Carbon economics of natural regeneration at scale

Authors: Sean Weaver
Publication: New Zealand Journal of Forestry, Volume N.Z.J.For. 2022, Issue N.Z.J.For. 67(4) 2023 , pp 35-47, Feb 2023
Publisher: New Zealand Institute of Forestry

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Abstract: Natural regeneration on eligible post-1989 land is a carbon project where nature establishes the forest for free. Converting marginal farmland to natural regeneration and registering this free gift from nature in the New Zealand Emissions Trading Scheme (NZETS) would be an ideal way to finance carbon sequestration. This could deliver on our Paris Agreement target alongside considerable biodiversity and sustainable land management co-benefits. Similarly, managing natural regeneration on existing pre-1990 indigenous scrub and forest land induces additional carbon sequestration that (in theory) could also be traded in a voluntary carbon market and contribute to our national climate change mitigation goals. This paper presents a practitioner perspective on these two aspects of natural regeneration for carbon management, with a particular emphasis on operating at a scale that has a meaningful impact on national carbon sequestration goals. A discounted cash flow (DCF) analysis was undertaken for four approaches to forest carbon sequestration projects commencing in 2024, at a scale of 100,000 ha: Scenario 1: Natural regeneration on eligible post-1989 land (a ‘shut the gate’ approach). Scenario 2: Indigenous afforestation planted at 2,000 stems/ha. Scenario 3: Exotic afforestation transitioned to indigenous forest over a 60-year period. Scenario 4: A combination of exotic afforestation transitioning to indigenous forest (70,000 ha) plus indigenous afforestation at 2,000 stems/ ha (30,000 ha). Results showed that (under Scenario 1) natural regeneration starting in 2024 would contribute zero carbon sequestration towards the 2030 Paris Agreement target, cost $650 million in investment (assuming no land purchase costs) and not be financially viable (i.e. unlikely to gain access to investment capital and not be financially selfsustaining). Indigenous afforestation planting 2,000 stems/ha (Scenario 2) would deliver approximately 800,000 carbon credits towards the Paris Agreement target, require $1.5 billion in investment and also not be financially viable. In contrast, a project that used exotic afforestation (Scenarios 3 and 4) would deliver between 2.77 million and 3.5 million tCO2e by 2030 (respectively), is financially viable, and could therefore be delivered at no cost to the taxpayer. Pre-1990 indigenous forest regeneration was also examined using an additionality lens consistent with international forest carbon standards. ‘Additionality’ is a measure of whether a project is delivering carbon benefits to the atmosphere that resulted from human intervention that is additional to: (a) what nature would do anyway; and b) what humans would do anyway. Pre-1990 natural regeneration is not additional unless there is a change in forest management (project scenario) that causes a measurable change in carbon benefits compared with business-as-usual (baseline scenario). This can be delivered through avoided logging of commercially viable timber volumes (via land-use change from productive to permanently protected forest) and/ or enhancing carbon sequestration through (for example) enrichment planting.

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