“The ETS will add a further level of cost to New Zealand Wood Processors which will not be felt by our offshore competitors,” Mr Davies says.

“The industry is struggling out of the worst trading environment ever. There are signs of improvement, but the New Zealand market is fragile. At a time when log costs are rising dramatically due to the demand driven by the Chinese Government stimulus package, it is difficult to understand why the New Zealand Government is determined to make it harder for the local wood processing industry to hold jobs at current levels, let alone begin to take on more people.”

“Under the ETS, New Zealand sawmills, panel, pulp and paper producers will be at a real disadvantage when exporting to non-Kyoto countries. From an environmental perspective any reduction in the approximately 75% domestic processing of New Zealand’s forest output means increased log exports, many going to countries with no formal greenhouse gas reduction targets.”

Mr Davies says it is likely that logs processed in overseas markets would lead to an overall increase in net greenhouse gas emissions from transport and energy production, as compared to processing that same volume of wood domestically.

“The New Zealand wood processing industry pioneered the use of what today is called ‘Bio-energy’ fuels in manufacturing processes. If ETS is designed to encourage the use of Bio-energy then there is a real need for the Government to recognise the existing situation, and not harm those who are already well ahead of the pack.”

Mr Davies questions the claim by some forest owners that the current ETS is needed to increase forest planting.

“New Zealand must improve its productivity in order to have a strong economy, and you can’t have that without real jobs across our country. It is death by a thousand cuts, as the ETS is the most recent addition to a long list of costs imposed on all New Zealand manufacturers.

“About 30 sawmills have closed in the past two years, and if wood processors continue to be unfairly disadvantaged there may be more to go yet. We support planting forests but it’s hard to see how exporting logs rather than processing them is good for New Zealand.”