NZ ETS unit settings and annual regulatory updates 2026

This document outlines proposals for a range of updates to the regulations for the New Zealand Emissions Trading Scheme (ETS). The regulations are made under the Climate Change Response Act 2002.

The Ministry for the Environment is seeking the insight, evidence and perspectives of participants in the ETS who may be directly affected by the proposed changes.

This year, we are consulting on:

• technical updates relating to default emissions factors for 2027 that are based on recent data
• waste updates that affect waste sector participants and remediation projects for historic contaminated waste.

Table 1 lists the proposed updates to ETS regulations in 2026.

Table 1: Proposed regulatory changes

We welcome submissions from anyone with an interest in the regulations on one or more of these matters.

Consultation on unit limits and price control settings

We are also consulting on a subset of the regulations for ‘unit limits and price control settings’ (ETS settings), which must be updated every year. These are presented in a separate consultation document: Annual Updates to New Zealand Emissions Trading Scheme Limits and Price Control Settings for Units 2026.

How to have your say

The Government welcomes your thoughts on the proposals in this consultation. Your responses will help us to further understand the issues, options and impacts. Each section explains the problem and presents the analysis and proposed options. We have included questions about each proposal, but welcome all comments. To ensure your point of view is clearly understood, you should explain the reasons for your views and give supporting evidence if needed. See appendix 1 for the full list of questions (LINK).

We are also seeking feedback on the impact of proposed changes on Māori

We recognise that Māori have a significant interest in climate change action and the ETS. In our assessment, there is unlikely to be any specific impact on Māori resulting from any of the proposed updates, but we acknowledge the possibility of gaps in our analysis. Therefore, as well as questions on each proposed update, we are seeking feedback on whether any of the proposals could have an impact on Māori, either positive or negative.

Role of the ETS

The Emissions Trading Scheme (ETS) is the Government’s main tool to help New Zealand meet: 

• its international obligations under the United Nations Framework Convention on Climate Change and Paris Agreement
• 2050 targets: net-zero greenhouse gas emissions (except biogenic methane), and a 14 to 24 percent reduction in biogenic methane from 2017 levels
• emissions budgets: a set of ‘stepping stones’ to reach the 2050 target.

All parts of New Zealand’s economy, except for agriculture, face costs for greenhouse gas emissions. The costs are from either:

• purchasing and surrendering New Zealand Units (NZUs) to meet ETS requirements, or 
• paying a fee based on the value of the NZU, through the Synthetic Greenhouse Gas Levy.

Participating in the ETS

Businesses that undertake activities outlined in Schedule 3 of the Climate Change Response Act 2002 (CCRA) are mandatory participants of the ETS. They are required to register, file annual emissions returns, and surrender the corresponding number of NZUs.

Businesses undertaking activities outlined in Schedule 4 of the CCRA, such as forestry removals, can choose to participate in the ETS. Doing so may earn them NZUs for removing carbon from the atmosphere, or other eligible removals.

Reporting emissions and surrendering emission units

Businesses calculate their emissions from activities taking place over a calendar year (the reporting period). Emissions returns are reported to the Environmental Protection Authority (EPA) by the end of the following March. Businesses must then surrender the equivalent NZUs to pay for their emissions.

Many businesses use a default emissions factor or unique emissions factor in their emissions reporting. These are used to convert reported data (eg, on production) into an emissions value. Default emissions factors are set directly in regulations, but participants must provide additional evidence and seek approval from the EPA to use a unique emissions factor.

The regulations that sit under the CCRA outline the information that participants must collect, report on and use to calculate their emissions. Regular reviews of these regulations keep them up to date and fit for purpose.

Table 2 outlines seven proposals to amend regulations under the Emissions Trading Scheme (ETS). The objective is to maintain the accuracy of, and confidence in, the scheme.

The amendments relate to:

• default emissions factors (DEFs): These allow participants to convert data about their operations into emissions totals, so that they can report under the ETS
• the waste sector: Landfill operators may use a unique emissions factor (UEF) if they can demonstrate that their disposal facility’s emissions are materially different from the DEF, such as those with a landfill gas capture system (LFG system).

Table 2: Seven proposed regulatory amendments under the Emissions Trading Scheme