Planting the seeds of change: Emissions Trading Scheme forestry rules could be getting a makeover

The Ministry for the Environment have announced potential changes to the default carbon look-up tables and other changes to the ETS as part of the Maximising Forest Carbon Programme, which is a four-year (2022 – 2026) initiative led by Te Uru Rākau – New Zealand Forest Service

What are carbon tables and why they matter in the ETS

In the Emissions Trading Scheme (ETS), forest landowners are required to calculate and report the carbon stock stored in their forests.  Carbon tables are essential tools for this process, providing estimates of how much carbon dioxide is stored per hectare based on the forest’s age, type, and other characteristics.

There are two main types of carbon tables used in the ETS:

• standard or default carbon look-up tables – these are pre-set tables developed by the government, primarily used by small-scale forest owners (ie, participants with less than 100 hectares of registered post 1989 forest land). The current default tables are contained in Schedule 4 of the Climate Change (Forestry) Regulations 2022 (Regulations).
• participant-specific carbon tables – these are custom-developed tables based on detailed data from a specific forest, typically used by larger forestry operations.

These tables enable participants to quantify the carbon their forests store and determine how many New Zealand Units (NZUs) they are eligible to receive or must surrender under the ETS.  Carbon tables are important to participants for both environmental accountability and financial returns within the ETS.

Potential changes to the default carbon table

Approximately 80 percent of participants are considered “small-scale” and use the default tables.  The Ministry for the Environment (MFE) propose that the current default tables, which were introduced in 2008, are outdated and no longer reflect advancements in carbon modelling, changes in forest species composition, or modern forest management practices. As a result of this, the carbon estimates provided in the default tables may be inaccurate, potentially leading to unfair NZU allocations.

To address this, the government is proposing updated default tables for exotic softwoods, hardwoods, and pinus radiata.  MFE anticipates that the new default tables will be implemented in updates to the Regulations for use by participants from 1 January 2026.

The MFE have stated that the proposed changes could also have the following flow-on benefits:

• making alternative exotic species more appealing and encouraging diversification by expanding species options for ETS participants;
• enhancing economic returns for small-scale forestry, supporting more informed decision-making by farmers, farm-foresters, Māori landowners, and other; and
• assisting New Zealand to meet international emissions reduction targets and delivering environmental co-benefits such as erosion control, improved water quality, and greater biodiversity, by increasing the establishment of small-scale forests.

Additional forest type for redwoods

A new forest type for redwoods is also proposed to better reflect their unique carbon storage characteristics and to address the mismatch in the current exotic softwoods category, which combines redwoods and cypresses (despite their differing growth profiles).  The new redwoods category would have its own averaging accounting settings, with proposed harvest ages of 35, 40, or 45 years, which would significantly affect the number of NZUs earned.

The new redwoods forest type may also assist with the flow-on benefits noted above according to MFE.

Other potential changes to the ETS

Additional proposed regulatory amendments to the Regulations include:

• clarification of treatment of failed first rotation forests so that where forests have failed to thrive / have not earned NZUs, they will still be treated as first rotation when re-established, allowing participants to earn units upon replanting;
• adjustment of the input calculator deadline to better match the emissions return deadline, giving participants more time and reducing the risk of errors or missed submissions;
• streamlining processing for transmissions of interest by prescribing the transferee holding account number on the transmission of interest notice;
• requiring small areas to be combined with neighbouring areas before identifying sub-areas for carbon calculations, creating a more consistent and logical approach; and
• updating the definition of “area” to reflect current geospatial practices (ie, the ellipsoidal method), ensuring the ETS can adapt to future technological changes without requiring system overhauls.

Together, these changes are designed to enhance the integrity and operational efficiency of the ETS.

Consultation is now open

MFE has opened consultation on the proposed updates to the default carbon look-up tables used in the New Zealand and other amendments to the ETS.

Written submissions can be made using the online portal, emailed to the Ministry for Primary Industries or posted to Te Uru Rākau.  Submissions can be made prior to 5:00 pm on 16 May 2025.

Limits on farm-to-forest conversions

The government recently announced that it would be introducing various restrictions on full farm-to-forest conversions on LUC1-6 farmland in late 2025 (see full details of these upcoming changes in our earlier article).  A press release dated 2 May 2025 has confirmed that the related legislation is on track to be introduced during the second quarter of 2025.

Want to know more?

Get in touch with our specialist Forestry Team to discuss any of the above further.

PDF available here.