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Tuesday, 01 September 2026 10:55

PCE Report: NZ ETS Not Fit for Purpose, Drives Afforestation

Written by  Nigel Malthus
Simon Upton Simon Upton

New Zealand's Emissions Trading Scheme (NZ ETS) encourages afforestation while not achieving climate goals, says a new report released by the Parliamentary Commissioner for the Environment, Simon Upton.

The report, Adrift: What future does the Emissions Trading Scheme have? says the NZ ETS is not fit for purpose. It says it will not achieve climate goals, nor yield carbon prices high enough to significantly reduce emissions.

“Instead, it will continue to drive the planting of new forests to offset emissions, leading to a significantly larger forestry estate over time.

“That forestry estate will need to be maintained by future generations in the face of increasing risks from fire, disease and extreme weather.”

The report was tabled in Parliament last Wednesday.

Upton said the role of forestry in particular needs a fundamental rethink if New Zealand was to have any hope of achieving its climate commitments and reducing the risks that the inclusion of forestry in the NZ ETS has created.

Beef + Lamb New Zealand says the report “supports many of B+LNZ’s positions and will encourage important discussions”.

Chair Kate Acland says B+LNZ has been calling for changes to the ETS since 2019.

“We have continually raised concerns about the unintended consequences of the current ETS settings, particularly the amount of productive sheep and beef farmland being converted into carbon forests.

“Independent research we’ve commissioned shows the total extent of whole sheep and beef farms sold for afforestation since the beginning of 2017 is now 330,000 hectares. The PCE’s report shows the trees planted on that land will break the ETS from the 2030s, when there will be an oversupply of sequestration.”

But the immediate past president of The Institute of Forestry, James Treadwell, said it was carbon emitters, not forestry, that the commissioner should look to take real action, and reduce their emissions.

“At the moment, the only thing that is helping New Zealand meet its commitments internationally is forestry.

“Whilst we’d like that not to be the case, we have to continue doing that or else every single New Zealander will be paying for it in 2030 and 2050 because we’re going to have to buy units from overseas.”

Treadwell said constant changes to the scheme – for example the national annual cap of 15,000ha for new exotic forestry on class 6 farmland imposed last year – made it hard for foresters to make market decisions and do their part to reduce emissions.

“Is the ETS working wonderfully? No it’s not, but it’s working okay,” said Treadwell.

“But emitters do have to start reducing their emissions, that’s the end goal.

“We are the only people who are actually doing anything about emissions at the moment, to be frank.”

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