Introduction to the Emissions Trading Scheme (ETS) for forestry

There are 2 classes of forests in the Emissions Trading Scheme (ETS), each with its own obligations.

About the Emissions Trading Scheme (ETS)

The ETS is New Zealand’s main tool for meeting our international obligations around climate change. The ETS operates as domestic carbon market by putting a price on carbon. This price is referred to as a New Zealand Unit (NZU), often referred to as a carbon credit, and 1 NZU = 1 tonne CO2 equivalent.

Owners of eligible forest can register their forests with the ETS. As their forests grow and store carbon they earn NZUs from the government that they can keep or sell on the market

Greenhouse gas emitters must surrender NZUs to the government to cover their emissions. They must buy NZUs from the market if they don't have enough.

The ETS has a specific definition for what a forest is to differentiate between land managed as a forest and other trees in the landscape – this is known as the ‘forest land definition’. Under this definition a forest:

  • is at least 1 hectare in size
  • is mainly made up of tree species that can reach 5 metres in height in that location at maturity (does not include trees grown primarily for fruit or nuts, gorse, broom or native shrubs)
  • has the potential to reach 30% tree canopy cover in each hectare at maturity
  • has the potential to reach an average tree canopy cover width of 30 metres at maturity.

This definition means that some areas of land that don’t look like a forest, like farmland with regenerating native tree seedlings, may be captured under the forest land definition.

Forest land in the ETS

ETS introduction Ministry for the Environment

What the ETS for forestry covers

1 January 1990 was the baseline date for New Zealand’s international climate change obligations, so there are 2 classes of forests in the ETS.

  • Forests existing before 1 January 1990 are considered baseline forests – they don’t count towards New Zealand’s obligations and there are penalties for deforesting (permanently removing the trees). These are classified as “pre-1990” forests.
  • Forests first established after 1 January 1990 are considered new forests – they can be counted towards our obligations and forest owners can earn NZUs from their growth. These are classified as “post-1989” forests.

Each classification has different obligations for forest owners.

What the ETS means for you

Who to contact 

If you have questions about forestry in the ETS:

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