“Reset” of New Zealand’s forestry regulations recommended

The Parliamentary Commissioner for the Environment has made fifteen recommendations for reform in New Zealand’s forestry regulations which, if implemented, would significantly reshape the forestry sector and its role in the Emissions Trading Scheme. 

In April 2025 the Parliamentary Commissioner for the Environment (PCE) released its report, “Alt-F Reset: Examining the Drivers of Forestry in New Zealand” (Report).

In the Report, the Commissioner has provided a detailed overview of New Zealand’s current policy framework for the forestry sector, the issues that have been created as a result of that framework, and the potential consequences of not addressing these issues. The Report then sets out fifteen key recommendations as to how the Commissioner proposes that these issues be addressed.

This article provides a summary of the Commissioner’s commentary on the above points.

Background and context

Historically, the drivers of forestry have been:

• commercial returns;
• land stabilisation; and
• conservation and cultural benefits.

For the first two of these drivers, radiata pine was considered as the preferred pathway forward due to its environmental resilience and comparatively high growth speed. This spurred the creation of a highly efficient industry being built around that species, cementing it as the cornerstone of New Zealand’s forestry industry. New Zealand’s regulatory environment has also been shaped by radiata pine’s dominance, with the species generally providing higher certainty and reduced cost and time commitments to obtain necessary consents to grow, harvest and use as compared with alternative species.

Radiata pine’s status as the forestry sector’s preferred species was further solidified following the introduction of the Emissions Trading Scheme (ETS) in 2008. This is because the ETS allows the “earning” of New Zealand Units (NZUs) via the sequestration of carbon dioxide from the atmosphere and, due to radiata pine’s ability to sequester carbon more efficiently than other environmentally viable species, the ETS had the effect of further incentivising the planting of radiata pine over other species.

With New Zealand’s current approach to climate mitigation heavily reliant on sequestration, it is expected that approximately 900,000 hectares of additional forests need to be planted in order to meet New Zealand’s climate targets. Assuming that the current economic and policy drivers remain unchanged, this is expected to result in a significant number of land use conversions towards forestry, with the vast majority of these additional forests expected to be radiata pine.

Issues with the current forestry policy framework in New Zealand

The Report identifies several issues that have been arisen as a result of the current policy framework and expects these issues to exacerbate in the future unless that framework undergoes various reforms. These issues include:

• the fact that radiata pine comprises approximately 90% of New Zealand’s plantation forests by area, leading to a largely monoculture forestry stock;
• the inherent threat to the resilience of New Zealand’s forests as a result of a lack in diversity of the species comprising the country’s forests;
• the economic risks that may result should New Zealand’s radiata pine forests suffer an adverse environmental event (such as the spread of disease);
• the conversion of productive land into forestry at higher than desired rates due to the current policy framework often making forestry a more lucrative venture than existing or alternative uses;
• the loss of usable land in the future as a result of large areas of land being locked up in forests with carbon liabilities, thereby restricting the ability to undertake land use changes on that land in the future;
• as the climate continues to change, areas in which mass-forestry has occurred introduce increased fire risk, as well as a higher potential for damage caused by woody debris where extreme rainfall events occur; and
• further loss of native forest, as radiata pine may begin to replace existing native forests as they reach the end of their lifecycle.

Recommendations

With a view to addressing the issues outlined above and creating a more diverse and environmentally and economically resilient forestry stock, the PCE has made the following 15 recommendations to the Government:

ETS reform

1. Phase out forestry offsets for fossil emissions, thereby increasing demand (and therefore price) of NZUs sold at auction and apply that revenue to the targeted funding of locally appropriate afforestation (with a view to stabilising land and providing cultural benefits).
2. Establish a separate “biogenic” trading scheme, which allows warming from biogenic methane emissions to be offset by production forestry with radiata pine and other suitable species.
3. Reform the permanent forestry category in the ETS to ensure that permanent forest owners are required to have suitable and realistic long-term management plans for those forests, including by creating categories (with varying rules) for different types of permanent forests.

Better risk management

4. Ensure that the Government has appropriate plans in place to deal with any long-term physical and financial risks that may arise as a result of the current forestry situation in New Zealand.
5. Investigate how to better reflect the risk of forest impermanence in the value of NZUs earned via forest carbon sequestration.
6. Ensure that the Ministry for the Environment puts in place appropriate mechanisms to ensure that the financial costs of environmental damage caused by the forestry sector are covered by the sector itself, rather than the taxpayer.
7. Ban clear-fell harvesting in areas in which doing so poses a high-risk.

Regulatory change to enable alternative commercial forestry

8. Review the application of the Forests Act 1949 to native forests established through assisted natural regeneration to assist in spurring the planting of new native forests.
9. Develop national guidance for local authorities on how they should treat native timber harvesting carried out in line with the Forests Act 1949.
10. Ensure that a process is in place to approve suitable alternative timbers (other than radiata pine) for use under the Building Code.

Funding, information and research

11. Target future afforestation funding schemes on the successful establishment and long-term maintenance of forests and ensure that any publicly funded afforestation projects must include requirements for sufficient maintenance, monitoring and reporting plans to be in place.
12. Ensure that alternative forestry systems are given prominent treatment in any future prioritization of environmental and forest-related research.
13. Create and maintain a publicly accessible data system to improve the availability and accessibly of existing knowledge about alternative forestry systems.

Forestry policy

14. Seek to develop cross-party support on the broad direction of forestry policy, including the degree to which diversification of the forestry estate is desirable, and what will be needed to achieve that.
15. Ensure that any reframing of forestry policies as suggested by the Report are done in consultation with Māori from the outset.

Conclusion

The recommendations of the Commissioner are wide-reaching and would result in significant shifts in the forestry sector. In particular, if recommendations 1 and 2 were implemented, this would have a significant impact on the ETS and the NZ carbon market.

While it is yet to be seen how the Government will respond to the PCE’s recommendations, the Government has signalled that it intends to continue to finesse the policy settings surrounding the forestry sector and the ETS, with some previously proposed changes being in-line with the direction proposed by the PCE in the Report.

Anderson Lloyd will continue to provide commentary on policy developments in these areas as they emerge.

Want to know more?

If you have any questions about the contents of this article, the ETS or the forestry sector and its regulatory environment generally, please contact our specialist forestry team.

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