The ETS puts a price on greenhouse gas emissions. People or organisations involved in the Emissions Trading Scheme (generally land owners, businesses, or people with forestry rights) can earn credits for business activities that absorb carbon dioxide (like planting or managing forests). When they earn credits, they can either:
- trade them
- hold onto them
- surrender them back to offset their activities that emit greenhouse gases (like burning fossil fuels) or reduce stored carbon (like harvesting trees).
Emitters can also purchase credits to offset their emissions. This provides an incentive for people to reduce emissions and plant forests to absorb carbon dioxide.
Certain businesses are required to acquire and surrender emission units to account for their direct greenhouse gas emissions or the emissions associated with their products.
An emission unit represents one metric tonne of carbon dioxide or the equivalent of any other greenhouse gas (carbon dioxide equivalent). There are lots of unit types and a variety of emission units are traded throughout the world.
MPI's main role is to administer the ETS for the forestry sector. We do this in partnership with the Ministry for the Environment (MfE) and the Environmental Protection Authority. We also work with MfE on climate change policy for the agriculture and forestry sectors.
Agriculture and the ETS
Farmers and producers are not currently required to surrender emission units for the biological emissions produced by agricultural activities. The Government has commissioned the Interim Climate Change Committee to assess how surrender obligations could best be arranged if agricultural methane and nitrous oxide emissions enter into the New Zealand Emissions Trading Scheme.
- Visit the Interim Climate Change Committee website
- Find out about agriculture and greenhouse gas emissions
Agricultural processors must report the on-farm biological emissions associated with the production of the milk and meat they process to the Environmental Protection Authority.
The term "agricultural processors" includes:
- meat processors
- dairy processors
- nitrogen fertiliser manufacturers and importers
- live animal exporters.
There are some exemptions to these categories, including:
- wool and velvet processors
- egg producers.
It's about sustainability and achieving our commitment to reducing emissions
The primary aim of the ETS is to encourage environmentally sustainable behaviour.
In New Zealand, sustainability is defined as:
- good governance that supports and maintains profitable enterprises
- encouraging and protecting the environmental integrity of both our ecosystems and the social wellbeing of our communities.
2016 - The Paris Agreement
The Government ratified the Paris Agreement in October 2016. The Agreement commits New Zealand to an ambitious target – to reduce emissions to 30% below 2005 levels by 2030. To meet our commitments under the Agreement, changes would need to be made to the ETS and our other climate change policies and programmes.
The transformation programme
To support New Zealand’s climate change ambitions, Te Uru Rākau – New Zealand Forest Service is transforming the Forestry ETS. New processes and technology will simplify the ETS for users and support greater accuracy for current and future participants.
Updates to the ETS
Between 2015 and 2021, the Government consulted on changes and improvements to the ETS. Changes were legislated in the Climate Change Response (Emissions Trading Reform) Amendment Act 2020, and most of the new provisions that relate to forestry will come into effect on 1 January 2023.
- Emissions Trading Scheme reviews
- New Zealand's Emissions Trading Scheme – Ministry for the Environment
- Emissions Trading Scheme and Register – Environmental Protection Authority
Who to contact
If you have questions about MPI's role in the ETS or what you can do to reduce your emissions by planting forests, email firstname.lastname@example.org