ensure that Tasmania can benefit from the trading of the Carbon sunk in the commercial forests by ensuring that Carbon can be traded in the new emissions trading scheme.
Further, Premier, you should renegotiate the Pulp Mill Wood Supply Agreement to ensure the trading price of Carbon, when it rises above $34 per tonne, sets a minimum price for pulpwood from the Sates forest so Tasmanians are not duded again.
If this was to cause Gunns to abandon its proposed pulpmill, then emissions trading, if forests sinks are included, will see a competitive price paid for wood, including as forest Carbon sinks and thus income flowing into Tasmania’s economy.
Such a scheme only affects plantations if the owner wishes to commit them to being a Carbon sink and at the Deutsche Bank predicted price of A$100 for 2020 this appears to be a better option for Gunns shareholders and investors than building a pulpmill.
I am putting this forward in the spirit that you iterated recently, that great ideas do not reside in any particular place. I am ready to put the argument more fully but I would be surprised if the bureaucrats did not already know the answer and in the Yes Minister fashion are only waiting to be asked the question.
phill Parsons
Elizabeth Town
