Amending the Climate Change Response Act 

The Government is making a number of changes to New Zealand’s climate change law to ensure it is working well and as intended. This includes making changes needed to progress new policy for the National Adaptation Framework and market governance of the New Zealand Emissions Trading Scheme.  

This includes: 

• changes to smooth the operation of the Act  
• updates related to the NZ Emissions Trading Scheme  
• changes to simplify the process of recognising and rewarding non-forestry removals at a later date  
• new requirements for adaptation plans in priority areas.  

The Government has completed a review of the Climate Change Response Act. The focus of this review was to streamline processes to ensure the Government can focus on delivering its climate change priorities.  

The Government is making these efficiency and effectiveness changes across three key areas of the Act:  

• Requirements for emissions reduction plans (ERPs) and national adaptation plans (NAPs).
• Timing and sequencing of reports, advice, decisions and responses.
• Consultation requirements.   

• The Climate Change Commission will no longer be required to provide advice to the Government on emissions reduction plans.   
• Content requirements for ERPs will be simplified to only needing to include:
  • policies and strategies for meeting the relevant emissions budget
  • a strategy to mitigate the impact on iwi and Māori
  • other policies and strategies that the Minister decides are necessary.    
• Changes to the process for amending or replacing emissions reduction plans and the supporting policies and strategies within the plan that will allow more regular updates as needed. This includes removing the requirement to consult on changes to emissions reduction plans.   
• Creating a new ability to make amendments to a national adaptation plan.   

The Commission will continue to provide policy advice on the climate system through its five-yearly emissions budget advice and its annual Emissions Reduction Monitoring report. The Act also enables the Minister of Climate Change to request advice from the Commission on a range of issues, including to inform future ERPs if needed.  

The Climate Change Response Act sets out a series of reports, advice, decisions and responses that must be provided by both the Climate Change Commission and the Government at certain times to support climate policy. A range of updates are being made to create a more logical sequence of advice and decisions and avoid potential duplication 

Updates to timing and sequencing

The Commission's annual emissions monitoring report

The Government has decided to bring forward the timing of the Commission’s annual emissions monitoring report to April to connect the advice with the annual release of emissions projections.

Aligning the timing of annual emissions monitoring and the NZ ETS Setting Advice in years when decisions are due will enable both reports to be considered as one coherent package.

The timeline of the required Government response to these pieces of advice is also being relaxed to enable the Government to respond to these together.  

The Government is making changes to consultation requirements to remove duplicative processes and ensure consultation by the Commission and the Government is pitched at the right level. The Commission’s advice needs to be informed by experts, in line with its role in providing expert advice, and the Government’s decisions are informed by a range of factors, including public opinion. In this context, it doesn’t make sense for both entities to always be required to consult with the public.   

The Government is making the following changes to address this:  

• The Commission will no longer be required to publicly consult when developing advice on emissions budgets. This is in line with other advice, which does not require consultation. The Commission will still be required to engage with experts and can still carry out public consultation if it considers it necessary.  
• The complex consultation requirements that must be followed when a Minister sets an emissions budget will be removed. This means the Commission will not be required to consult with the public but will still need to seek input from technical experts, and the Government will no longer be required to consult. This change is being made because these are technical decisions and are likely better addressed by expert advice.   
• As the Government is no longer requiring the Commission to provide advice before developing emissions reduction plans, the Commission will no longer need to engage with the public on that advice. The public will still have an opportunity to provide views on emissions reduction plans when the Government consults on proposed policies before finalising these plans.   

A full list of changes is included in Appendix 1 (page 19) of the proactively released cabinet paper. This clearly outlines the situation, the issue or problem that the change is intended to address, and the proposed change.  

See Policy decisions for a Climate Change Response Amendment Bill cabinet paper.

The Government is making changes to the operation of the NZ ETS to ensure it is operating as intended as New Zealand’s key tool to reduce emissions.

These updates are part of the Government’s work to support a stable and predictable regulatory environment and promote market confidence and stability, which is a critical component of its climate change strategy.

Industrial allocation

The Government has reviewed how it allocates industrial allocation to participants based on feedback that the current process may be discouraging companies from investing in technology that reduces emissions.

The review found that some industrial allocation settings are discouraging firms from making investments to reduce their emissions.

Removing allocative baseline reviews and eligibility reviews

Two components of the current industrial allocation settings  – allocative baseline reviews and eligibility reviews – are complex and risk disincentivising firms from decarbonising. Currently, these two processes mean it is possible for an allocation to be reviewed and reduced after investments are made, which then impacts the financial viability of making that investment.

The Government will remove these two reviews, except for a limited number of technical exceptions. In particular, annual updates to allocative baselines relating to electricity costs will continue, and any reviews in process will be completed.

The ability for a phase-out rate review will be retained. These will become the primary tool for managing volume of industrial allocation going forward. Phase-out reviews provide the right level of flexibility to balance the cost of industrial allocation with the related environmental, social and economic effects of New Zealand companies moving overseas.

The Government plans to make two minor changes to the phase out rate review provisions to allow them to better function in this new role:

• making the timing more flexible, so that a review can take place once in any 5-year period (rather than linked to an emissions budget period); and
• adding a firm’s decarbonisation investments (reductions in emissions intensity or gross emissions) to the list of factors the Minister must consider as part of reviewing phase out rates.

Electricity contracts and related changes to allocations

The Government is also clarifying and limiting the Minister’s use of their powers relating to electricity contracts and the potential to unexpectedly change allocations based on this.

The changes include:

• a new requirement for the Minister to publish guidance on how the power will be exercised
• a new ability for organisations to seek an early, binding decision on how their draft electricity contracts would affect their allocations once they come into force.

Market governance updates

In May 2025, the Government announced that it intends to make changes to improve market governance for the trading of New Zealand Units in the NZ ETS secondary market.

See Market governance for the New Zealand Emissions Trading Scheme.

These changes need to be passed into law before they take effect and will be included in the planned amendment to the Climate Change Response Act in 2026.

Moving to biennial ETS Settings decisions

The Government has decided to move to a biennial ETS settings process, replacing the current process which occurs annually. This means that ETS settings decisions will be made every two years after the bill passes.

The 2026 ETS Settings process will proceed as planned as the change will not come into effect until the amendment to the Act has been passed into law.

Other changes to the operation of the ETS

The Government is also making the following changes to the NZ ETS:

• Adding the import of carbon dioxide as a mandatory activity 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.

The Government has been exploring opportunities to help recognise and reward non-forestry removals in carbon markets.

As part of this work, it will amend the Climate Change Response Act to add “carbon removal activities” as an activity that can be recognised under the NZ ETS. This change won’t immediately enable new carbon removal activities to be recognised and rewarded in the NZ ETS. It will, however, enable this in the future by simplifying the process and making it faster.

The Government has developed a National Adaptation Framework to help manage the growing risks we face from climate change, in a way that minimises the overall long-term cost to society.

See the National Adaptation Framework.

Amendments to the Climate Change Response Act will deliver one of the key initial actions in the Framework. Local government is already required to manage risks relating to natural hazards, but the changes will clarify requirements by:

• requiring councils to plan for how to adapt to natural hazards in the highest-priority areas
• helping people know what investment will happen, so communities can be well-prepared
• laying out a plan for implementation and covering how different actions will be funded over time.

Accompanying regulations will ensure that a full range of options are considered for an at-risk area; and that generally the option most likely to minimise long-term cost is selected.

These amendments will work with the new planning system, with decision-makers identifying priority locations for adaptation planning as part of developing their first spatial plan, subject to the Planning Act being passed.

The Government intends to introduce an amendment bill to the Climate Change Response Act to make these changes in 2026.