Climate Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Act 2024

31 Jan 25

On the 26 November 2024 the Climate Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Act came into force. The act removes all agricultural activities from the NZ Emissions Trading Scheme.

The Climate Change Response Act 2002

The Climate Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Act 2024 (the Act) was introduced to parliament in June to remove all agricultural activities from the New Zealand Emissions Trading Scheme.

The purpose of the Climate Change Response Act 2002 (CCRA) was to create a framework for New Zealand to implement its climate change. Agriculture is one of New Zealand’s largest source of greenhouse gas emissions and makes up 50 percent the country’s gross emissions.

New Zealand Emissions Trading Scheme (ETS)

All energy-related measures were previously covered by the ETS, including synthetic fertilizer use, enteric fermentation and manure management. The ETS also covered the bulk of emissions from pastoral care, including sheep, beef, deer, and related product.

He Waka Eke Noa

In 2022 He Waka Eke Noa recommended an alternative pathway to the ETS for farm-level pricing. It was determined that the ETS scheme was not an appropriate way to regulate agricultural emissions. This alternative system would enable New Zealand to meet its emissions obligations, while remaining competitive internationally.

On 31 May 2022, He Waka Eke Noa provided its final report recommending a farm-level, split-gas levy pricing system. The system proposed that farmers report and pay for their emissions annually; pay one levy price for their short-lived greenhouse gas emissions and a separate levy price for long-lived greenhouse gas emissions. Additionally, farmers would receive an inventive payment for actions that reduce emissions including new technologies. By incentivising new technology, farmers would be more likely to adapt to climate friendly techniques faster.

The agricultural pricing system was intended to begin from 1 January 2025. Following the introduction of the Act, He Waka Eke Noa has been disbanded and the alternative pricing recommendation has been scrapped.

Effect of changes

The changes to the Act mean that from 1 January 2026 farmers will not have to report on their farm emissions and from 1 January 2027, they will not be required to pay for their emissions.

The requirement to consult with a representative of an Iwi and any Māori that may have an interest in the change were repealed in relation to the date for obligations to begin for fertilizer-farm activities and animal-farmer activities. Additionally, the requirement to consult with an Iwi on regulations in relation to eligible agricultural activities has also be repealed.

Impact on other legislation

The Act also revoked two other pieces of legislation. The first was the Climate Change (Agriculture Sector) Regulations 2010. This legislation created requirements for information to be provided to the EPA in order to calculate emissions from importing or manufacturing synthetic fertilisers containing nitrogen.

The other revoked legislation was the Climate Change (Animals-Farmer Activities) Order 2023. This legislation was aimed at delaying the requirement for animals-farmer activities to surrender units from 2024 to 2026. Because agricultural emissions were removed from the CCRA this legislation was no longer needed.

The Act amended the Climate Change (General Exemptions) Order 2009 to remove definitions relating to agriculture. Additionally, the Act revoked any general exemptions relating to agriculture, including slaughtering of animals, exporting of live cattle, dairy processing of milk and producing eggs.

Effect in New Zealand

Despite agricultural emissions being a significant contributor to New Zealand’s emissions, the Act means that there is still no system in place to regulate agricultural emissions in order meet global obligations. However, the government intends to introduce a farm-level pricing system by 2030.

Want to know more?

If you have any questions about the changes and their potential impact on your company, please contact David Goodman of our corporate commercial team and Climate Change Team.

View pdf version here.

For more information contact:

David Goodman

david.goodman@al.nz