The Climate Change Commission’s latest advice to the Government reflects efforts to restore confidence, clarity and certainty in the Emissions Trading Scheme, according to the Climate Forestry Association (CFA).

The CCC yesterday released its latest Advice on NZ ETS unit limits and price control setting for 2026 – 2030. The Commission underscored that the ETS is the main tool for reducing domestic emissions and that confidence in the market mechanism has improved but remains fragile. The Commission said the aim of its advice was to support “a credible, predictable and stable market.”

Climate Forestry Association chief executive Andrew Cushen says the Commission’s report highlights the need to give market participants the confidence to invest over the long term in supporting New Zealand’s climate goals.

“The advice on ETS unit settings helps achieve that, with a welcome approach of fact-based analysis and carefully calibrated recommendations that will help keep our approach on track while maintaining consistency in our national approach,” says Andrew Cushen.

“In particular, for many members of our organisation, it was encouraging to see the weight placed on feedback from the sector, and in particular, an acknowledgement of the vital importance of participation in the ETS for Māori landowners and forestry interests.”

The Commission’s report highlighted that the ETS offers important opportunities for Iwi/Māori to lift their prosperity, while also recognising there is concern among Māori that the contributions of forestry – to exports, employment, the climate and wider environmental benefits such as biodiversity, water quality and erosion control – are not fully recognised.

Andrew Cushen says the Commission's acknowledgement of changes to the unit surplus is also welcome, and shows that the market already has its own self-correction mechanisms built in.

The Commission said the number of surplus units in the market has reduced more quickly than previously forecast, since its 2024 advice, with a 17.7-million-unit reduction in the surplus estimate. This reduction included 3 million units identified through refinements in the surplus estimate methodology.

Overall, Andrew Cushen says the ‘steady as she goes’ approach to auction volumes over the next two years will support confidence for market participants to act, while reducing the uncertainty the Commission identified was created by several years of policy shifts and ad-hoc interventions.

“The ETS unit settings process is intended to be a simple series of mechanical adjustments to ensure our climate approach is on the right track – not a chance to provide political commentary or change Government policy. Likewise, the Commission's advice is intended to be fact based, expert and aligned with the Government's climate policy.”

“The forestry sector, the market and ultimately our climate ambitions and actions rely on this process to provide the stability and confidence we need to make long-term decisions about our investments for the future.”

“The advice we see from the Commission does that.”

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