Accounting for changes to the amount of carbon stored in your forest
Forests absorb carbon dioxide from the air as they grow. When the forest is harvested or cleared, this stored carbon is released. If you have post-1989 forest land in the ETS, you must regularly calculate and report on the carbon stored in your forest. This process is known as "carbon accounting".
Learn more about post-1989 forest land
Carbon accounting involves:
- regular calculations of the amount of carbon in your forest land
- reporting on how much the amount of carbon in your forest land has changed
- keeping records of your calculations.
This process is how you find out how many New Zealand Units (NZUs or units) you can claim. It will also tell you when you need to pay units. This is known as “surrendering” units.
If you are deforesting pre-1990 forest land, this does not apply to you. Emission returns for deforesting pre-1990 forest land only need a one-off calculation. You don’t need to account for changes across a period of time.
Find out what you need to do when you deforest pre-1990 forest land
Carbon accounting methods
From 1 January 2023, there are 2 methods of carbon accounting for post-1989 forest land in the ETS. These are:
- stock change accounting
- averaging accounting.
The number of units you earn or need to pay depends on the carbon accounting method you’re using.
Stock change accounting
The stock change method accounts for short-term changes in carbon storage. Using this method, you earn units as your forest grows and need to pay units when it’s cleared.
Before 1 January 2023, only stock change accounting was available.
Find out more about stock change accounting
Averaging accounting accounts for the long-term carbon storage of your forest land. With averaging accounting, you earn units until your forest reaches a certain age. You can then harvest your forest without having to pay units, as long as you replant.
Find out more about averaging accounting
Which accounting method applies to your land
Depending on when you registered your post-1989 forest land in the ETS, you must either:
- continue using stock change accounting
- make a one-off choice between stock change and averaging accounting, or
- use averaging accounting.
Different rules apply to forest land registered in the ETS before 2019, between 2019 and 2022, and from 2023 onwards.
These rules apply regardless of the size of your registered post-1989 landholding.
Forest land registered before 2019
If you registered forest land in the ETS before 2019, you must continue to use stock change accounting for that land.
Forest land registered between 2019 and 2022
If you applied to register forest land from 1 January 2019 and it was registered before 1 January 2023, it will have been registered under stock change accounting. You can choose whether to change this land to averaging accounting.
You will only have one chance to change to averaging accounting. If you don’t change by 30 June 2023, you must continue using stock change accounting for that forest land.
The accounting method applies to the forest land itself, rather than your registration. This means you can keep using stock change accounting for some of your post-1989 forest land and use averaging accounting for other areas.
Changing to averaging accounting and submitting your emissions return
To change registered post-1989 forest land to averaging, you must tell us by 30 June 2023. We'll provide information about how to do this when the process has been finalised. For any land that you change to averaging accounting, you must use averaging accounting to account for the whole of the 2018 to 2022 mandatory emissions return period.
You must also complete your emissions return for this period by 30 June 2023. This means that if you decide to change, you must complete this emissions return using averaging accounting. We will provide guidance on how to do this when the rules have been finalised. If you transition some carbon accounting areas to averaging accounting and keep some in stock change accounting, you’ll need to do an emissions return for each accounting method.
If you complete your emissions return for the 2018 to 2022 period using stock change accounting, you cannot then change to averaging accounting for that land.
Submit your request to change to averaging accounting from 1 January 2023.
Download the form to request to change to averaging accounting [PDF, 390 KB]
Forest land registered from 2023
From 1 January 2023, if you register forest land in the ETS you must use averaging accounting, unless you register your forest into the permanent forestry category.
The permanent forestry category is available from 1 January 2023. This category is for forests that won’t be clear-felled for at least 50 years. If you register a permanent forest, you will use stock change accounting for that land.
Learn more about permanent forests in the ETS
Using emissions returns for carbon accounting
To account for the carbon in your forest land, you complete and submit emissions returns. There are different types of emissions returns that must be completed at different times. An emissions return for post-1989 forest land:
- covers a set period of time
- calculates how much the carbon in the forest has increased or decreased over that time.
Based on the result of your emissions return, you will earn or need to pay units.
Learn more about emissions returns
Find out more
Find out more about stock change accounting