News and changes to the ETS

17 December 2021

Infringement offences

The Climate Change Response (Infringement Offences) Regulations 2021 will come into force on 1 January 2022.

Forestry ETS participants, and those who own pre-1990 forest land, must keep accurate records and provide certain information when required. Those who don't comply may be served with an infringement notice.

To encourage good compliance and provide forestry participants with the best opportunity to comply with their obligations, Te Uru Rākau – New Zealand Forest Service will take a phased approach to enforcement. In 2022, to promote understanding of the new rules, we will advise participants when they may have infringed. From 2023, infringement offence notices will be issued where applicable.

Read more about infringement offences in the ETS

Compliance in the ETS – Environmental Protection Authority

13 December 2021

Preliminary assessments to cease

Te Uru Rākau – New Zealand Forest Service will stop issuing preliminary assessments from 24 December 2021. This is part of a move to improve the efficiency of processing applications to register post-1989 forest land in the Emissions Trading Scheme (ETS).

This change will apply to all lodged applications still in the processing queue as at 24 December 2021, and new applications submitted after that date. The eligibility of land to be registered into the ETS as post-1989 forest land will be decided based on information available at the time.

Read the Sustainable Forestry Bulletin

7 December 2021

New exemption from pre-1990 deforestation obligations for less than 50 hectares   

One of the amendments to the Climate Change Response Act 2002 introduced a new exemption from pre-1990 deforestation obligations.

Landowners who intend to deforest less than 50 hectares of pre-1990 forest land that is Māori land, or had 10 or more owners on 1 September 2007, may be eligible to be exempt from deforestation liabilities.  

This new exemption type is in addition to the existing "less than 50 hectare" exemption.

Find out more about this exemption

3 November 2021

Proposed amendments to the forestry regulations

The Cabinet paper on the direction of several major amendments to the forestry regulations is available to download.

Cabinet has agreed to:

• the mechanics for how averaging accounting will work in practice
• the definition of temporary adverse events to implement the new exemption from paying carbon liabilities after events that damage and clear the forest (for example, fires or storms)
• how the penalty for clear-felling a permanent forest will be set
• policies for applying the field measurement approach (FMA).

Find the Cabinet paper and supporting documents

Changes to forestry from January 2021

You can decide whether to transfer ETS participation when you grant a forestry right or lease

It is now up to you whether you transfer your ETS participation to the other person (a "transmission of interest") when you grant a forestry right or lease over your forest. You will need to opt in to a transfer of ETS participation – if you do not opt in, participation will not be transferred.

This change does not affect the status of current forestry rights or leases. For these, participation will return to the landowner when the lease or right is finished.

Buying, selling, or transferring ETS forest land

A new definition of "re-establishment" makes it easier to include supplementary planting

Re-establishment of forest land must still happen primarily through natural regeneration of indigenous forest species. However, it can now include some supplementary planting to help this process. 

A new penalty regime

A new penalty regime effective from 1 January 2021 covers:

• failure to surrender or repay units on time
• errors in emissions returns
• failing to submit a return
• payment of penalties
• entitlements while an obligation is outstanding.

There are new rules for transferring leases or rights for land registered in the ETS.

The fixed price option is also being removed, so participants must meet their surrender obligations with units.

Read more on penalties and the Emissions Trading Scheme

Read the announcement in the Sustainable Forestry Bulletin (December 2020)

New price controls in the ETS

The Amendment Act introduced the ability for the Government to hold auctions of New Zealand Units to align the supply of units in the ETS with New Zealand’s emission reduction targets. The first auction was on 17 March 2021. The Amendment Act also introduced new price controls alongside auctioning.

Regulations on auctions, limits and price control settings for the NZ ETS – MfE

Minor changes that started on 23 June 2020

You have more time to surrender or repay units

When the Environmental Protection Authority issues a surrender notice, you have 60 working days to surrender or repay units. The surrender notice describes your obligations and includes the due date.

You must notify "interested parties" when you join or leave the ETS, and add or remove land

You must notify any "interested parties" if you:

• apply to join or leave the ETS
• add or remove land from the ETS.

If you are the landowner, you must notify any person with a registered forestry right or lease over the land.

If you are the holder of a registered forestry right or lease you must notify the landowner. If the Crown has an interest in the land you also need to notify the Crown.

It's now easier to ask for an emissions ruling

If you want to know if something will have ETS implications, you can ask the Te Uru Rākau to make an emissions ruling. For example, before you clear some trees, you can ask us if this counts as deforesting pre-1990 forest land.

The process for emissions ruling has changed. It is now easier to find out if land will be eligible before you apply to register in the ETS.

The timing for mandatory emissions return periods is being re-aligned

Emissions return periods usually last for 5 years. The current mandatory emissions return period runs from January 2018 to December 2022.

Reporting to the Paris Agreement also has a 5-year cycle, but this is from January 2026 to December 2030, then 2031 to 2035, and so on. To align our reporting with the Paris Agreement, the next mandatory emissions return period will run for 3 years from January 2023 to December 2025.

From January 2026, mandatory emissions return periods will return to a 5-year cycle.

Transmissions of interest are changing for executors or administrators of an estate

The transmission of interest process is changing for executors and administrators dealing with the ETS obligations of a participant who has died.

If you administer more than one estate, you must treat them separately. This means that outstanding liabilities from one estate will not impact another. You will not become an FMA participant if you are administering estates with a combined area exceeding 100 hectares.

Executors and administrators do not need to submit an emissions return when they come into possession of the land. An emissions return is only required when the land is passed on to the successors.