Mr. Bill Callanan:

Ultimately, the marketplace in terms of compliance on carbon is driven by the Commission's emissions trading system, ETS, which covers big industry and so on. Specific policy in Europe, however, is to preclude the use of carbon generated in forestry or similar areas in that market. In effect, it is not available to trade carbon from forestry into the ETS market, which is where the high value is in terms of carbon currently. That is not the case globally. In New Zealand, for example, the current ETS provides for carbon associated with forestry to be offset into the ETS system. The policy in Europe is particularly focused to avoid a situation where it is possible to use forestry to offset emissions. It is a policy decision that has been taken in Europe to preclude that transferability. That means we will be required to report in respect of emissions because they are not in the ETS. We have LULUCF targets in that regard. It will not preclude a voluntary carbon market where somebody wants to show or claim carbon neutrality for reasons of corporate social responsibility, for example. We offer such an opportunity through the woodland environmental fund. It is not and cannot be done from a compliance perspective in any shape or form, however.

The other thing that is developing at European level is the effort to develop a carbon market. That work has been commenced in terms of how to structure a carbon market into the longer term. As Mr. Gleeson outlined at the beginning, that is post 2030. There are a couple of caveats in that regard, however. One is that it will consider emission removals but, importantly, there is an additionality element associated with it. In other words, a carbon value cannot be generated unless it is additional to the existing commitments within the state. The objective there is that a climate-neutral Europe 2050 will have residual emissions, such as from aviation, and there are two options in terms of offsetting, namely, carbon capture and storage or through land use. The EU is trying to create a policy environment that might support availability or additional finance into that land use market, but only if it is beyond the existing commitments in terms of national targets.