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

Changes to New Zealand’s climate change law include updates related to the NZ Emissions Trading Scheme and general changes to smooth the operation of the Climate Change Response Act.

The changes to the NZ ETS include:

• 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.