Gowan Lea Carbon
Forest Scheme

Gowan Lea Carbon Forest Scheme

Silverfin’s latest offer

  • 8% p.a. pre-tax income distribution projected from 1 October 2022 to 31 March 2024
  • 3% p.a. pre-tax capital repayment projected to 31 March 2024
  • No bank debt. No exposure to interest rate volatility
  • Well located medium scale, mixed species forest
  • Existing registration in New Zealand’s Emissions Trading Scheme (ETS) provides immediate exposure to the increasingly important carbon market
  • An ‘Environmental, Social, Governance’ (ESG) investment helping New Zealand reduce its carbon footprint

 

Gowan Lea Carbon Forest Scheme

The Property

Gowan Lea Forest originated as part of the Selwyn Plantation Board Limited (SPBL) (now dissolved) forestry estate. The estate contained approximately 4,870ha of predominately Pinus radiata and Douglas fir tree species spread across the Selwyn district in central Canterbury. The ‘Low Mount Forests’ totalled approximately 1,172ha and included Low Mount, High Peak, Gorsy Hill, Newtons and Gowan Lea Forests. The SPBL forest estate was sold to Matariki Forests in 2010, with the exception of Gowan Lea Forest, which was sold separately to the current owners, Lansdowne Forestry Limited.

The Gowan Lea Forest was established in 1999 under instruction from SPBL and is of a mixture of Pinus radiata and Douglas fir species.

Approximately 131 ha of land within the title boundaries is either currently in grass or is reverting to bush. Forestry consultants, Forest Management Limited, have estimated that 40.6 ha of this land is potentially eligible for future registration in the ETS as post-1989 forest land. This is because the 40.6 ha was not in forest species on 31 December 1989, which is a requirement under the ETS. The areas identified as potentially eligible for future registration are centred around the disused telecommunication building (5.0 ha), the ‘reserve area’ (31.7 ha), and the northern boundary (3.9 ha). However, the current owner is not able to guarantee the ETS eligibility of this 40.6 ha.

Emissions Trading Scheme (ETS)

The Scheme will derive income from the receipt and sale of NZUs under New Zealand’s Emissions Trading Scheme (ETS). The purpose of the ETS is to assist New Zealand in achieving its international climate change obligations, and to help meet its 2050 targets under the Paris Agreement (adopted in 2015). The Paris Agreement (or Paris Climate Accord as it is sometimes known) sets a long-term temperature goal to keep the rise in mean global temperature to below 2°C above pre-industrial levels, and preferably limit the increase to 1.5°C. Emissions are to be reduced as soon as possible to reach net-zero by the middle of the 21st century. To stay below 1.5°C of global warming, emissions need to be cut by roughly 50% by 2030. The ETS puts a price on greenhouse gas emissions and creates a financial incentive for specific sectors and businesses to reduce their emissions, while encouraging landowners to plant forests that absorb carbon dioxide. One emission unit (NZU) represents one metric tonne of carbon dioxide. The Government gives eligible forest owners NZUs for carbon dioxide that has been sequestered by their forest. The NZUs are then able to be sold in the New Zealand ETS market. Certain industries and businesses that produce emissions must purchase enough NZUs to cover their emissions, these are then surrendered to the Government. 

The price of NZUs is set by supply and demand via Government auctioning and the secondary market, with the inclusion of price controls. Land afforested with the intention of remaining permanently in forestry may sell the maximum amount of stored carbon in the forest. Stored carbon has a liability associated with it if the forest is harvested. The ability to sell stored carbon provides significant revenues across the life of the forest. It is the ETS that provides the ability to generate regular and material operating revenues that may in turn be distributed to investors. The Gowan Lea Forest is registered in the ETS under the ‘stock change accounting’ approach, which is only available to forests registered before 31 December 2022. The stock change accounting approach will allow the Scheme to claim NZUs for as long as the forest continues to grow and absorb carbon – however if the trees are harvested and consequently the carbon stored in the forest decreases, an equivalent amount of NZUs will need to be surrendered. Forests registered from 1 January 2023 will only be able to be registered under the ‘average accounting approach’, which is structured for forests that will be harvested and allows NZUs to be obtained up until the forest is approximately 16 years old, unless the forest is registered in the permanent post-1989 forest category (in which case the ‘stock change accounting’ approach can be used).

Gowan Lea Carbon Forest Scheme

Investor Presentations

RSVP to attend an investor presentation below and the Silverfin team will be in contact with further information.

Auckland

Christchurch

New Plymouth

Hamilton

Tauranga

Online webinar

Nelson

Wellington

Contact

Get in Touch

Miles Brown
miles@silverfin.nz

021 877 274

 

Yulena Brown
yulena@silverfin.nz

021 376 763

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