Carbon Leasing & Joint Ventures

Not everyone wants to manage their own carbon credits. Carbon leasing and joint venture arrangements let you earn from your forest’s carbon without the complexity of direct ETS participation.

Overview of Options

Direct ETS Participation

The standard approach:

• You register your forest
• You receive NZUs directly
• You manage compliance
• You sell units when you choose
• You bear all risks and rewards

Carbon Leasing

Someone else pays you for the right to your carbon credits:

• Lease company handles ETS registration and compliance
• You receive regular lease payments (annual rental)
• They take on unit price risk and surrender liability
• Simpler for you, but lower potential return

Joint Ventures

Share the carbon farming with an investor:

• Investor provides capital and/or expertise
• Returns are shared according to agreement
• Landowner usually contributes land (and sometimes trees)
• More complex than leasing, more return than pure rental

Carbon Leasing

How It Works

1. You own forest land (or have rights to the carbon)
2. You enter a lease agreement with a carbon company
3. They register the forest in the ETS (or take over existing registration)
4. They manage all compliance and administration
5. You receive regular payments regardless of unit prices
6. At lease end, arrangements vary by contract

Typical Lease Terms

Payment: Annual per-hectare rental, often age-dependent

Example structure:

Duration: Typically 10-25 years minimum

Your obligations:

• Maintain the forest (not deforest)
• Allow access for monitoring
• Notify of any adverse events
• Not to double-deal carbon rights

Advantages of Leasing

For landowners:

• Guaranteed income regardless of carbon price
• No ETS administration or compliance burden
• No surrender liability risk
• Simple, predictable cash flow
• Access to carbon value without learning the system

Disadvantages of Leasing

What you give up:

• Upside if carbon prices increase
• Control over timing of sales
• Flexibility to exit
• Full value of carbon credits (lease companies take margin)

Example comparison:

The gap reflects the lease company’s margin for taking risk and providing services — but also includes their profit.

When Leasing Makes Sense

• You don’t want to learn the ETS system
• You value certainty over upside potential
• Your forest is small (compliance costs would eat returns)
• You want “set and forget” income
• You’re risk-averse on carbon prices

When Leasing Doesn’t Make Sense

• You’re comfortable with some complexity
• You want to maximise returns
• You believe carbon prices will rise significantly
• You have multiple forests (economies of scale)
• You want control over your carbon position

Joint Ventures

How Joint Ventures Work

Unlike leasing (arm’s length payment), joint ventures share the enterprise:

Landowner contributes:

• Land (and potentially existing trees)
• Access
• Sometimes ongoing management

Investor contributes:

• Capital (planting costs, establishment)
• Expertise
• Market access
• Compliance management

Returns shared according to agreement:

• Percentage split (e.g., 60/40)
• Priority returns to investor until capital repaid
• Different splits for timber vs carbon

Key Differences from Leasing

Structuring Joint Ventures

Forestry Rights Registration Act: Joint ventures often use registered forestry rights, which:

• Are recorded on the land title
• Specify ownership of trees and carbon
• Bind future landowners
• Provide security for both parties

Key terms to negotiate:

• Percentage split of carbon credits
• Percentage split of timber (if relevant)
• Who manages day-to-day
• Who handles ETS compliance
• Duration and exit provisions
• What happens if one party defaults

Advantages of Joint Ventures

• Access to capital for establishment
• Professional management
• Shared risk
• Participate in upside
• Learn from experienced partner

Disadvantages of Joint Ventures

• Share returns (less than full ownership)
• Long-term commitment
• Less control than doing it yourself
• Dependent on partner’s performance
• Complex to exit if relationship sours

Carbon Aggregators

What They Are

Aggregators pool multiple landowners together:

• Economies of scale reduce per-hectare costs
• Collective bargaining power for unit sales
• Professional management across portfolio
• Shared compliance infrastructure

How They Differ

Typical Aggregator Models

Fee-based:

• You retain ownership of units
• Pay fees for services (registration, compliance, sales)
• Keep whatever’s left

Percentage-based:

• Aggregator takes percentage of carbon income
• You receive the rest
• Lower upfront cost, ongoing share

Evaluating Opportunities

Questions to Ask Lease/JV Providers

1. Track record: How long in business? References?
2. Fee structure: What exactly do you pay or give up?
3. Term: How long is the commitment?
4. Exit: What happens if you want out?
5. Default: What if they go bust?
6. Transparency: Can you see your carbon position?
7. Control: What decisions require your consent?

Red Flags

• Pressure to sign quickly
• Vague fee structures
• No references or track record
• Unfamiliar with recent rule changes
• Unrealistic promises
• Overly complex structures you don’t understand

Due Diligence

• Get independent legal advice before signing
• Understand the full economic comparison
• Check the company’s financial position
• Talk to other landowners using them
• Make sure the contract matches verbal promises

Major Players (as at 2025)

Several companies offer carbon leasing or aggregation services in New Zealand:

Large-scale operators:

• NZ Carbon Farming (via Tāmata Hauhā for Māori land)
• NZ Forest Leasing Ltd
• Various forestry companies with carbon programmes

Technology-enabled services:

• CarbonCrop
• MyNativeForest

Note: We don’t endorse any specific provider. Do your own due diligence.

Legal and Tax Considerations

Documentation

Get proper documentation:

• Written lease or JV agreement
• Clear on responsibilities and liabilities
• Registered forestry right (if appropriate)
• Reviewed by lawyer familiar with carbon

Tax Treatment

Leasing income:

• Generally taxable as lease income
• Different timing than direct unit sales
• May affect your tax position differently

Joint venture returns:

• Treatment depends on structure
• May be partnership or other arrangement
• Get tax advice for significant arrangements

GST

Carbon lease payments may have different GST treatment than direct unit sales. Check with your accountant.

Key Takeaways

1. Leasing trades upside for simplicity — Guaranteed income, but capped
2. Joint ventures share risk and reward — More complex, more participation
3. Aggregators suit small landowners — Economies of scale
4. Direct ownership earns most — If you’re willing to manage it
5. Due diligence is essential — These are long-term commitments
6. Get legal and tax advice — Before signing anything significant

Next Steps

• Working with Carbon Consultants
• Small Landowners & Lifestyle Blocks
• Legal Considerations & Contracts
• Discuss your options with us