Government Halves Annual ETS Charge for Forestry Sector to Reduce Costs

New annual fee structure aims to support forestry’s role in emissions reduction and exports.

The Government has confirmed a 50 per cent reduction in the annual charge for forest owners participating in the forestry Emissions Trading Scheme (ETS), Forestry Minister Todd McClay announced today.

The move, which will see the annual fee drop from $30.25 per hectare to $14.90, will take effect from January 2025, with invoicing beginning in February 2025.

Supporting Confidence and Growth in Forestry

Minister McClay said the decision delivers on the coalition Government’s promise to rebuild confidence in the forestry sector while ensuring it remains a key player in helping New Zealand achieve its emissions reduction and export growth targets.

“This decision directly responds to feedback from the forestry sector, which has been struggling under excessive administrative costs imposed by the previous government,” McClay said. “We are working to restore confidence for over 4,300 forestry participants in the ETS registry.”

The annual charge reduction follows a period of consultation on proposed changes to the Climate Change (Forestry) Regulations 2022. It comes amid ongoing work by the Government to align the ETS settings with the sector's needs while addressing regulatory inefficiencies.

Previous Cost Burden Addressed

McClay criticized the previous Labour government, attributing the high ETS charges to decisions that significantly drove up administrative costs. “Labour’s approach forced the forestry sector to bear the brunt of poor decisions, and it undermined trust in the system,” McClay said.

“The revised charge ensures forest owners still contribute their fair share to maintaining the ETS registry but at a more sustainable level. We are ensuring the system is both fair and functional for forestry participants.”

Ongoing Reviews for Sustainable Cost Recovery

The Government has also initiated a wider review of cost recovery settings, which is expected to conclude by 2026. This comprehensive review will assess all administrative charges related to the forestry ETS registry to ensure transparency and fairness.

To support this work, the Forestry Sector Reference Group has been established to improve transparency and collaboration across the sector, ensuring forestry operators have greater visibility over cost structures and decision-making processes.

Key Benefits of the Charge Reduction

The new annual ETS fee structure is expected to deliver several benefits to the forestry sector, including:

Reduced financial burden on forestry participants, particularly small and medium forest owners.

Improved confidence and certainty for participants operating within the ETS.

Enhanced competitiveness for the forestry sector in achieving emissions targets and contributing to export growth.

Supporting long-term investment in sustainable forestry practices.

Implementation Timeline

The 50 per cent fee reduction will take effect from January 2025.

Participants will receive invoices based on the new charge structure starting February 2025.

The regulatory amendments will be officially notified in the New Zealand Gazette this week.

A Future-Focused Forestry Sector

Minister McClay reiterated the importance of forestry as a cornerstone of New Zealand’s economic and environmental goals. “Forestry is essential for meeting our climate targets, driving economic growth, and ensuring our exports remain competitive on the global stage. These changes are just the beginning as we work to make the forestry ETS fairer and more effective.”

The Government remains committed to ongoing collaboration with forestry stakeholders to deliver policies that support growth, innovation, and sustainability in the sector. Key Highlights:

Annual ETS charge reduced 50 per cent from $30.25 to $14.90 per hectare.

Effective January 2025, invoicing begins February 2025.

Wider cost recovery review underway, to be completed by 2026.

Forestry Sector Reference Group established to increase transparency.