NZ ETS unit settings and annual regulatory updates 2026

Proposal summary

• Default emissions factors (DEFs) allow emitters to convert data about their operations (such as the volume of waste received in their landfill) into emissions totals, so that they can report under the Emissions Trading Scheme.
• We propose to use the most recent and accurate information available to calculate the DEFs for the next reporting period. There are four options: no change; a minor change using new evidence; and two moderate changes providing a range of DEF options based on (a) activity source category, or (b) landfill size and class.

Impacts

• This proposal affects landfill operators participating in the ETS, whether they use a unique emissions factor or the default.
• Improved accuracy could result in a change to reported emissions. The direction of change depends on the data and evidence that operators provide.

The current DEF for waste participants (disposal facility operators) is set at 1.023 tonnes of carbon dioxide equivalent per tonne of waste. This figure is derived in part from a national average composition figure.⁶ This represents the portions of different types of waste collected by facility operators, in line with the categories in the current Solid Waste Analysis Protocol process (PDF 1.3MB).

The DEF for waste participants is used (and referred to in regulations) in two ways:

1. as the DEF for each class of waste where no UEF is approved by the Environmental Protection Authority. In these cases, it is an important piece of information used directly to calculate emissions for each facility
2. as an input into the formula to calculate a UEF for a disposal facility or other site where landfill gas (LFG) is destroyed:
   1. UEF = 1.023 x (1 – C), where C (the capture efficiency rate) is the lesser of 0.9 or the estimated efficiency of the LFG collection and destruction system. 

^{6 The default emissions factor calculation also includes assumptions about the methane generation potential of different waste types, oxidation, and that no gas is collected and destroyed.}

The problem

For the estimate of the current national average waste composition, the data used to inform the current DEF was largely collected between 2017 and 2019. More recent data⁷ indicates that the composition of the waste stream, including the organics component, may have changed since then. The current approach to calculating a DEF assumes that different waste compositions similarly impact emissions, without other landfill characteristics having much influence. We may therefore need to update the DEF, or the information a DEF is based on, to better reflect waste emissions.

^{7 This data includes publicly available datasets through the waste assessments required for six-yearly Waste Management and Minimisation Planning, as well as plant-specific composition data submitted by operators.}

Options

We propose a range of options for improving the accuracy of the DEF for waste (table 6).

Table 6: Options for improving the DEF accuracy for waste 

^{8 Ministry for the Environment. Waste data – Overview of activity category reporting. Retrieved 14 May 2026.}

Implementation

Options 1 or 2 in table 6 would apply to disposal activities that take place in the 2027 calendar year. This means that it will not affect calculations of UEFs in January 2027 for activities that took place in the 2026 calendar year. The aim is to minimise disruption to business planning by avoiding unanticipated costs.

For options 3 and 4 in table 6, which introduce a range of DEFs based on landfill or waste characteristics, we will work with stakeholders to ensure the figures reflect current operations. This would include seeking supporting data and evidence to inform the parameters. The ETS Register cannot currently accommodate these changes. Bringing in options 3 or 4 would, therefore, depend on future enhancements to the ETS Register, the timing of which is uncertain at this stage.

Final policy decisions will be reflected in amendments to both the Climate Change (Waste) Regulations 2010 (section 5(1a)) and the UEF Regulations (section 23C).

Proposal summary

• Operators with a landfill gas capture system (LFG system) can reduce their Emissions Trading Scheme obligations by accounting for the quantity of gas captured underground. When doing so, they can subtract up to 10 percent of their emissions using an oxidation factor, despite oxidation occurring through the landfill cap rather than under it.
• This proposal includes an option to change the oxidation factor to 0 because it has no impact on how much gas the system captures.

Impacts

• Affects landfill operators with an LFG system who apply for a unique emissions factor.
• May result in higher unique emissions factors and reported emissions, but these will be more accurate.

The DEF for the disposal of waste is set in the Climate Change (Waste) Regulations 2010. It assumes that no emissions generated by waste decomposing at a municipal landfill have been captured by a landfill gas capture system (LFG system).

Most municipal landfills have an LFG system that collects and destroys landfill gas, which results in lower emissions. The ETS allows eligible landfills to apply for a UEF to account for these reductions. Landfills will then use their approved UEF for emissions reporting, instead of the waste DEF.

The requirements for landfills calculating a UEF are set out in sections 23A to 23D of the UEF Regulations. The calculation allows landfills to include the gas collected by the LFG system when calculating the UEF. To ensure accurate accounting, landfills use a first order decay model to determine gross methane generated in the calendar year, along with how much methane the system collected.

The UEF Regulations also allow additional inputs for use in the models. One input is an oxidation factor of 10 percent (section 23C(2)(e)). Oxidation occurs when methane generated by the landfill has not been captured by the LFG system and passes through the soil of the landfill cap. 

In 2025, we consulted on where the oxidation factor should be placed in the formula for determining a UEF for landfills with an LFG system. No decision was made after consultation and upon further analysis, this proposal was developed.

The problem

The way landfill gas UEFs are currently calculated includes an ‘oxidation factor’ that does not fit with how the system actually works. The calculation method looks at methane collected under the landfill cap, but the oxidation factor is meant for methane that passes through the cap. Including it in the calculations could mean emissions are reported as being 10 percent lower than they really are. This could make gas collection seem more effective than it is, and result in under-reporting of landfill emissions.

Options

Table 7 outlines the options for addressing this problem.

Table 7: Options for addressing use of oxidation factor in emissions calculations

Impacts

Impacts from option 1: status quo: It is not known how many landfill gas UEFs have used a 10 percent oxidation factor. Detailed UEF calculations to authorised verifiers, and not to the Ministry or Environmental Protection Authority (EPA).

Assuming all landfill UEFs have used a 10 percent oxidation factor, setting the value to zero will most significantly affect landfills collecting 80 to 90 percent of generated methane.

Implementation

A participant applies for a UEF in January using data from the previous calendar year. If approved, they can use that UEF to report emissions for the previous year in their return, which is due by the end of March.

We propose that this change applies to UEFs calculated in January 2028 for activities that took place in the 2027 calendar year. This means it will not affect calculations of UEFs in January 2027 for activities that took place in the 2026 calendar year.

Proposal summary

• Emissions Trading Scheme (ETS) participants have the option of applying for a unique emissions factor (UEF) to reflect site-specific waste and gas information.
• Our proposal is to introduce a tiered approach for these applicants. A higher bar of information would be required when operators are reporting high-efficiency capture rates for their landfill gas systems, because these rates reduce ETS obligations. We must, therefore, ensure there is a high degree of confidence in the accuracy of these rates.
• This change would enable landfill operators to claim up to 100 percent capture efficiency rates when calculating their obligations under the ETS. This could be a significant financial benefit for some operators.

Impacts

• Affects landfill operators with a landfill gas system who apply for a UEF.
• May result in higher UEFs and reported emissions, but these will be more accurate.

Waste sector participants can apply for a UEF if they have evidence that their waste composition differs from the national average, or if they capture and destroy landfill gas (including methane). Using a UEF will usually mean that the emissions total is lower. UEF applications are made to the EPA, with a statement verifying the accuracy of the submission.

The problem

The regulations cap the total amount of landfill gas that can be claimed at 90 percent, preventing operators from claiming 100 percent efficiency rates. At the time that the regulations were created, this was considered the highest efficiency technically possible for LFG systems.

Disposal facility operators report they can now achieve very high efficiency rates and would be motivated to continue to work at maximum efficiency if they could claim 100 percent capture in calculating their ETS obligations. This would reduce their liability under the scheme.

Although lifting the cap is a further incentive for lowering emissions, it must also require more evidence. A more accurate approach to the UEF benefits both emissions reporting and operators by: 

• improving their understanding of their impact on the environment, and what they need to do to address this
• ensuring business planning can accurately assess the costs of ETS obligations.

A 2022 United Nations Framework Convention on Climate Change (UNFCCC) review of New Zealand’s Greenhouse Gas Inventory found New Zealand’s methane recovery rates (landfill gas capture efficiency) required further justification. It recommended quantifying methane recovery based on site-specific measurements provided by landfill operators.

The Ministry commits to continuous improvement in inventory modelling and methodologies. One barrier to justifying higher landfill gas capture efficiencies in the inventory is that underlying sector data and assumptions have not been made available to the Ministry, the EPA or the UNFCCC expert review teams.

Transparency is essential for ensuring the quality of the inventory in accordance with the UNFCCC guidelines. More direct evidence of landfill gas recovery is needed to satisfy these requirements. This proposal aims to continue to improve transparency and certainty in New Zealand’s reported emissions.

Proposal

Table 8 outlines a two-tiered approach that enables operators to report capture efficiencies of up to 100 percent if they submit supporting evidence. This approach removes the current 90 percent capture limit, which the sector has argued penalises high-performing LFG systems.

This proposal will also help to improve confidence in New Zealand’s reported waste emissions: it will directly build an evidence base, so that the standard of evidence aligns with the anticipated fiscal benefits from claiming high gas capture efficiencies.

Table 8: Proposed tiered approach to information requirements for UEF applicants

Impacts

Disposal facility operators are not required to reapply for a UEF every year. A new UEF is only required when there is a material change to the information or factors on which an approval is based, or the EPA conditions cease to be met or complied with.⁹

Any operator who currently has a UEF based on a gas capture efficiency over 60 percent must provide the required information and reapply for a UEF, using the section 23D formula from the UEF Regulations, which includes their composition data.

If LFG efficiency claims exceed 60 percent, the operator must invest in gaining information on waste composition. We understand that operators already measure and record total gas captured and destroyed, and some are already regularly surveying composition. They will have to submit evidence directly to the Ministry for the Environment, separately from their UEF application to the EPA. This would be through systems they already use to meet information requirements under the waste disposal levy.

The main benefit of this proposal is increasing certainty and accuracy in New Zealand’s reported emissions. An inaccurate UEF, where the gas capture efficiency is set too high, could artificially reduce ETS liabilities and ETS revenue, while not actually lowering emissions. Using a capture efficiency that is too low could create undue costs through the ETS for landfill operators, while not reflecting their achievement in lowering emissions.

It is possible that this change would, at first, see an increase in reported emissions as reporting starts to capture emissions that had previously not been accurately accounted for. Over time, operators will likely take action to cut emissions, to reduce the fiscal cost of surrender obligations, and achieve 100 percent efficiency rates.

^{9 Section 91(2), Climate Change Response Act 2002. Retrieved 14 May 2026}

Implementation

A participant applies for a UEF in January using data from the activities that took place in the  previous calendar year. If approved, they can then use that UEF to report emissions for that previous year in their return, which is due by the end of March.

This change would first be used by operators to calculate UEFs in January 2028, for activities that take place in the 2027 calendar year. This means it will not affect UEF calculations in January 2027 for activities that took place in the 2026 calendar year.

This change would involve adding an information requirement to section 4 of the Climate Change (Waste) Regulations 2010, which outlines the information required to calculate emissions for operating disposal facilities.

Proposal summary

• Waste is generated during the remediation of historic contaminated sites. It often has much lower emissions than ‘new’ waste in landfills.
• We propose to create an exemption for this waste stream, so that it is treated differently from new waste. This will improve the accuracy of how the ETS accounts for historic waste emissions and make the costs that operators pass on to landfill users fairer.

Impacts

• Directly affects participating landfill operators because it reduces the ETS costs they would otherwise face when accepting this material.
• Affects organisations that are funding and working on remediation projects. If operators are exempt from paying costs for emissions from this waste, we expect them to pass on the savings to landfill users through lower disposal charges.
• There are negligible broader economic implications. The change targets a specific waste stream rather than general waste.

To reduce risks to human health and the environment, local authorities and central government agencies remediate sites containing historic contaminated soil and waste. Climate change and land‑use change are accelerating the need to remediate high-risk legacy sites. At least 20,000 contaminated sites are located nationwide.¹⁰ The Government has prioritised this work by refocusing funding to address financial barriers.

Landfills contribute to methane emissions from decomposing organic waste. Emissions reduce over time until little to no methane is emitted. Historic waste, or waste that does not include organic matter, has considerably fewer emissions than new organic waste.

Under current ETS settings, all material disposed at a landfill is treated as new when modelling future emissions. Therefore, even remediated waste with little or no future emissions incurs charges. Landfill operators pass these costs on to their customers, including territorial authorities and land owners disposing of waste from historic contaminated sites.

An exemption currently exists for redisposing of waste from closed landfills. However, the Ministry is aware of remediation projects underway that are not eligible for this.

^{10 Ministry for the Environment. 2020. Contaminated land – estimates 2019/2020. Wellington: Ministry for the Environment.}

The problem

Landfill operators are expected to pay for emissions under the ETS even when that waste is producing few or no emissions. As well as being unfair, this creates a potential cost barrier for territorial authorities that want to send such waste to landfills. It could also encourage remediation projects to dispose of material in other ways that enable them to reduce costs, but may not produce optimal human health and environmental outcomes.

Options

We propose two options to address the inaccurate accounting of emissions under the ETS from historic contaminated waste. The details are set out below, and table 9 outlines the benefits and trade‑offs.

Option 1: Status quo: Currently, all material sent to landfills is treated as new waste for ETS purposes. Emissions obligations are calculated using default assumptions about future methane generation, even where the material has largely decomposed and has few or no remaining emissions.

Alternatively, under the status quo, landfill operators can apply for an additional waste‑composition‑specific UEF to reflect the type of material accepted from remediation projects when calculating ETS obligations. Although this approach could improve emissions accuracy in principle, it requires significant data collection, ongoing monitoring and delayed implementation for a smaller subset of waste. It also introduces greater complexity, compliance costs and the risk of non-representative sampling and misuse across broader waste streams.

Option 2: General ETS exemption for pre-1991 HAIL sites: This is a general exemption for waste from sites where Hazardous Activities and Industries List (HAIL) activities have occurred, excluding closed landfill sites already covered by the existing exemption. The new exemption would apply to contaminated waste from a HAIL activity that ceased before 1991.

The eligibility criteria of sites verified as having had HAIL activities take place before 1991 align with requirements in established regulatory frameworks, including the Resource Management Act 1991 and National Environmental Standard for Assessing and Managing Contaminants in Soil to Protect Human Health (NES-CS). These frameworks are already used by district and regional councils to identify, investigate and prioritise sites for remediation, based on the risks posed to the environment and human health.

In practice, remediators use these established frameworks to confirm whether a site has hosted a HAIL activity. They do this by completing a detailed site investigation (DSI) to determine land use history, the likely presence of contaminants, and whether the site meets the relevant verification thresholds. Under the blanket exemption, remediators will be required to provide the landfill operator with the DSI as evidence that the waste meets the exemption requirements. Landfills keep this on record for auditing purposes.

The 1991 cut-off date was chosen because New Zealand did not have a comprehensive framework for managing contaminated land before the introduction of the Resource Management Act 1991. While that Act is currently being reformed, this does not affect the use of 1991 as a fixed eligibility cut-off for this proposal.

Section 60 of the Climate Change Response Act 2002 provides a pathway for establishing this exemption in the Climate Change (General Exemptions) Order 2009. Previous exemptions under section 60 have been used to address situations in which default ETS settings would materially overstate emissions from historic waste with negligible remaining emissions potential.

Option 2 eligibility criteria for landfill operators

• Waste is from a site verified as having had a Hazardous Activities and Industries List activity take place.
• The verified Hazardous Activities and Industries List activity ceased on the site before 1991.

Table 9 shows the main benefits and trade‑offs of the two options.

Table 9: Options to exempt emissions from historic contaminated waste

Discarded options: Section 60 of the Climate Change Response Act 2002 allows an Order in Council to be made for exemptions from Schedule 3 activities. We considered establishing a simplified process for case-by-case exemptions; however, this requires extensive amendments to the CCRA. The existing process will remain an option for projects that do not meet the new blanket exemption parameters.