What is changing?
The Government has introduced policy changes intended to limit how much farmland is converted to exotic forest and registered in the ETS. These changes are to preserve productive land for agricultural use.
- A bill is going through Parliament that proposes changes to the Climate Change Response Act 2002.
- It is called the Climate Change Response (Emissions Trading Scheme – Forestry Conversions) Amendment Bill.
- The Government introduced the bill on 10 June 2025 and it was referred to the Environment Select Committee on 24 June 2025 for 7 weeks.
- The bill proposes a commencement date of 31 October 2025.
- The Select Committee reported back to Parliament on 13 August 2025, recommending that the bill is passed but with some changes.
- The bill passed its second reading on 19 August 2025. It will now progress to the final stages of the parliamentary process.
- It is possible more changes will be made to the bill as it goes through Parliament.
Media release: Legislation introduced to restrict farm-to-forest conversions – Beehive
Track progress of the bill through Parliament – New Zealand Parliament
Regulatory Impact Statement: Managing farm conversions to exotic forestry [PDF, 3 MB]
Proposed changes to the bill after Select Committee
We’ve updated this page to reflect the proposed changes from the Select Committee. The main change proposed is to the transitional exemptions (summarised below).
More information on this and other minor and technical changes can be found in the revision-tracked bill and Select Committee report.
Changes to transitional exemptions
People applying for a transitional exemption will need to show:
- a clear interest in the land before 4 December 2024, and
- evidence of a qualifying investment.
Sale and purchase agreements, forestry leases or rights, or seedling orders will not be enough on their own to qualify for a transitional exemption.
Read about transitional exemptions
What restrictions does the bill propose?
Currently, there are no restrictions on how much forest land you can register in the ETS.
The proposed changes restrict how much Land Use Capability (LUC) class 1 to 6 farmland you can convert to exotic forest and register in the ETS.
Once the proposed bill takes effect, landowners and rights holders will still be able to register some exotic forestry in the ETS if it's on LUC class 1 to 6 land.
There will be 2 options to do this:
- The proposed bill lets you register up to 25% of LUC class 1 to 6 land as exotic forest on each farm.
- As well as the 25% above, 15,000 hectares of LUC class 6 farmland can be converted to exotic forest and registered in the ETS annually. This is a national limit and the rights to apply to register this land will be allocated through an annual ballot.
There will also be specific circumstances where land will not be restricted, meaning it may be exempt from the restrictions above.
About the Land Use Capability (LUC) system
The LUC system classifies land based on its ability to support various productive uses over time. Land is classified based on features such as climate, soil, slope, vegetation, and erodibility.
LUC 1 is the most productive land and LUC 8 is the least productive.