Government and climate change

The Paris Agreement is the main global agreement on climate change. It was adopted in December 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) and commits participating countries to take action to address climate change.

The Paris Agreement aims to:

• Keep the increase in global average temperature well below 2°C above pre-industrial levels, while pursuing efforts to limit the temperature increase to 1.5°C
• Strengthen the country's ability to respond and adapt to the effects of climate change
• Make financial flows consistent with low-emissions and climate-resilient development.

New Zealand is a signatory to the Paris Agreement. This commits New Zealand to:

• Set and regularly update its emissions reduction targets, known as Nationally Determined Contributions or NDCs
• Report on its greenhouse gas emissions and progress towards meeting its targets
• Plan for and adapt to the effects of climate change
• Provide financial support to help developing countries reduce emissions and adapt to climate change.

New Zealand’s first NDC is to reduce net greenhouse gas emissions to 50 per cent below gross 2005 levels by 2030.

New Zealand’s second NDC is to reduce net greenhouse gas emissions to 51–55 per cent below gross 2005 levels by 2035.

A credible, long-term greenhouse gas emissions reduction target helps New Zealand meet its international commitments and make a smooth transition to a low-emissions future.

The Climate Change Response (Zero Carbon) Amendment Act 2019, also known as the Zero Carbon Act, provides the framework for New Zealand to:

• contribute to the global effort under the Paris Agreement; and
• prepare for and adapt to the effects of climate change.

New Zealand’s domestic targets are:

• Net zero emissions of all greenhouse gas (GHG) emissions other than biogenic methane by 2050.
• A 14 to 24 per cent reduction below 2017 biogenic methane emissions by 2050, including a 10 per cent reduction below 2017 biogenic methane emissions by 2030.

The biogenic methane target was last updated in December 2025 through an amendment to the Climate Change Response Act.

Biogenic methane is methane produced by biological processes. In New Zealand, most biogenic methane comes from livestock digestion, with a smaller amount coming from waste. This makes the methane targets particularly relevant to agriculture.

The legislation also requires the Government to set emissions budgets. These limit the total amount of greenhouse gases New Zealand can emit over a set period and act as stepping-stones towards the 2050 targets.

The Government must publish plans setting out how it will meet the emissions budgets and make progress towards the targets. The independent Climate Change Commission provides advice and reports on New Zealand’s progress.

As noted above, the Climate Change Commission - He Pou a Rangi - was established in November 2019. Its purpose is to provide independent, evidence-based advice to successive governments on New Zealand's greenhouse gas emissions and the potential impacts and effects of climate change. It also monitors and reviews progress towards the country's goals for reducing emissions and adapting to a changing climate. 

One of its early pieces of work was to develop a package of advice for the Government on:

• The first three emissions budgets covering 2022-2035
• The direction for the Government's Emissions Reduction Plan

The package also included advice on two other questions specifically requested by the Minister of Climate Change: (i) whether New Zealand's current Nationally Determined Contribution under the UN Paris Agreement is compatible with contributing to global efforts to limit warming to 1.5°C above pre-industrial levels; and (ii) whether further reductions in biogenic methane might be required by New Zealand as part of those global efforts.

The Commission's advice was released in June 2021, following extensive public consultation. The Government then released its Emissions Reduction Plan in May 2022. 

The Emissions Trading Scheme (ETS) is the Government's main tool for reducing greenhouse gas emissions in New Zealand and was established in 2008.

The ETS puts a price on greenhouse gas emissions, creating a financial incentive for businesses to reduce their emissions and landowners to earn money by planting forests that absorb carbon dioxide as the trees grow.

One emission unit, known as a New Zealand Unit or ‘NZU’, represents one metric tonne of carbon dioxide.

The Government provides NZUs to eligible foresters for carbon dioxide that is absorbed by their trees. The foresters can then sell these NZUs on the ETS market. Emitters (businesses with legal ‘surrender obligations’) must purchase enough NZUs to cover their emissions. These NZUs are then surrendered to the Government. It's up to the emitter to decide whether they reduce their emissions or purchase NZUs. The price the emitter pays for NZUs (also known as the carbon price) is set by supply and demand.

How the ETS works

The ETS was intended to be an 'all sectors, all gases' scheme. However, agriculture is not included other than for reporting purposes. This means carbon dioxide is the only gas currently priced.  In June 2024, the Government commited to keep agriculture out of the ETS. Read this announcement

The ETS was reformed in 2020, via the Climate Change Response (Emissions Trading Reform) Amendment Act, to improve its effectiveness. The following changes were introduced: 

• A cap on total emissions covered by the scheme that declines over time, in line with the 5-yearly emissions budgets and the 2050 targets
• Auctioning introduced from 2021 to allow the Government to sell NZUs from within the cap
• Establishment of controls to prevent unacceptably high or low prices
  • Price floor of $20/NZU, which will increase by 2% for each subsequent year.
  • Cost containment reserve triggered if the unit price reaches $50, which would release more NZUs into an auction to ease demand. This will increase by 2% for each subsequent year, based on forecast annual inflation. 
• Phase-out of industrial allocation from 2021 at a rate of 1% per year until 2030, 2% per year from 2030-2040, and 3% per year from 2040-2050 
• Changes to improve forestry's participation 

For more information on the ETS, see the Ministry for the Environment website or the Ministry for Primary Industries website. You can also watch this video explaining the NZ ETS, produced by the Ministry for the Environment.