Overview

Description

The New Zealand Emissions Trading Scheme (NZ ETS) was launched in 2008 and covers roughly half of the country's emissions. Covered entities must surrender allowances for all their reported emissions. The NZ ETS was originally designed to operate without a specific hard domestic cap as this accommodated carbon sequestration from forestry activities and a full link to the international Kyoto Protocol carbon markets, but in 2015 the allowance supply was restricted to NZUs. The NZ ETS was originally conceived as a nested system under the Kyoto Protocol, with full links to international carbon markets. However, as of June 1 2015, the NZ ETS became a domestic-only system. Extensive legislative reforms of the NZ ETS were implemented in 2020. Agricultural processor-level reporting obligations, along with the prospect of compliance obligations, were repealed in 2024. The agriculture sector now has no obligations under the NZ ETS.

Recent Developments

In August 2025, the government announced annual unit supply settings for 2026 to 2030 where base auction volumes will decline from 5.2 million units in 2026 to 1.7 million in 2030, with the overall cap falling from 16.3 million in 2026 to 9.6 million in 2030. The 2026 auction reserve price floor is NZD 71, and the first CCR trigger price is NZD 201. In September 2025, Parliament restricted new NZ ETS registrations for plantation forests on high and medium productivity agricultural land. In November 2025, the government adopted amendments to the Climate Change Response Act streamlining NZ ETS governance, including removing the requirement for unit supply settings to accord with the country's NDC and making public consultation on emissions budgets discretionary rather than mandatory.

Coverage

The NZ ETS applies to GHG emissions (CO2, CH4, N2O, SF6, HFCs and PFCs) from the industry, power, waste, transport and forestry sectors and includes industrial process emissions. The agriculture sector carries no reporting or surrender obligations under the NZ ETS following the 2024 repeal of agricultural emissions provisions.

Pricing and Allocation Approaches

Free allocation (Intensity-based), Auctioning

Compliance Approaches

Annual

Relation to Other Compliance CPIs

The NZ ETS is not linked with any other system. Until June 2015, the NZ ETS was indirectly linked to other systems (e.g., the EU ETS) via the international Kyoto Protocol flexible mechanisms. Since then, the NZ ETS has been an exclusively domestic system.

Covered Sectors

Electricity and heat

Industry

Mining and extractives

Transport

Aviation

Buildings

Agriculture, forestry and fishing fuel use

Waste

LULUCF