New Zealand Units in the ETS
New Zealand Units are also known as NZUs, "units", or "carbon credits". You can earn units if you register in the ETS with eligible land. You may need to pay units if your forest is cleared. This is known as surrendering units.
The Ministry for Primary Industries (MPI) manages forestry in the ETS. If you have any tasks to complete for forestry, you'll do these through us. However, units and unit transactions are managed by the Environmental Protection Authority (EPA). The EPA runs an online register where you can store units and transfer them to other holding accounts when trading. This is called the New Zealand Emissions Trading Register (NZETR). You need an account in the NZETR to receive, trade, or pay units.
Earning units for forestry in the ETS
There are different kinds of forest land in the ETS. You can earn units if you are registered in the ETS with post-1989 forest land.
To earn units, you must report on how much carbon your forest stores. Each unit represents 1 tonne of carbon (or equivalent greenhouse gases). To report on your forest, you must submit emissions returns. This is when you tell us about changes to the amount of carbon in your forest. If an emissions return shows that you're entitled to receive units, and we don't need any more information, we will tell the EPA. They then transfer the units to your NZETR account within 20 working days.
The number of units you can earn depends on a lot of different factors. It also involves complicated calculations. Earning units depends on:
- how much forest land you have in the ETS
- the age of the trees
- the forest type
- the rotation (harvest cycle) the forest is on
- the method of carbon accounting you're using.
You may want to get advice from a forestry professional when deciding whether to join the ETS. You can also appoint a representative to complete ETS tasks for you.
Other ways to get units
You can buy units in:
- auctions that the government runs
- the secondary market, through online trading platforms.
The price of units changes with supply and demand.
What you can do with your units
When you have units, you can either keep them or sell them. They are stored in your NZETR account.
If you want to sell your units, do it through the carbon market. Anyone with an NZETR account can buy and sell units.
If you earn units through forestry, you may need to transfer them back to the government later. If you've sold them, you will need to buy units to pay what you owe. If the value of units has increased since you sold yours, this may cost you additional money.
When you need to pay units for forestry in the ETS
When forest is cleared, the carbon it stores is released. This contributes to New Zealand's emissions. You may need to pay units for these emissions, depending on the kind of forest land you have and whether it's in the ETS. If you need to pay units to the government, we'll tell the EPA. They will send you a notice asking you to pay units.
Paying units for pre-1990 forest land
If you deforest pre-1990 forest land, you must pay units for the emissions. There are exceptions if the land is exempt, or you have an approved application to offset it by planting another forest elsewhere.
Paying units for post-1989 forest land
If you are registered in the ETS with post-1989 forest land, you must pay units if you:
- deforest the land
- remove it from the ETS.
You may need to pay units if you clear the forest, even if you replant it (or it regenerates). This depends on the method of carbon accounting that applies to the land. From 1 January 2023, there are 2 methods of carbon accounting in the ETS:
- stock change accounting
- averaging accounting.
If you're using stock change accounting, you must pay units if you submit an emissions return that shows the amount of carbon has decreased. If you're using the averaging accounting method, you may need to pay units if you clear your forest at an early age.
Paying the units you owe
If you need to pay units, the EPA will send you a notice telling you how many you owe. You can pay units through your NZETR account.
If you don't have enough units, you can buy more. If you don't pay the units you owe on time, you may face a penalty.
Using the Fixed Price Option for units you owe
Until 2021, the "Fixed Price Option" was available for meeting your unit liabilities. The Fixed Price Option is an option to pay a set amount of money for each unit that you owe, instead of paying units.
If you have post-1989 forest land in the ETS, you must submit an emissions return between 1 January 2023 and 30 June 2023. This emissions return covers 1 January 2018 to 31 December 2022.
In this emissions return you may be accounting for emissions that happened between 2018 and 2020, when the Fixed Price Option was still available. You can still use the Fixed Price Option for the units you owe for those emissions.
You cannot use the Fixed Price Option for any units owed for emissions from 2021 onwards.