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Emissions Trading Scheme

If you own some forest or are considering planting areas of land, you may be thinking about joining the New Zealand Emissions Trading Scheme (NZ ETS).

The NZ ETS can be complex, so it pays to be well informed before joining the scheme.

Below is a brief overview, however we recommend that you do your research and check out the links provided to learn more.

What is the NZ ETS?

The NZ ETS is the Government’s main tool for meeting domestic and international climate change obligations and targets.

The scheme puts a price on emissions, by charging certain sectors of the economy for the greenhouse gases they emit. They must then acquire and surrender New Zealand Units (NZUs) to account for their direct greenhouse gas emissions or the emissions associated with their products.

Those that remove greenhouse gases from the atmosphere, such as forest owners, can earn NZUs from the Government.

For more information about the scheme and how it works, visit: environment.govt.nz/ets

Who can participate in the NZ ETS?

Property title owners and/or forest owners can register their forest and participate in the NZ ETS.

Under the NZ ETS, forest land must be at least a hectare in size and have (or will have) tree crown cover:

  • of more than 30% in each hectare from forest species
  • with an average width of at least 30m
  • Forest species in the NZ ETS are those that can reach at least 5m in height when mature, including mānuka. This doesn't include trees grown primarily for fruit or nuts.

Stands of trees less than a hectare can be linked using strategic planting corridors to join smaller stands together thereby increasing the size of co-joined stands to meet forest land definition of more than a hectare. This can be used to join stands of poplars, planted for erosion control, together to form forest land greater than a hectare.

Registering post-1989 forest land

The Ministry of Primary Industries (MPI) has a step-by-step guide to help you register forest land in the scheme. Visit: www.mpi.govt.nz/forestry - Registering post-1989 forest land

If you have any questions about registering your forest:

Obligations

Participants in the NZ ETS are required to meet several obligations. It is very important that you understand your obligations to avoid penalties.

For more information, visit: www.mpi.govt.nz/forestry - Forest land in the ETS 

Carbon accounting

Once registered in the NZ ETS, you need to calculate and account for changes in the carbon stored in your forest to see whether you will receive NZUs or need to surrender some.

There are two different ways to do this, depending on when the forest was registered in the scheme and the harvest regime.

Stock change accounting: This method accounts for short-term changes in your forest's carbon stock. Stock change accounting is used by existing post-1989 forests and forests in the permanent post-1989 activity.

Average accounting: Averaging accounting looks at your forest's long-term carbon storage over several rotations of growth and harvest. New post-1989 forests can use averaging accounting. It will be mandatory from 1 January 2023.

For more information, visit: www.mpi.govt.nz/forestry - Accounting for carbon in the ETS