Government Extends ETS Settings to 2031 for Market Stability
The New Zealand Government will maintain current Emissions Trading Scheme unit settings and extend price controls until 2031, providing longer-term certainty after recent market volatility.
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The New Zealand Government will maintain current Emissions Trading Scheme unit settings and extend price controls until 2031, providing longer-term certainty after recent market volatility.
Extension Provides Certainty
The Government announced it will keep the auction reserve price floor, cost containment reserve prices and reserve volumes in place through 2031 rather than ending in 2030. The changes take effect from 1 January 2027.
Climate Change Minister Simon Watts said the approach supports emissions budgets and targets while aligning with Climate Change Commission advice.
"A stable ETS is key to delivering the emissions reductions required to meet our targets. These settings provide the certainty participants need to plan for the future." — Climate Change Minister Simon Watts
Current Settings and Trajectory
The 2026 auction reserve price stands at NZD 71. The cost containment reserve triggers at NZD 203 for 2.3 million units in the first tier and NZD 254 for 4.2 million units in the second tier.
Base auction volumes will fall from 5.2 million units in 2026 to 1.7 million units in 2030. The overall cap on units declines from 16.3 million in 2026 to 9.6 million in 2030.
NZ ETS Base Auction Volumes 2026–2030
Volumes decline steadily as the cap tightens through 2030.
The Climate Change Commission recommended keeping prices at current levels with inflation adjustments only and extending controls to 2031. It cited a central estimate of 29.7 million surplus units in the market.
"Stability is critical while confidence in the NZ ETS remains fragile." — Climate Change Commission, NZ ETS unit limits and price control settings for 2026–2030
NZU spot prices fell to the low NZD 30s in January 2026 after November 2025 policy announcements before recovering to around NZD 54.65 by early August 2026, according to emsTradepoint's ECMI monthly price index.
Sector Impacts and Future Risks
The scheme covers about half of national emissions, excluding agriculture. Stable settings support planning for energy, transport, industrial and forestry participants.
The Climate Change Commission's own published advice flags that tighter volumes amid falling surplus could push prices higher later, potentially raising compliance costs for emitters and affecting competitiveness.
The extension covers the second emissions budget period ending in 2030 but leaves open questions for the 2031–2035 period if surplus depletion accelerates.
