Government announces a series of changes to NZ’s climate change law

The government is making a number of changes to the NZ ETS: 

• Removing the provision within the Act that states the NZ ETS unit volumes and price control regulations must ‘accord with’ our Nationally Determined Contributions under the Paris Agreement.  
• Moving ETS Settings decisions from an annual process to a biennial process. This will not affect the annual decision planned in 2026 which will proceed as planned.  
• Changes to how the Government reviews firms’ industrial allocation to decrease the barriers for firms to invest in decarbonization projects   
• Changes to the operation of the ETS, including:  
  
  • Adding the import of carbon dioxide in the NZ ETS   
  • Making administrative changes to penalty repayment provisions managed through the Environmental Protection Authority.  
  • Allowing flexibility for foresters to re-establish forests after significant disruptions, such as severe weather events.   
  • Minor adjustments to the compliance regime, including extending deadlines after major disruptions, amending the penalty for emissions returns that should have been zero, and allowing for discretion to waive ETS penalties in some instances.   

The Government has completed a review of the Climate Change Response Act. The focus of this review was to streamline processes to ensure the Government can focus on delivering its climate change priorities. 

We are making changes across three key areas of the Act: 

• Requirements for emissions reduction plans (ERPs) and national adaptation plans (NAPs) 
• Timing and sequencing of reports, advice, decisions and responses 
• Consultation requirements.  

Changes to requirements for ERPs and NAPs 

• The Climate Change Commission will no longer be required to provide advice to the Government on emissions reduction plans.  
• Content requirements for ERPs will be simplified to only needing to include policies and strategies for meeting the relevant emissions budget, a strategy to mitigate the impact on iwi and Māori, and other policies and strategies that the Minister decides are necessary.   
• Changes to the process for amending or replacing emissions reduction plans and the supporting policies and strategies within the plan that will allow more regular updates as needed. This includes removing the requirement to consult on changes to emissions reduction plans.  
• Creating a new ability to make amendments to a national adaptation plan.  

The Commission will continue to provide policy advice on the climate system through its five-yearly emissions budget advice and its annual Emissions Reduction Monitoring report. The Act also enables the Minister of Climate Change to request advice from the Commission on a range of issues, including to inform future ERPs if needed. 

Changes to timing and sequencing of reports, advice, decisions and responses 

The Climate Change Response Act sets out a series of reports, advice, decisions and responses that must be provided by both the Climate Change Commission and the Government at certain times to support climate policy. A range of updates are being made to create a more logical sequence of advice and decisions and avoid potential duplication: 

• The Climate Change Commission will next provide 2050 target advice in 2031. Subsequently, this advice will be provided in the first year of each emissions budget period.  
• The Minister will next decide on the 2050 target in 2032. Subsequently, this decision will be made in the second year of each emissions budget period.  
• The Climate Change Commission’s advice on emissions budgets will next be due in 2028. Subsequently, it will be due in the third year of each emissions budget period.  
• The Minister will next decide on emissions budget in 2029. Subsequently, this decision will be made in the fourth year of each emissions budget period.  
• The next emissions reduction plan will be due in 2030, instead of 2029. Subsequently, it will be due in the fifth year of an emissions budget period.  

The Government has also decided to bring forward the timing of the Commission’s annual emissions monitoring report to April to connect the advice with the annual release of emissions projections.  Aligning the timing of annual emissions monitoring and the NZ ETS Setting Advice in years when decision are due will enable both reports to be considered as one coherent package. The timeline of the required Government response to these pieces of advice is also being relaxed to enable the Government to respond to these together. To achieve this, we will:  

• reduce the timeframe for ETS Settings regulations to come into force from three months to 28 days 
• extend the timeframe for a response to Emissions Reduction Monitoring Report from three months to during that calendar year. 

The Government has also decided to extend the timeframe for when the Minister must respond to the Commission’s end of emissions budget report to six months.  

Lastly, National Adaptation Plan progress reports provided by the Commission and related Government responses will only be needed two years after the NAP is published. This reduces the number of progress reports required during each NAP period from three to one.  

Consultation requirements 

We are making changes to consultation requirements to remove duplicative processes and ensure consultation by the Commission and the Government is pitched at the right level. The Commission’s advice needs to be informed by experts, in line with its role in providing expert advice, and the Government’s decisions are informed by a range of factors, including public opinion. In this context, it doesn’t make sense for both entities to always be required to consult with the public.  

The Government is making the following changes to address this: 

• The Commission will no longer be required to publicly consult when developing advice on emissions budgets. This is in line with other advice, which does not require consultation. The Commission will still be required to engage with experts and can still carry out public consultation if it considers it necessary. 
• The complex consultation requirements that must be followed when a Minister sets an emissions budget will be removed. This means the Commission will not be required to consult with the public but will still need to seek input from technical experts, and the Government will no longer be required to consult. This change is being made because these are technical decisions and are likely better addressed by expert advice.  
• As the Government is no longer requiring the Commission to provide advice before developing emissions reduction plans, the Commission will no longer need to engage with the public on that advice. The public will still have an opportunity to provide views on emissions reduction plans when the Government consults on proposed policies before finalising these plans.  

Other changes to improve the efficiency and effectiveness of the Climate Change Response Act are detailed in the proactive release of the Cabinet Paper.  

The Government has been exploring opportunities to help recognise and reward non-forestry removals in carbon markets. We are progressing work in three key areas:   

• Releasing an Assessment Framework for Carbon Removals to help landholders and project owners better understand what scientific evidence they need to gain credits for removals, and to clarify the pathway for crediting new activities in the ETS.  
• Amending the Climate Change Response Act to add “carbon removal activities” as an activity that can be recognised under the NZ ETS. This change won’t immediately enable new carbon removal activities to be recognised and rewarded in the NZ ETS. It will, however, enable this in the future by simplifying the process and making it faster.   
• Updating our Guidance for Voluntary Carbon Markets in 2026.  

Read the Assessment Framework for Carbon Removals.  

The Ministry for the Environment expects to launch application tools for people to submit their activities for assessment in the first half of 2026.  

The Government has changed the date for when government organisations need to be carbon neutral. This was originally 2025 and has now been shifted to 2050. This change has been made because 2025 is too soon for organisations to reduce their emissions enough to meet carbon neutrality. 
 
The alternative would be to buy offset credits to achieve neutrality, but there aren’t enough New Zealand-based offset credits for organisations to buy. Buying international offsets is complex and expensive, especially in times of tight fiscal constraints.   
 
This approach is in line with climate mitigation international best practice which is to reduce emissions before offsetting.   The change brings the target year in line with our broader, legislated 2050 net zero target.  
 
Government organisations will continue to measure, report and reduce emissions, ensuring progress towards New Zealand’s climate goals.  

Read more about the Carbon Neutral Government Programme.

More detail about these decisions is available in the Cabinet Paper, which has been proactively released.  

The Government intends to introduce an amendment bill to the Climate Change Response Act to make these changes next year. This will also include previously announced decisions on ETS market governance and requirements for adaptation planning in priority areas as part of the National Adaptation Framework.  

A separate amendment bill will be introduced and passed before the end of this year to bring the recently announced updates to the 2050 biogenic methane target into legislation. The change to remove the requirement for ETS Settings to accord with Nationally Determined Contributions will also be made through this process so that it can take effect in time for next year’s ETS Settings decisions.