New Zealand Emissions Trading Scheme

The New Zealand Emissions Trading Scheme (NZ ETS) was launched in 2008 and is a central policy for climate change mitigation in the country. It covers roughly half of New Zealand’s GHG emissions. The “Climate Change Response Act 2002” sets the legislative framework for the NZ ETS and incorporates all New Zealand’s key climate legislation under one Act.

The NZ ETS has broad sectoral coverage, including forestry, stationary energy, industrial processing, liquid fossil fuels, waste, and synthetic GHGs. Free allocation is granted only for emissions-intensive and trade-exposed (EITE) activities and is based on output- and intensity-based benchmarks. Auctioning of allowances began in March 2021. Uniquely to the NZ ETS, the forestry sector has both emissions surrender obligations and the opportunity to earn units for emissions removals. Currently, biological emissions from agriculture have reporting obligations without surrender obligations. A carbon price will be levied on agricultural emissions by 2025, either through the NZ ETS or a separate pricing mechanism.

Extensive legislative reforms of the NZ ETS were implemented in 2020 to improve its design and operation and enable it to better support New Zealand’s international and domestic emissions reduction obligations.

The scheme covers the following sectors: Forestry, Waste, Domestic Aviation, Transport, Buildings, Industry and Power.

For more information please visit: