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Organization : Ministry for the Environment
Facility : Emissions Trading Scheme
Country : New Zealand
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MFE Emissions Trading Scheme

This section has information on the New Zealand Emissions Trading Scheme, the Government’s principal policy response to climate change. It supports global efforts to reduce greenhouse gas emissions while maintaining economic productivity.

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The New Zealand Emissions Trading Scheme (NZ ETS) is the Government’s principal policy response to climate change.
Its objective is to support and encourage global efforts to reduce greenhouse gas emissions by :
** assisting New Zealand to meet its international obligations
** reducing New Zealand’s net emissions below business as usual levels.
For how the NZ ETS fits within the wider climate change work programme see New Zealand’s climate change work programme.

How the NZ ETS Works?

The NZ ETS puts a price on greenhouse gas emissions. This price on emissions is intended to create a financial incentive for businesses to invest in technologies and practices that reduce emissions. It also encourages forest planting by allowing eligible foresters to earn New Zealand emission units (NZUs) as their trees grow and absorb carbon dioxide.

The NZ ETS requires all sectors of New Zealand’s economy to report on their emissions and, with the exception of biological emissions from agriculture, to purchase and surrender emissions units to the Government for those emissions. Just over half of New Zealand’s greenhouse gas emissions are covered by NZ ETS surrender obligations.

An emission unit represents one metric tonne of carbon dioxide, or the carbon dioxide equivalent of any other greenhouse gas. Currently, the only eligible emissions unit in the NZ ETS is the New Zealand Unit (NZU).

Impact on Households & Businesses

The NZ ETS does not require households to surrender emission units. However, households feel some of the effects of the scheme as the businesses that are involved pass NZ ETS costs on to consumers.

The point of obligation in the NZ ETS (ie, the participant in the scheme) is as far upstream in the supply chain as possible. This means most businesses in New Zealand are not required to be participants in the NZ ETS.

For example, for transport fuels the obligation is placed on the companies importing the fuel, rather than on the end user. This makes it possible to cover the whole sector without trying to directly target the millions of private cars in New Zealand.

Participating in ETS

People and businesses can participate directly in the NZ ETS in three ways :
** Some will have obligations to surrender New Zealand Units (NZUs) when they carry out certain activities. They are required to participate in the scheme. See About obligations for more information. Guidance on Surrendering units is also available.

** Some may have opportunities to earn NZUs. They can choose to participate in the scheme.
** Some will be allocated NZUs as compensation for increased costs under the scheme. They can participate in the scheme because, if they apply for and receive an allocation, they can trade their NZUs. See About allocations for more information.

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