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China National ETS

ETS Status
in force
Jurisdictions
China
Start of operation (year)
2021
Sectoral coverage
Industry
Power
Allocation
Free Allocation (Output-based Benchmarking)
Offsets and credits
Domestic (national) with quantitative limits
Cap or total emissions limit
~8,000 MtCO2 (2024)
GHGs covered
CO2, CF4 and C2F6 (only for aluminum smelter sector)
Average secondary market price
CNY 95.96 (USD 13.33)

General Information

China’s national ETS began operating in 2021, with the objective of contributing to the effective control and gradual reduction of CO2 emissions. China’s national ETS is the world’s largest in terms of covered emissions, estimated to cover around 8 billion tCO2 – or more than 60% of the country’s CO2 emissions.

The China national ETS regulates more than 3,500 companies from the power, steel, cement, and aluminum smelter sectors with annual emissions in excess of 26,000 tCO2. Covered entities must surrender allowances for all their covered emissions. The allowances in the China national ETS are 100% freely allocated using an output-based approach. Compliance obligations are currently limited and vary between different types of facilities. The system’s coverage will expand to other sectors over time.

In January 2024, China launched its national GHG voluntary emission reduction trading market, the Chinese Certified Emissions Reduction scheme (CCER). This came after six years of suspension, during which time it was undergoing reform. This reform could contribute to the implementation of an offsetting scheme in the domestic ETS (see ‘Offset Credits’ section).

The national ETS builds on the successful experience of regional carbon markets implemented in seven regions. These pilots continue to operate in parallel with the national ETS, covering sectors and entities not included in the national system. 

In January 2024, the State Council of China promulgated the “Interim Regulations for the Management of Carbon Emissions Trading” (Interim Regulations) that establishes a robust legal foundation for the national ETS, which took effect as of May 2024. It further enhances enforcement measures and non-compliance penalties for different stakeholders.

In October, the Ministry of Ecology and Environment (MEE) released the allocation plan and compliance work plan for the power sector for 2023 and 2024. The allocation plan updates benchmarks and excludes indirect emissions. It also sets a limit on banking and cancels borrowing. According to this plan, the compliance is shifting from a two-years cycle to a one-year cycle. 

After the launch of the CCER program in January 2024, the Certification and Accreditation Administration (CNCA) announced the list of accredited verifiers in June 2024. In August, the MEE started accepting new project applications and verifications. As of April 2025, there are five accredited validation and verification agencies for the CCER program. More than 70 emission reduction projects have applied for CCER project status, and nine of these projects have successfully had their emission reductions issued, totaling 9.48 million tonnes CO2e.

In March 2025, the MEE published a work plan for extending the sectoral coverage of the national ETS after a public consultation in September 2024. The plan expands the ETS to include the steel, cement, and aluminum smelter sectors, implemented over two phases. Phase 1 (2024 to 2026) aims to familiarize companies in these sectors with the national ETS and enhance emissions data quality. Phase 2 (starting in 2027) aims to decrease the emission intensity and further improve the functioning of the system. This scope expansion brings an additional 1,500 companies into the Chinese national ETS, increasing the system’s emissions coverage by 3 billion tCO2e.

Industry
Power

Emissions & Targets

14,314 MtCO2e (2021)

By 2025: Reduction in carbon emissions per unit of GDP of 18% compared to 2020 levels (14th Five-Year Plan)

Before 2030: Peak CO2 emissions; reduction of CO2 emissions per unit of GDP by over 65% from 2005 levels ('1+N’ policy framework; updated NDC)

Before 2060: Carbon neutrality (‘1+N’ policy framework; updated NDC)

Average secondary market price: CNY 95.96 (USD 13.33)

Size & Phases

CO2, CF4 and C2F6 (only for aluminum smelter sector)

There are currently no specific phases for the Chinese national ETS. 

The cap is the sum of the bottom-up total allowance allocation to all individual covered entities. The cap is adjusted according to the actual production levels. 

The national ETS is estimated to have had an annual cap of ~4,500 MtCO2 in 2019 and 2020, ~5,100 MtCO2 in 2021 and 2022, ~5,200 MtCO2 in 2023 and ~8,000 MtCO2 in 2024.

Power (including combined heat and power, as well as captive power plants of other sectors), steel, cement, and aluminum smelter.

Compliance obligations are currently limited (see ‘Allocation’ section). 

The scope is expected to be gradually expanded to cover other sectors: petrochemicals, chemicals, flat glass, copper smelter, paper, and aviation. Entities in these sectors have MRV obligation since 2015.


INCLUSION THRESHOLDS:

For 2019 to 2020: Entities with annual emissions of 26,000 tCO2 or greater in any year from 2013 to 2019.

For 2021 to 2022: Entities with annual emissions of 26,000 tCO2 or more in any year from 2020 to 2021.

From 2023: Entities with annual emissions of 26,000 tCO2 or more in the previous year.

Point source

~3,500 (2024)

Allowance Allocation & Revenue

Allowances are distributed for free, using benchmarking. 

FREE ALLOCATION (Power sector): Output-based benchmarking is used as the main allocation method, with four distinct benchmarks: conventional coal plants below 300 MW; conventional coal plants above 300 MW; unconventional coal; and natural gas. 

A pre-allocation method is adopted for the annual allowance allocation. Allocation is then adjusted ex-post to reflect the actual production in the respective compliance year.

Entities received allowances at 70% of their verified emissions in the previous year. Allocation was subsequently adjusted to reflect actual generation in 2023 and 2024. A unit load (output) adjustment factor distributed more allowances for coal-fired entities operating at load rates below 65%. This may have provided more allowances for less efficient power units.

According to the 2023 to 2024 allocation plan, compliance obligations are limited. Gas-fired plants only need to surrender allowances up to their level of free allocation as per the benchmarks. Coal-fired plants with free allowance below 80% of their verified emissions will have their allocation adjusted upwards to 80% of their verified emissions. This means that 20% remains the maximum shortfall, similar to the previous compliance periods. 

FREE ALLOCATION (steel, cement, and aluminum smelter sector):

For the compliance year of 2024, covered entities will receive free allowances equal to their verified emissions. 

The MEE will design and publish the annual allocation method for the compliance year 2025 and subsequent years, which will be output-based and intensity-controlled.


AUCTIONING: Allocation currently takes place through free allocation, but the Interim Regulations clarify that auctioning is to be introduced and gradually expanded. There is currently no timeline for this.

There is currently no arrangement for the use of revenues generated by the scheme.

Flexibility & Linking

Borrowing was temporarily allowed in 2021 to 2022. 

Banking was allowed with no limit in the first three compliance periods. In the following compliance period, covered entities are allowed to bank up to 10,000 tonnes plus 1.5 times their net sales over 2024 and 2025.

The use of offset credits is allowed. 

QUANTITATIVE LIMITS: Covered entities can use CCERs generated from projects not covered by the national ETS for up to 5% of their verified emissions. 

QUALITATIVE LIMITS: There were no additional project or vintage restrictions. 

In 2012, the National Development and Reform Commission (NDRC) issued the “Interim Measures for the Management of Voluntary GHG Emissions Reduction Transactions”, which provided guidelines for the issuance of CCERs. The registration of CCER projects started in 2015 but the program was suspended in 2017 while regulations were reviewed. MEE launched the CCER system in 2024 with new methodologies, registry, verifiers and exchange.

Only credits from projects registered in the new CCER program are eligible for offset use in China’s national ETS after January 2025.

The National Center for Climate Change Strategy and International Cooperation (NCSC) operates the CCER registry. The Beijing Green Exchange is dedicated to CCER trading platforms.

The China national ETS is not linked with any other system.

ETS: Regional ETSs in Beijing, Chongqing, Fujian, Hubei, Guangdong, Shanghai, Shenzhen and Tianjin

Domestic crediting mechanism (national): China Certified Emissions Reduction (CCER)

Domestic crediting mechanisms: Local offset crediting mechanism in Beijing, Chongqing, Fujian, Hubei, Guangdong, Shanghai, Shenzhen, Tianjin, etc.

Compliance

Two calendar years from 2019 to 2022. One calendar year from 2023 onwards.

MEE publishes an ETS work plan to set the timeline for MRV work each year.  MEE published the 2025 work plan in April 2025.

MONITORING: Covered entities are required to set up monitor plans and monitor their emission based on these plans.

REPORTING FREQUENCY: Covered entities must submit a monthly emission report within 40 calendar days after the end of each month, including fuel consumption, low-level calorific value, carbon content of the fuel, purchased electricity, output products, as well as other parameters. Covered entities in the power sector must submit the 2024 emissions reports by the end of March 2025. Covered entities in the steel, cement and aluminum smelter sectors must submit the 2024 emissions reports by the end of June 2025. 

VERIFICATION: Provincial-level ecological and environmental authorities are responsible for organizing the verification of GHG reports. They may commission technical service agencies to provide verification services. Verification of 2024 emissions from the power sector must be completed by the end of June 2025. Verification of 2024 emissions from the cement, aluminum smelter and steel sectors should be completed before the end of August 2025. Verification of other key industries should be completed by the end of September 2025. 


FRAMEWORK: MRV guidelines, supplementary data sheets, verification guidelines, and other guidance are available for the eight sectors expected to be covered by the ETS. This MRV framework has evolved continuously since 2013 (see ‘Sectors and Thresholds’ section).

The Interim Regulations enhanced enforcement measures and penalties for different parties. Covered entities face a fine for not reporting or cheating in reporting, ranging from CNY 500,000 (USD 69,469) to ten times the illegal gains. Failures in compliance obligations result in fines ranging from five to ten times the market value of the gap, a significant increase from the previous maximum fine of CNY 30,000 (USD 4,416). For those who refuse to surrender allowances after receiving a warning, deductions from the following year’s allocation and potential production suspension are now in force.

Consultancy firms, third-party verifiers and testing organizations involved in MRV data fraud may face penalties up to ten times of their illegal gains, as well as disqualification. Similar punishments also apply for market manipulation. The regulation rectifies the previous absence of penalties for misconduct by technical service providers and market participants.

Market participants involved in market manipulation behaviors may face penalties up to ten times their illegal gains, starting from CNY 500,000 (USD 69,469). 

Market Regulation

MARKET PARTICIPATION: Compliance entities. The Interim Regulations indicate that other types of institutions or individuals may in the future also be allowed to participate in the market; however, there is no specific timeline for this. 

MARKET TYPES: 

Primary: Allowances are currently only distributed by free allocation. The Interim Regulations state the intention to introduce auctioning, though without a specific timeline. 

Secondary: China Emission Allowances (CEA) can be traded on a dedicated trading platform managed by the Shanghai Environment and Energy Exchange. CEAs for the 2019 to 2020 period, CEAs for 2021, CEAs for 2022, and CEAs for 2023 are categorized as four different products on the exchange, and have similar prices.

Due to financial market regulations, other products (i.e., derivatives) are currently not allowed.

LEGAL STATUS OF ALLOWANCES: Allowances are not considered financial instruments. For financial accounting purposes, the Ministry of Finance published an interim policy that categorizes only purchased allowances, and not those received for free, as assets in financial statements.

In May 2021, the MEE announced the option of establishing a market-regulating and protection mechanism. This would enable the MEE to respond to abnormal fluctuations in trading prices, for instance through buy-back, auctioning, or adjusting the rules related to CCER use. The necessary triggers and specifics of this mechanism are yet to be defined.

EXCHANGE

Instrument type: Price-based instrument

Functioning: The Shanghai Environment and Energy Exchange implements a system of limits on price increases and decreases for trading over the exchange. For listed trading (the maximum volume for a single transaction does not exceed 100,000 tCO2e), this is 10% above or below the reference price (the closing price of the previous trading day). For block trading (with minimum transaction volume of 100,000 tCO2e), this is 30% above or below the reference price. Only transactions within this price range can be successfully completed on the exchange. It also sets the maximum position limit for the different market participants: the sum of their annual allocated allowances plus 1 MtCO2 for compliance entities, 1 MtCO2for institutional investors, and 50,000 tCO2 for natural persons.  

Other Information

The China national ETS has a multi-level governance structure involving three levels of government: 

Ministry of Ecology and Environment (MEE): 
Acts as the national competent authority setting the rules and overseeing the system, jointly with other national regulators.
Provincial-level MEE subsidiaries: Oversee the implementation of the ETS, including identifying covered entities, organizing MRV, hiring verifiers, calculating allowance, managing provincial registry account, oversee compliance.
Municipal-level authorities: Responsible for managing covered entities directly. 

China Carbon Emissions Registration and Clearing Co., Ltd.: Responsible fo.lr operating the CEA registry and clearing platform.

Shanghai Environment and Energy Exchange: Operates the CEA trading platform.

National Center for Climate Change Strategy and International Cooperation (NCSC): Operates the CCER registry. 

The Beijing Green Exchange: Responsible for operating the CCER trading and clearing platform.

An evaluation framework is currently under development. 

The National Measures for the Administration of Carbon Emission Trading (trial) (2021)

Allocation Plan for the Power Sector (2019-2020) and list of covered entities (2021) (English translation)

Guidelines for Enterprise Greenhouse Gas Verification (trial) (2021)

Notice on Strengthening the Management of Enterprise Greenhouse Gas Emissions Reporting (2021)

Allocation Plan for the Power Sector (2023-2024)

Management Measures for voluntary Greenhouse Gas Emission Reduction Trading (Trial) (2023)

Guidelines for GHG Monitoring and Reporting for various sectors (2013, 2014, and 2015)

Updated Guidelines for GHG Monitoring and Reporting for the power sector (2023) 

Updated Guidelines for GHG Monitoring and Reporting for industrial sectors (2023)

Interim Regulations on the Administration of Carbon Emission Trading (2024)

Guidelines for GHG Monitoring and Reporting for Cement, aluminum smelter and steel industries (2024 and 2025)

Work Plan for National ETS covering steel, cement and aluminum smelter sectors (2025)

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New Zealand Emissions Trading Scheme

ETS Status
in force
Jurisdictions
New Zealand
Start of operation (year)
2008
Sectoral coverage
Fuel use in agriculture and/or forestry
Forestry
Maritime
Mining and extractives
Waste
Domestic Aviation
Transport
Buildings
Industry
Power
Allocation
Free allocation (Benchmarking); Auctioning; Allowances granted for forestry and other removal activities
Offsets and credits
Offset credits are not allowed
Cap or total emissions limit
19.1 MtCO2e (2025)
GHGs covered
CO2, CH4, N2O, SF6, HFCs, PFCs
Average auction price
NZD 64 (USD 38.75)
Average secondary market price
NZD 59.31 (USD 35.91)
Total revenue since beginning
NZD 5.6 billion (USD 3.7 billion)
Total revenue
NZD 480.9 million (USD 291.2 million)

General Information

The New Zealand Emissions Trading Scheme (NZ ETS) was launched in 2008 and is a central climate change mitigation policy for the country. It covers roughly half of New Zealand’s GHG emissions. The “Climate Change Response Act 2002” sets the legislative framework for the NZ ETS and incorporates all of New Zealand’s key climate legislation under one Act. 

The cap is set in a top-down process to align with New Zealand’s 2050 net zero targets and associated emissions budgets. Covered entities must surrender allowances for all their reported emissions. 

The NZ ETS has broad sectoral coverage, including forestry, stationary energy, industrial processing, liquid fossil fuels, waste, and synthetic GHGs. Allocation is based primarily on auctioning, which began in March 2021. Free allocation is granted only for emissions-intensive, trade-exposed (EITE) activities and is based on output- and intensity-based benchmarks. Uniquely to the NZ ETS, the forestry sector has both surrender obligations and the opportunity to earn units for emissions removals. The agricultural sector used to face processor level reporting obligations with the future possibility of facing compliance obligations under the NZ ETS, but this is no longer the case. 

From 2011 until November 2024, companies carrying out certain agricultural activities had an obligation to report their emissions to the NZ ETS at the processor level. The He Waka Eke Noa partnership between the government and the agricultural sector had been established to deliver a pricing mechanism outside of the NZ ETS for the sector, with a ‘backstop’ measure to price agricultural emissions through the NZ ETS at the processor level in 2025, followed by pricing at the farm-level in 2027. 

This legislation was repealed in 2024, removing agriculture activities from the NZ ETS. A new Pastoral Sector Group will replace the He Waka Eke Noa partnership. The government plans to price agricultural emissions (through a mechanism other than the NZ ETS) by no later than 2030.

In June 2024, the government commissioned an independent ministerial advisory panel of experts to review the latest science about biogenic methane and provide an up-to-date evidence base about methane’s warming impact. This report was delivered in December 2024 and ministers will consider the findings alongside the Climate Change Commission’s advice on New Zealand’s 2050 targets in 2025. 

Unit supply settings, as well as auction reserve price settings for 2025 to 2029, were updated in September. The cap (which limits the number of units from auctioning, industrial allocation, and the cost containment reserve - CCR) was reduced from 27.9 million in 2024 to 19.1 million in 2025. The 2025 auction reserve price floor is NZD 68 (USD 41.17), and the first CCR trigger price is NZD 193 (USD 116.86).

Four auctions were undertaken in 2024, with 14.1 million units for sale, as well as another 7.7 million units available from the CCR. Two of the auctions cleared, with 3 million units sold in March 2024 and 4 million in December 2024, all at the floor price of NZD 64 (USD 38.75). In line with the NZ ETS auctioning regulations, any units that were unsold after the last auction of 2024 are not available for sale at any subsequent auction.   

In December 2024, the government updated baselines for activities eligible for industrial allocation, to better reflect the actual emissions intensity of those activities. The regulations containing the new baselines came into force as of January 2025 and will impact the final allocations firms receive for 2024. The updates bring the industrial allocation system more in line with its purpose.

Fuel use in agriculture and/or forestry
Forestry
Maritime
Mining and extractives
Waste
Domestic Aviation
Transport
Buildings
Industry
Power

Emissions & Targets

78.4 MtCO2e (2022)

By 2030: 50% reduction of net emissions below gross 2005 levels (NDC); 10% reduction of biogenic methane emissions below 2017 levels (Climate Change Response Act 2002, through an amendment in 2019) 

By 2050: Reduce net emissions of all GHGs (except biogenic methane) to zero; reduce biogenic methane emissions to 24-47% below 2017 levels (Climate Change Response Act 2002, through an amendment in 2019) 

Average auction price: NZD 64 (USD 38.75)

Average secondary market price: NZD 59.31 (USD 35.91)

Updated prices available here 

Size & Phases

34.20MtCO2e
CO2, CH4, N2O, SF6, HFCs, PFCs

The NZ ETS cap limits the number of New Zealand Units (NZUs) that may be released to the market from auctioning, industrial allocation, and from the CCR, as well as from any international units (not currently allowed). There is no limit on NZUs generated from removal activities. The NZ ETS cap thus limits the volume of net emissions that are emitted by ETS regulated entities, without imposing a limit on gross emissions within the ETS. 

In 2025, the cap is 19.1 MtCO2e. 

The Climate Change Response Act 2002 requires the government to set a cap on emissions covered by the NZ ETS, based on the five-yearly emissions budgets and announced over a rolling five-year period with annual updates. 

The government updated regulations for unit supply settings in September 2024, setting the annual cap for the years 2025 to 2029. In setting supply limits, the government also considers the stockpile of banked allowances already in circulation and projected unit supply from removal activities.

NZUs generated from removal activities are forecast to be 13.8 million units in 2025, mainly generated in the forestry sector.

The NZ ETS was originally designed to operate without a specific domestic cap, as this accommodated carbon sequestration from forestry activities and a full link to the international Kyoto Protocol carbon markets. Allowance supply was restricted to NZUs in 2015. No decisions have been made on potential future access to and use of international units.

SECTORS: Sectors were gradually phased in between 2008 and 2013.

  • Forestry (mandatory: deforesting pre-1990 forest land; voluntary: post-1989 forest land)
  • Stationary energy 
  • Industrial processing 
  • Liquid fossil fuels 
  • Waste (except for small and remote landfills)
  • Synthetic GHGs; synthetic GHGs not covered by the NZ ETS are subject to an equivalent levy

From 2011 until November 2024, companies carrying out certain agricultural activities had an obligation to report their emissions to the NZ ETS at the processor level. The He Waka Eke Noa partnership between the government and the agricultural sector had been established to deliver a pricing mechanism outside of the NZ ETS for the sector, with a ‘backstop’ measure to price agricultural emissions through the NZ ETS at the processor level in 2025, followed by pricing at the farm-level in 2027. 

This legislation was repealed in 2024, removing agriculture activities from the NZ ETS. A new Pastoral Sector Group will replace the He Waka Eke Noa partnership. The government plans to price agricultural emissions (through a mechanism other than the NZ ETS) by no later than 2030. 


Types of fuel covered: petrol, diesel, aviation gasoline, jet kerosene, light fuel oil, heavy fuel oil. Emissions from fuel used for international aviation and marine transport are exempt.

INCLUSION THRESHOLDS: Thresholds for participation are typically low.*

  • Forestry (mandatory: deforesting pre-1990 forest land; voluntary: post-1989 forest land)
  • Stationary energy (various thresholds)
  • Industrial processing (various thresholds)
  • Liquid fossil fuels (various thresholds)
  • Waste (except for small and remote landfills)
  • Synthetic GHGs (various thresholds); synthetic GHGs not covered by the NZ ETS are subject to an equivalent levy

 

 

* Detailed threshold information can be found in Schedule 3 of the Climate Change Response Act 2002 and in the Climate Change (General Exemptions) Order 2009

Upstream (power, aviation, buildings, forestry, forestry fuel use, transport); point source (industry, waste).

For all fossil fuels, the point of obligation is generally upstream. Some large businesses that purchase fossil fuels directly from mandatory NZ ETS participants can choose to opt into the NZ ETS rather than have the costs passed down from their suppliers.
 

4,617 entities were registered as participants in the NZ ETS as of the end of December 2024, of which:

  • 165 entities have mandatory reporting and surrender obligations for 176 activities*
  • 4,452 entities have voluntary (opt-in) reporting and surrender obligations for 4,650 activities*, 4,427 entities are registered as forestry.

*Some entities have obligations under multiple activities.

Note that some organizations have both mandatory and voluntary reporting and surrender obligations. 
 

Allowance Allocation & Revenue

Proportion of allowances offered at auction in 2024: 51%

14.1 million units were made available at auction in 2024, and seven million were sold.

FREE ALLOCATION:

Leakage protection/Industrial free allocation: Free allocation is provided, based on output and intensity-based benchmarks, for 26 eligible industrial activities. Activities are deemed eligible if both EITE criteria are met. Highly emissions-intensive activities (over 1,600 tCO2e per NZD 1 million [USD 605,494] of revenue) receive 90% free allocation. Moderately emissions-intensive activities (over 800 tCO2e per NZD 1 million [USD 605,494] of revenue) receive 60% free allocation. An activity is deemed to be trade-exposed if there is transoceanic trade in the good produced.

In 2023, 5.7 million NZUs were allocated for industrial EITE activities.

In December 2024, the government updated the baselines for activities eligible for industrial allocation, to better reflect the actual emissions intensity of those activities. The regulations containing the new baselines came into force from January 2025 and will impact the final allocations firms receive for 2024. The updates bring the industrial allocation system more in line with its purpose. 

Industrial free allocation is being phased down. A minimum annual phase-down rate of 0.01% across all industrial activities applies from 2021 to 2030. That rate will increase to 0.02% for the years 2031 to 2040, and to 0.03% for 2041 to 2050. The minimum phase-down rate could be adjusted for activities that are considered at lower risk of carbon leakage alongside other criteria as set in legislation.

AUCTIONING: 

Auctioning was introduced in 2021. The volume of NZUs made available for auctioning is set on an annual basis, five years in advance (see ‘Cap’ section). The annual quantity is split between the quarterly auctions. In 2024, 14.1 million allowances were made available for auctioning, plus an additional 7.7 million allowances in the CCR. Seven million NZUs were sold in 2024.

Auctions follow a sealed-bid, single-round format. The clearing price is set at the lowest successful bid and NZUs are sold to all successful bidders at this price, providing it is not below the confidential reserve price (see ‘Market Stability Provisions’ section). Otherwise, the auction fails and all allowances on offer are rolled forward to the next auction within the same calendar year. Any units that remain unsold after the last auction of the year are not available for sale at any subsequent auction.   

ALLOWANCES GRANTED FOR REMOVALS:

Post-1989 forestry sector and other removal activities: NZUs are granted to participants that voluntarily register in the scheme for removal activities.

Forestry removal activities: Participants are entitled to receive one NZU per tCO2 removed for registered post-1989 forest land. If the forest is harvested* or deforested, units must be surrendered to account for the emissions. If the participant chooses to deregister from the scheme, NZUs equivalent to the number received must be returned. 20 million NZUs were issued for forest removal activities in 2023.

Other removal activities: 2.1 million allowances were granted in 2023 for other removal activities, such as producing a product with embedded GHGs.


 

* Under the new “averaging” method for post-1989 forests, allowances are granted only up to the long-term average carbon stock, but therefore do not need to be surrendered at harvest.

NZD 5.6 billion (USD 3.7 billion) since the beginning of the program
NZD 480.9 million (USD 291.2 million) in 2024
 

Flexibility & Linking

Banking is allowed. NZUs do not expire. 

Borrowing is not allowed.
 

The use of offset credits is not allowed. 

Units from Kyoto Protocol flexibility mechanisms were eligible for use in the system with no restrictions until June 2015 but have since been ineligible. Access to high-integrity international carbon markets may be part of New Zealand’s strategy to meet its 2030 target. The government can decide to allow international units as part of the annual unit supply-setting process. However, only units from government-approved sources and those meeting environmental integrity standards would be eligible and subject to quantitative limits.
 

The NZ ETS is not linked with any other system.

Until June 2015, the NZ ETS was indirectly linked to other systems (e.g., the EU ETS) via the international Kyoto Protocol flexible mechanisms. Since then, the NZ ETS has been an exclusively domestic system.

Carbon tax: Synthetic GHG levy

Compliance

For most sectors, the NZ ETS has annual surrender obligations. For post-1989 forestry participants, annual reporting of emissions and removals is optional, with five-year mandatory reporting periods. As a result, unit allocations and surrenders for these participants occur in the year they choose to report their emissions.

REPORTING: Most sectors are required to report annually; the deadline is the end of March to submit an Annual Emissions Return (emissions report).

VERIFICATION: MRV follows a system of self-reporting supplemented by a program of official government audits. Each year, a sample of NZ ETS participants are selected for compliance review. Third-party verification is not typically required for emissions reports. However, participants must seek third-party verification if they apply for the use of a unique emissions factor, as opposed to using the default factors supplied by the government.

An entity that fails to submit an emissions report by the due date must pay a fine equal to the number of units involved, multiplied by the current unit price and a “culpability factor”.
 

An entity that fails to surrender or repay emissions units when required must surrender the units and pay a cash penalty of three times the current market price for each unit that was not surrendered by the due date. Entities can be fined up to NZD 24,000 (USD 14,531.86) on conviction for failure to collect emissions data or other required information, calculate emissions and/or removals, keep records, register as a participant, submit an Annual Emissions Return when required, or notify the administering agency or provide information when required to do so.

Entities can also be fined up to NZD 50,000 (USD 30,274.70) on conviction for knowingly altering, falsifying, or providing incomplete or misleading information about any obligations under the scheme, including in the Annual Emissions Return report. This penalty and/or imprisonment of up to five years also applies to entities that deliberately lie about obligations under the NZ ETS to gain financial benefit or avoid financial loss.

Market Regulation

MARKET PARTICIPATION: Any individual or organization can own and trade NZUs, if they hold an account with the NZ ETS Registry.

MARKET TYPES: 

Primary: Auctions are operated jointly by NZX (New Zealand Exchange) and the European Energy Exchange (EEX) and are held four times a year. Any NZ ETS Register Account Holder can participate in the auctions. 

Secondary: Most NZUs are traded on the secondary market. Trades can take place directly between companies (OTC) or via a trading platform. Trades can be on a spot basis or through forward contract. 

LEGAL STATUS OF ALLOWANCES: Allowances are not financial products in New Zealand law and, as a result, there is currently no single integrated market governance framework that would manage risks of misconduct in the NZ ETS. The government has work underway on options to improve market governance. 
 

COST CONTAINMENT RESERVE (CCR)

Instrument type: Price-based instrument

Functioning: If a predetermined trigger price is reached at auction, a specified number of allowances from the CCR are additionally released for sale. The CCR follows a two-tier system, with a specific number of allowances available for auction at each trigger. The government updates the CCR trigger prices each year, together with other auction supply settings (see ‘Cap’ section). 

At the start of 2025, the first CCR trigger price is NZD 193 (USD 116.86), with a total of 2.6 million units available. The second trigger price is NZD 242 (USD 146.53), with 4.5 million units available. These triggers will rise annually to reach NZD 235 (USD 142.29) and NZD 294 (USD 178.01) respectively in 2029. 

In 2024, the volume of the CCR was set at a total of 7.7 million allowances for both triggers. The trigger price was not reached during 2024, so none of these were released to market. Currently, the volume of the reserve is set at 7.1 million in 2025, dropping annually to 4.7 million in 2029. 

PRICE FLOOR

Instrument type: Price-based instrument

Functioning: With the start of auctioning, the government introduced a price floor operating through a reserve price or minimum accepted bid at auction.

In addition to the hard auction reserve price floor, the government introduced a confidential reserve price. This is set by referencing prices from the secondary market and uses a confidential methodology to determine a reserve price below which units cannot be sold. If it is set higher than the hard auction reserve price, then it becomes the new reserve price floor for that auction.

The hard auction reserve price floor is NZD 68 (USD 41.17) in 2025, rising annually to NZD 82 (USD 49.65) in 2029.

Other Information

Ministry for the Environment: Responsible for establishing the regulatory framework of the NZ ETS.
Environmental Protection Authority: Responsible for the NZ ETS registry and compliance.
Ministry for Primary Industries: Responsible for the forestry sector under the NZ ETS.

Climate Change Commission: Independent body providing official annual advice on NZ ETS settings.

The Climate Change Response Act 2002 includes provisions for reviews of the operation and effectiveness of the NZ ETS. These reviews were originally required every five years, but the timing is now discretionary. The first review took place from 2011 to 2012, and the second review took place from 2015 to 2017. A third review of the NZ ETS was opened in early 2023. Following the 2023 General Election, this was closed by the new government.

Climate Change Response Act 2002—Part 4 New Zealand greenhouse gas emissions trading scheme*


 

* To keep New Zealand’s key climate change legislation under one act, the Climate Change Response Act incorporates both the “Climate Change Response (Emissions Trading Reform) Amendment Act 2020”, and the “Climate Change Response (Zero Carbon) Amendment Act 2019”. The “Zero Carbon Act” details domestic targets to 2050, establishes the Climate Change Commission, and mandates a process of setting and meeting five-year national emission budgets.

 

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