Emissions Trading Scheme improvements for forestry

Between 2015 and 2019, the Government conducted a review of the Emissions Trading Scheme (ETS) and consulted on potential changes and improvements. A wide range of changes to the forestry provisions in the Climate Change Response Act 2002 are now being introduced, and work is continuing to update the supporting forestry regulations. Most of the changes will apply from 2023. Find out about what's changing.

Updates

25 June 2020 – Emissions Trading Reform Bill receives royal assent

On Monday 22 June the Emissions Trading Reform Bill received royal assent. This means it will become law, and the Climate Change Response Act will be updated to reflect the new provisions as they come into effect.

The revised legislation is on the New Zealand Legislation website.

Climate Change Response Act 2002 – NZ Legislation

For forestry, most of the new provisions will come into effect (start) on 1 January 2021 or 1 January 2023. However, some provisions started the day after royal assent on 23 June 2020. These include:

  • extended deadlines for unit surrenders for post-1989 forestry emissions
  • changes to how estate executors or administrators become participants as part of a transmission of interest
  • changes to the notification requirements of interested parties when adding or removing land from the ETS
  • clarifying requirements for pre-1990 offsetting emissions returns
  • making it easier to register previously deforested exempt land in the ETS
  • simplifying the exemption application process for owners of less than 50 hectares of pre-1990 forest land
  • changes to the registration requirements for consolidated groups and unincorporated bodies.

Find out more information about the operational improvements

There are also changes to the fixed price option (FPO) that may interest forestry participants:

  • The FPO has changed from $25 to $35 for emissions from the start of 2020.
  • For emissions which occurred up to 31 December 2019, participants will continue to have access to the FPO at $25 for those emissions.
  • Post-1989 forestry participants who submit a net emissions return which covers multiple years will have access to the FPO on a pro-rata basis for the number of years in the emissions return. For example, if a voluntary emissions return under section 189(3) is submitted in 2021 and is the first VER for the CAA since 2018, up to two thirds of the surrender obligation can be met at $25 (2018 and 2019) and up to one third at $35 (2020).

More information about the FPO changes is on the Ministry for the Environment (MfE) website.

Price controls in the New Zealand Emissions Trading Scheme – MfE

If you have any questions about the upcoming changes to forestry in the Climate Change Response Act, email etsforestrychanges@mpi.govt.nz

9 June 2020 – We're making it easier to register forests in the ETS

Over the next 2 years we're looking at ways to streamline our ETS administration and upgrade our technology to make it easier for people to take part.

We're replacing the existing Climate Change Information System (CCIS) with a new system. The first version of this will be live by mid-2022. Along with this you'll also see:

  • streamlined processes
  • improved administration
  • better guidance and tools for landowners.

Our new system and processes will give you:

  • a more user-friendly interface
  • reduced application processing times
  • a quicker and simpler system for registering trees
  • reduced complexity - making it easier for you to meet statutory requirements.

Get in touch if you want to sign up for updates or give feedback on what you'd like to see in the new system. You can contact us by email etsforestrychanges@mpi.govt.nz

2 June 2020 – Emissions Trading Reform Bill has second reading

The Government has introduced some important changes to forestry through a supplementary order paper (SOP) which will now be debated in the House.

The SOP proposes 3 key changes for forestry:

  • Many of the forestry provisions will come into effect on 1 January 2023. Forests registered between 1 January 2019 and 31 December 2022 will be able to use stock change accounting or averaging accounting.
  • The temporary adverse events provisions will be made available to all post-1989 forests in the ETS. Temporary adverse event cover will let participants "pause" their unit earning after an adverse event, such as a fire, instead of having to pay units back.
  • The new non-surrender/repayment penalty will apply to small forestry participants from 1 January 2023. The existing penalty in the Climate Change Response Act will apply until 31 December 2022 to forestry activities that result in a surrender obligation of less than 25,000 units per year.

Find out more about the Bill on the Ministry for the Environment (MfE) website.

Overview of the New Zealand Emissions Trading Scheme reforms – MfE

10 December 2019 – Consultation extended

Te Uru Rākau extended the deadline for submissions until 5pm on Wednesday 15 January 2020.

Consultation announcement for the proposed changes

10 November 2019

The ETS Forestry Regulations consultation was opened for submissions. 


24 October 2019

Climate Change Response (Emissions Trading Reform) Amendment Bill 2019 introduced

The Climate Change Response Amendment Bill was introduced to Parliament for its first reading. The Bill covers the policy decisions on the ETS forestry improvements that have been announced over the last 9 months – for example, the introduction of averaging accounting. The Bill also includes the decisions on agriculture in the ETS.

You can make submissions on these major changes through the Environment Select Committee.

We were also consulting on the ETS Forestry Regulations, which cover the operational detail of the changes. For example, how averaging accounting will work.

If you have any questions, email etsforestrychanges@mpi.govt.nz

Note that any submissions on the policies should go to the Environment Select Committee when it is receiving submissions.

Climate Change Response (Emissions Trading Reform) Amendment Bill – New Zealand Parliament

ETS changes – MfE

ETS agricultural emissions – MfE


Other ETS improvements

The Government has also announced other improvements to the overall ETS.

Information on these changes is available on the Ministry for the Environment (MfE) website.

Proposed improvements to the ETS

MfE consultation on technical rules for auctioning in the ETS

Introducing an emissions cap will not affect the availability of New Zealand Units for forestry participants with forests registered in the ETS.

Find out more

Make a submission to the Emissions Trading Scheme Forestry Regulations

Learn more about the Emissions Trading Scheme

Read Cabinet papers related to the decision

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