Government Keeps ETS Settings Unchanged to Provide Market Certainty

Under the decision, the Government will retain the current Emissions Trading Scheme unit settings rather than introducing changes.

The New Zealand Government will keep the current settings of the Emissions Trading Scheme (ETS) in place, a move it says will provide greater certainty for businesses and investors while supporting the country's long-term climate goals. Climate Change Minister Simon Watts announced the decision after a public consultation on proposed ETS settings, saying stability in the carbon market is essential for helping participants make long-term investment decisions and supporting New Zealand's emissions reduction targets.

Under the decision, the Government will retain the current Emissions Trading Scheme unit settings rather than introducing changes. Watts said maintaining a stable framework gives businesses and other market participants confidence when planning future investments and managing their emissions obligations. The Government believes the existing settings remain appropriate for keeping New Zealand on track to meet its emissions budgets and broader climate commitments.

Key Price Controls Extended Until 2031

As part of the announcement, the Government will extend several important ETS mechanisms for an additional year.

The auction floor price, cost containment reserve price, and the current reserve volume of New Zealand Units (NZUs) will now remain in place until 2031, instead of ending in 2030. These measures are designed to support orderly market operation by providing minimum pricing signals while limiting excessive price volatility if demand for carbon units rises sharply. The extension is intended to give the market greater certainty over future trading conditions.

Decision Aligns With Climate Advice

Watts said the Government's approach is consistent with recommendations from the Climate Change Commission, which advises on policies needed to meet New Zealand's emissions reduction goals. According to the Minister, maintaining the current settings supports the country's emissions budgets while reinforcing confidence in the ETS as New Zealand's primary tool for pricing greenhouse gas emissions.

Regulatory Changes to Take Effect in 2027

Alongside the main decision, the Government confirmed it will also proceed with several smaller regulatory changes that were included in the consultation process. All of the approved changes, including the extension of the existing ETS settings, will come into effect on 1 January 2027, providing participants with time to prepare before the updated regulations begin.