Consultation opens on proposed ETS settings and regulations

• NZ ETS unit settings and annual regulatory updates 2026 consultation
• Proposed changes to the NZ ETS regulations 2026 consultation document
• Annual updates to the NZ ETS limits and price control settings for units 2026 consultation document

Consultation runs from 12 June to 12 July and seeks feedback on New Zealand Unit (NZU) auction volumes and price settings for 2027 to 2031.

Regulation proposals include changes to default emissions factors for natural gas activities, geothermal activities and liquid fossil fuels; and how landfill organisations report their emissions under the ETS.

The proposals aim to make rules more workable, improve emissions counting accuracy, ensure ETS costs are fair and truly reflect emissions and encourage remediation of contaminated land.

The ETS is the Government’s main policy tool for reducing emissions by influencing long-term investment by businesses and industries in low emissions technology.  This means ETS policy settings are key to a stable and predictable ETS, and settings updates help ensure alignment to our domestic emissions reduction targets.

The Government proposes keeping settings largely as they are. This continues a stable and predictable approach while ensuring New Zealand is well positioned to meet its emissions budgets and targets now and in the long term.

The Climate Change Commission provides independent advice to the Government as part of the settings process. The Government and the Commission agree that keeping largely the same New Zealand Unit (NZU) auction volumes and price controls strikes a balance between meeting our emissions budgets and targets and avoiding risk of a market under supply later.

The only difference is the Government’s proposed volumes for 2031 are slightly lower, reflecting a more conservative approach to meeting the third emissions budget (2031-35).

Proposed settings continue to align to our domestic emissions reduction targets, including the third emissions budget.

While projections show we are on track to meet our first and second emissions budgets, more options outside the ETS will need to be considered to meet the third budget.

Thinking on this will start ahead of the third emissions reduction plan, which must be released by 2031.

Following consultation, the Government will consider feedback and make final decisions later in the year, with any updated settings implemented through regulations.