Country:New Zealand
Policy status:In Force
Date Effective:2010
Date Amended:

2010, 2012; Being reviewed 2016

Policy Type:Economic Instruments>Market-based instruments>GHG emissions trading
Policy Target:Multiple RE Sources
Policy Sector:Electricity, Framework Policy, Multi-sectoral Policy
Agency:Ministry for the Environment
Legal References:Climate Change Response (Emissions Trading) Amendment Act 2008; Climate Change Response (Moderated Emissions Trading) Amendment Act 2009; Climate Change Response (Emissions Trading and Other Matters) Amendment Act 2012

Under the United National Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol , New Zealand has commitments to reduce its greenhouse gas emissions.

The Government has chosen the New Zealand Emissions Trading Scheme (NZ ETS) as its primary tool to reduce emissions, as it is the least-cost way of reducing emissions. The NZ ETS puts a price on emissions and therefore creates a financial incentive for all New Zealanders – especially businesses and consumers – to change our behaviour. The NZ ETS provides an incentive to:

  • reduce emissions
  • invest in clean technology and renewable power generation, and
  • plant trees. 

The New Zealand Emissions Trading Scheme (NZ ETS) is the principal policy tool underpinning New Zealand’s domestic emissions reduction action. It requires emitters that are participants in the scheme to report on their emissions and surrender emissions units that correspond to their obligations. 

The NZ ETS is a broad based trading scheme that enables New Zealand to meet its international targets using international carbon markets.  Entry to the scheme was phased by sector, with forestry the first sector to have reporting and surrender obligations. Since then, the transport, stationary energy , industrial processes, synthetic gases and waste sectors have joined the NZ ETS. The agriculture sector faces reporting obligations and currently there is no legislated date for when biological agricultural emissions will assume surrender obligations under the NZ ETS.

Introduced in 2008, the NZ ETS was reviewed in 2011 with consequential amendments made in 2012. The resulting changes were designed to ensure the NZ ETS remains flexible and able to respond to a range of international agreement outcomes in the 2013 to 2020 period, while more effectively supporting Government’s economic growth priorities. The NZ ETS is a long-term tool and the Government is committed to regularly reviewing the NZ ETS and making any modifications as needed to ensure New Zealand meets its international climate change obligations and reduces emissions.

Agricultural research: New Zealand has a strong focus on researching ways to reduce emissions from agriculture production and it is an area where New Zealand can provide expertise. This has seen an enduring commitment to providing leadership in research, innovation and technical solutions to reduce greenhouse gas emissions from agriculture, and sharing this knowledge internationally.

Financial support: New Zealand remains committed to assisting developing countries to address climate change.  New Zealand delivered on its fast-start finance commitment, providing NZ$30 million per annum over the three-year period 2010 – 2012. New Zealand has given and delivered on undertakings to continue to provide climate change related financial support to developing countries, with a focus on renewable energy in the Pacific.

Public awareness campaigns: The Government actively supports initiatives that encourage public awareness of climate change. Over the past four years, the Government has run a number of public awareness campaigns, including household and vehicle energy efficiency campaigns, greenhouse gas reduction certification schemes, tools for measuring emissions, and environmental awards.

Research on impacts, adaptation and vulnerability: During the reporting period the Government has funded research relating to the impacts of climate change in a range of subject areas. In particular, research has focused on the land-based sectors and the built environment. The Government has undertaken work to identify vulnerabilities in the tourism and transport sectors. New Zealand has committed investment towards a four year research project investigating community vulnerability to climate change.

International engagement: New Zealand engages widely at the international level to address climate change. In addition to participating actively in IPCC working groups and UNFCCC negotiations, New Zealand contributes to a number of scientific organisations and plurilateral initiatives. For example, New Zealand is active in international efforts to eliminate fossil fuel subsidies and is a member of the Friends for Fossil Fuel Subsidy Reform group.

Carbon dioxide removal from forests: New Zealand’s net emissions are significantly affected by carbon dioxide removals from the planted forest estate. Planted forest in New Zealand covers 2.1 million hectares of land and makes up 21% of the total forest cover. Extensive forest planting on pastoral land in the early 1990s has partially offset New Zealand’s greenhouse gas emissions.

The Ministry for the Environment is leading the consultation. The review will focus on:

  • some transitional measures introduced to moderate the impacts of the NZ ETS
  • what is required for the NZ ETS to evolve with changing circumstances including future targets
  • operational and technical improvements a report on an evaluation of the NZ ETS to date.

In 2012 amendments were made to the NZ ETS to:

• support New Zealand contributing its fair share to international action to reduce emissions, including meeting international obligations
• deliver emission reductions in the most cost-effective manner
• support efforts to maximise the long-term economic resilience of the New Zealand economy for the least cost.
The changes maintain transition phase settings and aim to ensure the NZ ETS is flexible enough to cater for future international scenarios by giving the Government the power to auction NZ Units and introducing a number of technical amendments to improve the operation and administration of the NZ ETS. In particular, the changes:
• extend transitional measures to reduce the cost impacts of the scheme beyond 2012 – this has seen the introduction of two-for-one surrender obligations and the choice for participants to meet their obligations by paying the Government NZ$25 per tonne of emission (the fixed price option)
• remove the start date for surrender obligations for biological emissions from agriculture – the Government has indicated that the agriculture sector will only face surrender obligations if there are economically viable and practical technologies available to reduce emissions and when New Zealand’s trading partners make more progress on tackling their emissions in general
• introduce ‘offsetting’ as an option for pre-1990 forests – this provides forest land owners with the flexibility to convert their land to a better use, while avoiding deforestation costs by planting a carbon-equivalent area of forest elsewhere
• remove forest land with naturally regenerated tree weeds (ie, pest species) from post-1989 registration eligibility, unless the Environmental Protection Authority is satisfied that the risk of spread is low.

Related policies:Negotiated Greenhouse Gas Agreements (NGAs) , New Zealand Energy Strategy (NZES) , Climate Change Response Legislation , Policy Package on Climate Change
This record supersedes:National Emission Reduction Strategy

Last modified: Fri, 20 Jan 2017 14:15:31 CET