WoodWeek – 23 June 2021

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Greetings from your WoodWeek news team. This week we celebrate a rapidly growing wood market as Auckland City Mission’s ten-year vision comes to fruition with their opening of their new multi-storey building in downtown Auckland – our country’s newest and tallest timber building!

The best part about this new 10-storey building is what it will be used for: accommodating homeless people and helping them to rebuild their lives. It’s a most worthy purpose for our newest and tallest timber building in New Zealand. We applaud the vision and commitment of both Government and the leaders at Auckland City Mission who decided they wanted a tall timber building and worked with the architects at Stevens Lawson Architects to make it happen.

Meanwhile out in the forest the team at Scion are studying forest growth and productivity in the long term.

Following last week’s record-breaking event in Rotorua it has been pointed out to us there may be some confusion among some people who attended the Carbon Forestry Conference about averaging accounting. Following their presentation at Carbon Forestry 2021 Te Uru Rākau – New Zealand Forest Service has pointed to the following website content to help aid understanding of averaging accounting.

Click here to access the content: >>

We would like to thank all of our speakers, sponsors and delegates for a most engaging and informative day where the growth of our newest niche – carbon forestry was fostered by all.

Next up on the carbon agenda is the coming auction. The team at Carbon Match report, that, this week so far NZUs have continued their journey north, last trade $40.75. - Volumes are fairly modest - certainly many compliance buyers have an eye to next week's auction, wondering if it will again bring the opportunity to secure a "deal".

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Auckland Home to our Tallest Timber Building

HomeGround: New $110m Auckland City Mission HQ being finished, tallest NZ wood building - The new $110 million Auckland City Mission headquarters will be New Zealand's tallest wooden block when it opens later this year, its chief says.

Tony McKee, project director for the newly-named HomeGround, said the 10-level block was built in cross-laminated timber, a lightweight system that was mostly pre- fabricated and relatively easy to build. “It will be the tallest structural timber building in this country and one of the tallest in Australasia," he said.

"The CLT system was manufactured and installed by Xlam using 40 per cent New Zealand and 60 per cent Australian timber, all radiata pine," McKee said.

Eight of the 10 levels are timber.

"All the floors and the 20cm-thick walls are timber and this is one of the world's tallest mass timber buildings developed in a seismic zone," McKee said referring to earthquake risk. HomeGround, as the new building is called sits beside St Matthews in the City. It is only half as heavy as comparable steel and concrete structures.

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Source: NZ Herald

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Scion Team Studying Long-Term Forest Productivity

Sustaining forest productivity: A 30-year study - A 30-year experimental monitoring of forest ecosystem nutrient levels and forest productivity over a complete rotation has been completed by Scion researchers. The results show that soil nutrient levels and forest productivity can be maintained with site- specific management – specifically through the retention of forest harvest residues and the forest floor at low-fertility sites.

Around 15 percent of New Zealand’s planted radiata pine forests are now in their third or fourth rotation. A consistent supply of nutrients is essential to ensure the long-term productivity, health and sustainability of these forests. This is not a new issue, with concern being raised more than 40 years ago.

Effects of removing harvesting residues - Harvesting a forest includes removing the main stem but can also include removal of harvest residues (slash) and even the forest floor, a scenario which is becoming increasingly more plausible as biomass for bioenergy and biofuels are emerging as ways to diminish our reliance on fossil fuels. Understanding the consequences of these practices from one rotation to the next is necessary to ensure our forests stay productive into the future.

New Zealand is part of a global network of “Long Term Site Productivity” trials investigating the sustainability of intensive forest management harvesting practices and the pressures placed on soil resources. The first whole-of- rotation results have now been reported for forests around New Zealand.

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Source: Scion

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Searching for the Future on the North Island Hills

(Opinion - Keith Woodford) Some weeks back I wrote an article on New Zealand’s sheep and beef farms, focusing on the current situation. I said I would be back as there was more to discuss about both the present and the future. Here, I want to focus more specifically on the North Island hill (Beef+Lamb Class 4) and hard-hill country (Class 3). These land classes comprise around 4000 farms and contain approximately 45 percent of New Zealand’s commercial sheep and beef farms.

Before heading further down that track, I want to share some information supplied by Rob Davison from Beef+Lamb. The 2017 Statistics Department national census indicates there are approximately 26,400 sheep and beef farms in New Zealand. However, Beef+Lamb estimates that only 9200, or 35 percent thereof, are commercial farms. These commercial farms typically have at least 750 stock units and comprise 97 percent of New Zealand’s sheep production plus 88 percent of the beef cattle production. That means there are another 17,200 lifestyle and hobby farmers.

Although the 17,200 non-commercial farmers may not be particularly important from a production perspective, they are still a very important part of the rural community. Many of these people have a day-job in the agricultural servicing industry.

Beef+Lamb put out a fact sheet in June 2020 looking at hill-country farming. They reckoned there were 920 Class 3 North Island hard-hill farms totalling 1.08 million effective hectares, and there were 3055 Class 4 hill farms on somewhat gentler country totalling 1.8 million effective hectares. The total area was 2.9 million ha of combined Class 3 and 4 hill country compared to 3.8 million in 1991. So where did the 900,000 ha of North Island pastoral farming disappear to?

Precise details are not clear, but the biggest contributor to that loss of hill-country pastoral land seems to have has been scrub reversion. This was land that was simply too difficult to farm. Another contributor was forestry.

(Keith Woodford, Rural Sector Commentator)

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Source: Keith Woodford

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Campbell Global Acquired by JP Morgan

JP Morgan Asset Management Acquires Campbell Global, a Leading Player in Forest Management and Timberland Investing
New York, NY June 21, 2021 -- In an effort to directly impact the transition to a low-carbon economy and provide ESG-minded investment opportunities related to climate, conservation and biodiversity, JP Morgan Asset Management has acquired Forest Management and Timberland Investing company, Campbell Global, LLC. The terms of the deal with Campbell Global’s parent company, BrightSphere Investment Group, were not disclosed. The acquisition does not impact current investment strategies for Campbell Global clients.

Campbell Global is a recognised leader in global timberland investment and natural resource management. Based in Portland, Oregon, the firm has over three decades of experience, $5.3 billion in assets under management and manages over 1.7 million acres worldwide with over 150 employees. All employees will be retained and Campbell Global will remain headquartered in Portland. The deal will make J.P. Morgan a significant benefactor for thriving forests around the world, including in 15 U.S. states, New Zealand, Australia and Chile.

Carbon sequestration in forests worldwide will play an important role in carbon markets, and J.P. Morgan Asset Management expects to become an active participant in carbon offset markets as they develop.

“This acquisition expands our alternatives offering and demonstrates our desire to integrate sustainability into our business in a way that is meaningful,” said George Gatch, Chief Executive Officer of JP Morgan Asset Management. “Investing in timberland, on behalf of institutional and high net wealth individuals, will allow us to apply our expertise in managing real assets to forests, which are a natural solution to many of the world’s climate, biodiversity and social challenges.”

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Source: LinkedIn
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Carbon Forestry - Does the ETS Need Mates?

We are aware that there was some confusion among some people who attended the Carbon Forestry Conference about averaging accounting. It would therefore be useful if the following could be sent to attendees:

Following their presentation at Carbon Forestry 2021 Te Uru Rākau – New Zealand Forest Service has pointed to the following website content to help aid understanding of averaging accounting:

Fact sheet: Introduction to averaging carbon accounting for forests in the Emissions Trading Scheme

Click here to access: >>

There will be further communications from Te Uru Rākau – New Zealand Forest Service once final decisions about averaging accounting, including how it applies to second and future rotation forests, have been made.

Whether relying on the emissions trading system alone will get the country to zero net emissions by 2050 is one of the key points of contention among business leaders. The flurry of statements in response to the Climate Change Commission’s final advice to the government showed business leaders will lobby most on the role of the emissions trading system (ETS) and whether other policies are needed to sit alongside it to achieve that goal is where the consensus breaks down.

There is still broad corporate consensus for the government’s goal of achieving zero net emissions by 2050. This is not a “devil in the detail” issue so much as a fundamental disagreement over the role of market forces. The commission’s view is that you need a comprehensive policy package made up of three pillars:

– Pricing to influence investments and choice.
– Action to address barriers.
– Enabling innovation and system transformation.

The commission believes that having policies alongside the ETS can put people and businesses in a better position to respond to a rising emissions price and lower their exposure and vulnerability to that price. Or to borrow from a phrase used by 1990s era finance minister Ruth Richardson speaking of the Reserve Bank governor: the ETS, like monetary policy, “needs mates”.

The commission’s report acknowledged the ETS can push economic decisions towards low-emissions alternatives but said emissions pricing plays a more limited role where decisions are made by individuals, or by small businesses or firms for whom energy and emissions are not critical to the business.

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Source: BusinessDesk

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Carbon Match Market Update

Carbon Match Market Update - This week so far NZUs have continued their journey north, last trade $40.75. - Volumes are fairly modest - certainly many compliance buyers have an eye to next week's auction, wondering if it will again bring the opportunity to secure a "deal".

That hasn't stopped buyers snapping up NZUs and since the release of the Climate Change Commission's report, prices have pushed up from $39.00 to $40.75. But thin supply is a contributing factor - natural sellers still have an eye on the horizon and perceived upside, buoyed by talk of much higher carbon prices required to drive abatement, and supported by strong if not record log prices.

Meanwhile funding costs remain low. And as carbon prices move up, some sellers then require less volume to be sold to make financial budgets.

Others point to European carbon prices, still close to $90 NZD equivalent, a notable value gap even in the absence of fungibility.

So what will happen in next week's auctions? We don't know and it's not for us to speculate, but conceptually we tend to think of four different broad scenarios, which sit across a spectrum. Any are possible in theory and you can have a think and attach your own private likelihood to each in your own mind.

Scenario 1: Auction does not clear. In the event the Government does not receive sufficient bids next week at levels above the confidential reserve price, it will not sell its 4.75 million units. That scheduled volume will then roll forward to become available at the 1 September auction, which would then have 9.5 million NZUs on offer.

While this might seem like a bearish outcome, what overseas experience has shown us is that sometimes the participants who missed out, but nonetheless have genuine buying interest, then hit the secondary market to get that done, perhaps causing an uptick.

Scenario 2: Auction clears below ex-ante secondary market price levels/ sufficient but modest interest. This was the situation that pertained to the inaugural 17 March auction earlier this year. What happened there is that in a market that the day before had traded $38.70, and had recently been as high as $39.50, the auction was fully subscribed but cleared at $36.00 flat. The secondary market then retraced to lower levels. Only in the last couple of weeks have prices recovered to, and pushed on higher from, pre-March auction levels. So, very crudely put, in our view scenario 2 for next week is a rinse and repeat of 17 March and the weeks that followed.

Scenario 3: Auction clears above ex-ante secondary market levels/strong interest. This would be a situation where strong buying interest and layering tactics see the auction clear at some price higher than recent price levels seen on the secondary market. In our view, such a scenario would be supportive, and perhaps drive further bullish sentiment in the weeks that follow.

Scenario 4: Auction clears at or above $50, bringing the cost containment reserve into play. Clearly the market would then find itself working off a whole new basis.

Of course, in reality, a myriad possibilities exist with many nuances. But broadly speaking, if you have something you're looking to do or a liability you wish to close off, or an asset you're trying to decide how and when to monetise, it's worth thinking through each of the above and how your decisions might play out for you under each scenario.

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Source: Carbon Match

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Pest Culling Could Help Climate Efforts

Culling deer, possums and other pests could undo 15 per cent of our annual climate impact — Forest and Bird – Culling deer, possums, goats, feral pigs and other invasive mammals could let established native forests recover to the point where they sucked in 15 per cent of New Zealand’s yearly greenhouse gas emissions, says a report from Forest and Bird.

The conservation advocacy group has used a report by Crown science agency Scion, as well as independent estimates of the numbers of feral mammals and other information, to estimate how much eradicating pests could benefit the climate.

More than a decade of monitoring at native forest plots scattered the length of the country shows New Zealand’s established forests are in equilibrium – sucking in roughly as much carbon dioxide as they release.

But while reports to government agencies often stress that forests are overall in balance, Forest and Bird argued looking at the national average was missing the point. The natural forests inventory tracks hundreds of representative plots of forest. It’s the nearest to an official count of how much carbon the nation’s old-growth forests are gaining and losing.

While each deer, possum, or other mammal eats only a tiny proportion of a forest’s foliage, the total becomes significant once spread over vast forests, the report said. Warm-blooded browsers also eat seedlings and kill young trees, which doesn’t remove much carbon immediately, but can disrupt the next generation of trees from growing in a mature forest.

The forest inventory is out of date – covering the years from 2002-2014 – however the results were only recently published. Forest and Bird’s Kevin Hackwell said there was no reason to think carbon losses from Kamahi-podocarp forest had stopped since 2014, and, if extrapolated over two decades, would add up to almost as much as the country’s annual emissions.

Per year, counting foliage eaten directly and other impacts, the group estimated 8.4 million tonnes of carbon dioxide could be saved by culling pests to the lowest possible level.

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Photo credit: Gerard Hutching, 'Possums - Possums in New Zealand'

Source: Scoop

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The Future of our Forests

Native forest once covered most of Aotearoa in a great green swathe, heaving with biodiversity. Two-thirds fell to fire, axe and bulldozer during a botanical Blitzkrieg the like of which the world has never seen. Today’s forest remnants are confined largely to areas of conservation land, but legislation can’t protect against pathogens, pests and invasive weeds that do not respect park boundaries. What does the future hold for our forests?

It’s late at night and a cold rain is falling when I reach Pureora Forest Park, a ragged patchwork of forest remnants that lies between Lake Taupo and the King Country. The carpark—a circle of gravel flanked by thick bush—is deserted. I brew a coffee, then roll up my sleeping bag inside a slab of foam, tie the bundle with rope and walk intothe forest. There is a steady, heavy dripping from trees that are taller than my torch beam can shine. Pureora is said to be one of the finest examples of podocarp rainforest in the world; about the only part of that description I can fully appreciate at the moment is rain.

Out of the darkness looms a wooden tower, four storeys high. It’s solidly built, the work of the local Lions Club; a philanthropic gesture to help people appreciate this place. I climb four steep flights of steps to the top, and haul up my gear. There is just enough floor space to unroll my bedding, and the roof extends out far enough to keep things dry. I wriggle into my bag and listen to the calls of night birds and the whirring of insects that fly around my head. I flick my torch back on. I’m being strafed by huhu beetles, or some of their relatives. Their wings sound like the propellers of model aeroplanes, and I feel a tiny breeze on my face as they pass. It is an enchanting way to be lulled to sleep.

Nature’s wake-up call next morning is more strident. Flocks of kaka shred the dawn with their shrieks, and the heavy whopwhop-whop wingbeats of kereru whistle through the canopy. Cackling parakeets add their calls to the mix. From the tower, I look down on the perfect green umbrellas of tree ferns and up into the crown of a neighbouring rimu, its branches laden with perching plants. Broadleaves slick with rain glisten an almost iridescent green.

This is historic—I’m tempted to say hallowed—ground. In 1978, Pureora was on the chopping block. The Forest Service intended to finish what had begun decades earlier: the logging of all the merchantable timber here—matai, rimu, totara, kahikatea, the pick of this country’s lowland podocarp trees. This despite the fact that, a year earlier, a 341,160-signature petition had been presented to Parliament, demanding an end to native-forest logging and legal recognition of native forests.

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Source: Kennedy Warne, New Zealand Geographic

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Buy and Sell

... and finally - some midwinter humour ...


Christmas was fast approaching when my good friend Dawn reminded her eight-year-old son Ken that he would soon be visiting with Santa Claus.

He seemed unusually resistant to the idea. "You do believe in Santa, don't you?" She finally asked her son.

He thought hard, then said, "Yes, but I think this is the last year."


"There has been a lot of talk about conserving energy lately. Like keeping the thermostat down in the winter. Using low energy bulbs. Turning off lights. Using less gas. It made me realise, my dad was like the first environmentalist. He would walk around the house yelling, 'turn off those lights! Turn the heat down!' He was green before his time."

That's all for this week's wood news.

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John Stulen
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

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