Government to amend emissions trading scheme settings, other climate change requirements

Neutrality goal for carbon neutral government program moved to 2050 from 2025

Government to amend emissions trading scheme settings, other climate change requirements

Simon Watts, climate change minister, has announced plans for the government to introduce targeted legislative changes to ensure the Climate Change Response Act 2002 (CCRA) works efficiently and as intended through an amendment bill next year. 

According to the government’s news release, the changes contemplated to the CCRA include: 

  • deleting or updating unnecessary or complex CCRA requirements, including duplicative consultation requirements for the Climate Change Commission and the government, as well as the need for the Commission to provide policy direction advice before the government’s development of an emissions reduction plan 
  • amending the industrial allocation settings and other functions of the New Zealand Emissions Trading Scheme (NZ ETS) for more market certainty and fewer disincentives to decarbonisation project investments 
  • making the annual ETS settings process a biennial one instead 
  • removing the requirement for ETS settings to align with nationally determined contributions 
  • adding future opportunities to recognise other carbon removal types in the NZ ETS 
  • making other technical updates for stakeholders to meet CCRA requirements more easily

“The package presents some of the most significant changes to climate policy since the 2019/2020 reforms associated with the Zero Carbon amendments,” stated an insight from law firm Chapman Tripp. 

In the government’s news release, Watts said the planned amendments aim to: 

  • help landholders, project owners, or groups interested in entering carbon markets understand whether their project or activity has the environmental and scientific rigour required to venture into those markets 
  • reduce government and business costs 
  • offer greater certainty 
  • efficiently make meaningful reductions 

“New Zealand’s climate change system can be unnecessarily complex and duplicative in parts, which creates high compliance costs and slows effective action,” Watts said. “We have been clear in our commitment to look into the CCRA to see where we can make improvements.” 

In its news release, the government added that it has also chosen to update the neutrality goal for the carbon neutral government program to 2050 from 2025. 

“This change acknowledges that the original 2025 deadline was too soon for organisations to reduce their emissions enough to meet carbon neutrality,” Watts said. “The new deadline also aligns with New Zealand’s broader, legislated 2050 net zero target.” 

Assessment framework

Alongside the intended legislative changes, Watts also announced the government’s release of a new assessment framework for carbon removals. 

“The Carbon Removals Assessment Framework is a crucial step toward recognising and rewarding non-forestry carbon removals in New Zealand, unlocking new opportunities for landholders and businesses,” Watts said. 

The government said the new framework seeks to: 

  • deliver a priority action from the second emissions reduction plan 
  • follow through on an election promise to investigate biodiversity credits to recognise the potential of new wetlands and incentivize their creation 
  • demonstrate a commitment to economy-growing climate action and emission reduction 

“Forestry is already a critical part of our climate response, but we also want to enable businesses and organisations to explore other ways to reduce emissions,” Watts said in the government’s news release. 

“We are progressing work to help farmers and landholders access pathways for recognition and reward for activities that remove carbon from the atmosphere on farm, including opportunities around rewetting peatlands,” he added. 

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