The Department actively promotes afforestation as a land use and the current Forestry Programme 2014-2020, which commenced in 2015 and has been extended to the end of 2022, consists of 11 separate measures to encourage the planting of forests by land owners with a focus on afforestation of private lands. The Forestry Programme 2014 -2020 is 100% exchequer funded, State aid approved, and represents State investment in the forestry sector of some €482m over its lifetime.
The Department’s main Afforestation Scheme includes 12 different planting categories to promote a good species mix and covers 100% of the cost of establishing a forest through the payment of grants. The scheme also pays an annual premium to the landowner of up to €680 per hectare payable each year for 15 years.
Premium rates payable are linked to the category of tree species planted. The basis for the calculation of forestry premium rates was the level of income foregone to a forest owner by switching from agriculture to forestry. The outcomes of the Teagasc study on income figures for agriculture enterprises were used at the time for determining the baseline figures. A particular emphasis was also put on avoiding deadweight loss.
In addition, the Department supported the forestry premium calculations through an externally carried out financial analysis, ensuring that any premiums paid would not result in abnormally high profits compared to a) the returns earned by farmers for the same investment and b) to other types of similar investments (the counterfactual).
All grant-aided activities must be conducted in compliance with the laws of the State relating, inter alia, to tax and employment. Proof of compliance, such as the provision of Tax Clearance Certificates, may therefore be required as part of a valid application for grants and premiums by forest owners. As the Deputy is probably aware, the sale of timber is exempt from Income Tax which is one of the reasons why reforestation cannot be grant aided under State aid rules. The justification and level of funding provided by the national forestry programme in the form of premiums, grants and tax incentives takes into account the many benefits forests provide, including climate benefits and carbon sequestration.
Forest owners are free to avail of the opportunities offered through the different existing voluntary carbon trading schemes as long as they don't impact on Ireland's international accounting and reporting requirements.