Introduction to averaging carbon accounting for forests in the Emissions Trading Scheme

Averaging accounting is a new method to account for carbon storage in forests registered in the New Zealand Emissions Trading Scheme (ETS). From 2023 all newly registered post-1989 forests must use averaging accounting unless they are registered as a permanent forest. This fact sheet covers the basics of averaging accounting.

What is averaging accounting?

Currently all forests in the ETS use the stock change method to account for carbon storage. Averaging accounting works very differently to stock change accounting and there are several new concepts.


A first rotation forest will earn carbon credits up to its long-term average carbon stock

Under averaging accounting, a first rotation forest (that is, a forest that hasn’t been harvested before) will earn carbon credits until it reaches its long-term average carbon stock. This is the blue line in the graph above. The long-term average carbon stock is the average amount of carbon stored in the forest over several cycles of growth and harvest. The forest’s actual carbon stock is the black line in the graph above.

The long-term average carbon stock is based on an assumed harvest age

The average amount of carbon your forest stores is calculated using an assumed harvest age and the growth curves for your type of forest. The types of forest are radiata pine, Douglas fir, exotic softwoods, exotic hardwoods, or indigenous.

When you register in the ETS, we assume you will:

  • harvest at an age “typical” to your forest type – most forests of the same type are harvested within a similar rotation timeframe, and
  • harvest your forest at around the same age in every rotation.

The age when the forest reaches its average carbon stock is its "average age"

We will assign an average age to each forest type. Forests on their first rotation will earn carbon credits until they reach their average age. Once they reach the average age they will stop earning units.

Until your forest reaches its average age you must complete emissions returns to report the amount of carbon being stored in your forest. This is the same as if you were using stock change accounting.

The age when the forest is harvested determines the number of carbon credits you earn

If the forest is harvested at or near its assumed harvest age you will keep all the carbon credits you earned. If you replant, you won’t need to pay any carbon credits back.

"Age bands" are a range of harvest ages that have the same average age

All forests harvested within a range of ages – an age band – will be assigned the same average age. They will receive the same number of carbon credits per hectare. Age bands provide some flexibility around harvest age for participants so they do not have to worry about accounting for small changes in carbon stock. Participants will often harvest a few years earlier or later than the assumed harvest age, depending on market prices and other factors.

The default age band will be set around the assumed harvest age for each forest type

When you register an area of forest land we will assume you will harvest the forest within the age band that includes the assumed harvest age. This means you can harvest any time within the age band of the assumed harvest age without having to surrender any of the carbon credits you earned.


Only significant changes in carbon storage will result in earning or surrendering carbon credits

If you harvest later than the age band of the assumed harvest age, you will move up an age band (from band A to band B in the left-hand graph below) and you will earn additional carbon credits. This is because the long-term average carbon stock in your forest has increased from what we assumed when you registered.

If you harvest earlier than the age band of the assumed harvest age, you will move down an age band and will need to surrender some carbon credits (from band A to band B in the right-hand graph below). This is because the long-term average carbon stock in your forest is lower than what we assumed it would be when you registered.


The amount you earn or surrender will be the difference between the number of carbon credits assigned to the default age band and the number assigned to the age band you actually harvest in.

Switching to averaging accounting

Until 31 December 2022, all newly registered forests will use the existing stock change method for calculating carbon storage.

Forests that are registered between 1 January 2019 and 31 December 2022 can switch to averaging accounting in 2023. You will do this through a special emissions return process.

From 1 January 2023, averaging accounting must be used for all newly registered post-1989 forests, unless it is registered as a permanent forest activity.

Where to find more information

The Ministry for Primary Industries website has information on all of the policy changes being made to the forestry parts of the ETS.

You can also get in touch with us at:

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