CarbonCopy
- Rebecca Hunink
- Apr 1, 2025
- 12 min read
Updated: 19 hours ago
The CarbonCrop Newsletter | Q1 2025
This issue:
ETS Policy Update: Planted or Planning
Carbon Market Commentary
Recent announcements
Important dates
ETS fees update
Customer story - Synlait milk
What’s New
Our tech
Things you might have missed
ETS Policy Update: Planted or planning – can you still register exotic forest on farm?
By CarbonCrop
In our previous blog, we covered the Government’s proposal to restrict the registration of exotic forests in the ETS based on Land Use Capability (LUC) class. On March 25th, MPI released an update on the details of these proposed changes, with particular focus on proposed ‘qualifying investment’ exemptions and ‘existing forest’ exemptions.
To recap: the stated goal of the policy is to limit full-farm conversions to exotic forestry, particularly on more productive land.
If it seems like we use the words “could” and “might” a lot in the below, it’s because in the absence of finalised legislation, risk and uncertainty remain.
New info
The ‘qualifying investment’ exemption was mentioned in the initial announcement, but the March 2025 update shared more details on how the exemptions might apply to ‘in-progress’ conversions/afforestation and investments underway.
Some potentially good news: If you started an afforestation investment before December 4 2024, you might have an exemption from the restrictions even for LUC1-6 land, and there may also be a (somewhat overlapping) exemption if your land is ‘forest’ when the law comes into effect later this year. It comes down to where in the process you are, what evidence you can provide (... and the final implementation of the rules!).
There is a list of proposed qualifying forestry investments, and a requirement that these have been made between 1 Jan 2021 and 4 Dec 2024. Where this is the case, the associated areas may be exempt from the new LUC restrictions for a limited period – even after they come into force. Currently this ‘exemption sunset’ date is proposed as 31 December 2027, suggesting that after that date even ongoing forestry investments will be constrained - which may have material implications for the scheduling of planting!
These restrictions are still expected to come into force from October 2025.
What counts as a “qualifying investment”?
The Government has proposed six types of forestry activity that might be a basis for an exemption:
Buying farmland with the intent to afforest
Signing a forestry right or lease
Applying for an emissions ruling or resource consent related to planting
Ordering seedlings or preparing the site for planting
Receiving a recognised grant to afforest
Contracting a third party to carry out due diligence
If you can provide sufficient evidence of one or more of these activities occurring before 4 Dec 2024, that could support an exemption - even if planting hasn’t taken place yet. You would also need to submit your ETS application for registration by 31 December 2027 for the exemption to apply, based on the current proposal.
Already planted? You might be covered.
The Government is also proposing that land already established in exotic forest before the new rules take effect may be exempt from the LUC restrictions, even if not otherwise exempt on the basis of the “qualifying investments” above or another exemption class.
Hopefully this avoids a ‘rush to register’ for existing forests, but note that with 2025 being the final year of a ‘MERP’ there are still other reasons to seriously consider registering your existing forestland quickly to avoid missing out on units.
So, if I get my new forest in quickly, I’m safe?
If you’re thinking about planting this winter to take advantage of this existing forest exemption, it will be extremely important to collect strong, verifiable, dated, evidence of the forest establishment, and you should also be aware that this exemption is still only a proposal - and your investment risk assessment should consider it as such. We encourage caution around this suggested ‘existing forest exemption’ for 2025 plantings in particular, especially the relevant dates and any potential timeline risks for your forestry activity.
Notwithstanding the indication around ‘land that is already forest land’ above, the update also specifically says that:
“Anyone who has chosen to start the process of converting a farm to exotic forestry for registration in the ETS since the government announced this planned policy change on 4 December 2024, should expect to be subject to the new restrictions by the time they come to register in the ETS. This is because we intend for these restrictions to come into effect quickly, from October 2025."
These two indications are not in contradiction - it’s possible to both start planning after 4 Dec 2024 and have established forest by October 2025, but there’s obviously little margin for error or for variation in the final implementation of the rules.
What does this mean if you’ve worked with CarbonCrop?
That sixth exemption “contracting a third party to undertake due diligence” could cover a range of possible scenarios. Landholders who have contracted with CarbonCrop to assess land eligibility with a view to exploring exotic afforestation scenarios may be eligible for the “in process” exemption on the basis of this investment - this would similarly apply to other due diligence service providers.
For CarbonCrop, an example pathway might be:
Submitted your land for assessment through CarbonCrop
Received a Land Assessment Report from us (or any other provider), including exotic conversion P89 eligibility assessments and financial projections.
Engaged CarbonCrop, or another adviser, to further explore planting options
If that work took place before 4 December 2024, it might be considered a qualifying investment. There's no guarantee that any specific report or activity will meet the criteria - that will depend on how the rules are finalised and interpreted. If you’re in this situation, it may be useful to focus in the short term on ensuring you have all the relevant evidence in a robust form, moving quickly if you’re already committed and are able to (such as with registration of existing forest), and if you’re not committed then considering deferring a final decision on your further investment until you have sufficient confidence of eligibility.
What now?
Check your records
Look for anything between Jan 2021 and Dec 2024 that shows you were planning or preparing for exotic forest planting, especially if you engaged CarbonCrop or another forestry / planting adviser, or made other related investments.
Pre-existing forest
If your forest already exists, or will be established before the new law will come into effect (October 2025), it appears you are likely to be covered by the proposed ‘existing forest land’ exemption, but note the timing and final legislation risks - especially for new plantings intended in 2025 where these are not also supported by “Investment in process” evidence.
Keep your paperwork tidy
You’ll need clear documentation of what you did and when (e.g. assessment reports, invoices, contracts, receipts). This may be valuable if you need to demonstrate qualifying activity and could be important evidence later.
Keep informed and make a plan
There are a number of relevant timelines that have been indicated: Jan 2021 - Dec 2024; 4 Dec 2024; October 2025; 31 December 2027. The MPI update provides an excellent visual of these, which we’re including below:
How these dates relate to you will depend on your particular situation, but if you have activities or investments that may be impacted there’s no time like the present to begin planning your path through.
Get in touch
Not sure if your CarbonCrop assessment might be relevant? We can help you review what’s on record and explore potential next steps.
The rules are changing - but if you’ve already planted, planned, or even just explored options before December 2024, there might still have a pathway forward. Tracking what’s been done, managing your risk, and staying informed will give you the best chance of navigating a good outcome through what comes next.
For more information on these proposed rules, check out MPI’s announcement here. We strongly recommend you read this original release if you’re potentially impacted by these rule changes.
Carbon Market Commentary
emsTradepoint
CarbonCrop late addition
In the wake of the auction failure to clear, prices fell significantly over the week of March 24 2025 with some platforms trading in the ~$53 range, before recovering slightly for the week to close around $58.
Carbon prices were very stable for the first 2 months of 2025, with a trading range on emsTradepoint of $62.30 - $64.00. Early March started to see a change in sentiment, the weight of small forestry/farmers wanting to sell their units as soon as they received them quickly drove the price of NZU's down to $60 and over the last week we touched $59.00, the old adage that 'cash is king' is still very relevant, particularly at a time of global uncertainty/volatility.
The first Government Carbon auction for 2025 saw just 1.5 million units on offer, but the floor price was at $68, which was much higher than where the secondary market was trading, so the auction had no chance of clearing. Learn more here.
There has been much discussion about the size of the NZU 'Stockpile' and the impact it has on price, many experts have attempted to quantify the stockpile, and the range of predictions is far and wide. A recent Ernst Young (EY) report was considerably less than the Climate Change Commission had projected. Read more.
Limits to converting farmland to exotic forestry registered in the ETS: The Government has announced more details on the proposed policy changes intended to limit how much farmland is converted to exotic forest and registered in the ETS. This includes how the restrictions are proposed to apply to people who took steps to convert farmland to exotic forestry for registration in the ETS before this policy was announced. It also explains how the proposed new restrictions will affect people who began their farm-to-exotic forestry conversions in the ETS after this policy was announced. News and changes to the ETS | NZ Government
European Carbon prices have been under selling prices for most of 2025, they are currently sitting around 71 Euro ($134 NZD) and Australian units (ACCU’s) at $33.50 AUD ($37 NZD)
European carbon prices posted a weekly loss for the sixth time in eight weeks even after prices made marginal gains on Friday, boosted by technical buying after an early failure to make a significant break below Thursday’s lows, while traders continued to discuss a French government proposal for a price corridor to encourage a more “stable” EUA price. Friday’s close was 68.80 Euro ($130 NZD approx.)
Recent Announcements
FMA Assessment Exemption
Forests registered before the end of 2022 are not required to complete new FMA sample plot measurements for the 2023–2025 period. You will still need to complete measurements for later compliance cycles.
Private-Public Planting Partnerships
The government has issued a request for information (RFI) exploring potential public-private partnerships for large-scale planting projects on crown-owned land. Submissions closed on 17 March 2025. Details on how these initiatives will integrate with the NZ ETS are coming soon.
Transitional planting exemptions
Landholders who started investments before 4 December 2024 may qualify for transitional exemptions from the new Land Use Capability (LUC) restrictions. Evidence like land purchase agreements, seedling orders dated before the specified date, or detailed business plans indicating clear intent to afforest will be required. The government aims to avoid penalising existing projects, though specific qualifying criteria are yet to be finalised.
New LUC restriction exemptions
Forests registered after October 2024 may face new eligibility requirements, particularly around exotic plantings on LUC 1–6 land. Landowners planning new registrations should monitor legislative updates to ensure compliance. Exemptions may apply for those who made qualifying forestry investments between January 2021 and 4 December 2024 - including planting, planning, or engaging an adviser before that date.
ETS registration processing times
MPI recently shared some processing stats. As of early February, the median processing time is 93 working days or about 4.5 months.
That’s faster than in December, but there’s still a backlog of 350+ applications, and December saw a high volume of applications. It’s important to remember that this is a lagging indicator of processing time; with the potential high volume of applications this year with the ‘end of MERP’ deadline as well as the LUC restriction deadline, we expect this median processing time to climb.
Scaling Carbon Removals in Dairy Supply Chains
To quantify on-farm carbon sequestration and support sustainability reporting, Synlait worked with CarbonCrop on a pilot testing scalable carbon measurement solution across 18 farms in its Nestlé supplier network. Using CarbonCrop’s technology, Synlait gained insights on forest carbon removals and biodiversity, without the need for disruptive on-site visits. The pilot validated the CarbonCrop platform’s ability to provide robust, scalable insights backed by data, giving Synlait confidence in integrating carbon removals into its supply chain strategy. Farmers also benefited from new visibility over their land’s carbon potential, supporting future decision-making.
With proven results, Synlait is now exploring how to expand the CarbonCrop platform across its wider supplier base, building a foundation for long-term carbon management and nature-based climate action.
Important Dates
19 March 2025 – First NZ ETS Auction
The first government auction of 2025, where 1.5 million NZUs were available at a floor price of NZ$68. This auction failed to clear. Check out the results here.
18 April 2025 – Delivery of Advice on NZ ETS Unit Limits and Price Control Settings
The Climate Change Commission is scheduled to provide its recommendations on New Zealand Emissions Trading Scheme (NZ ETS) unit limits and price control settings for the period 2026–2030 by 18 April 2025. This advice will influence future auction volumes, price floors, and overall market stability. You can learn more about this here.
30 April 2025 - Climate Reporting Deadline for 31 December 2024 Year-End
Large businesses with a 31 December financial year-end must file their second mandatory climate disclosure reports. These reports align with TCFD (Task Force on Climate-related Financial Disclosures) recommendations and cover climate risks, emissions, and transition plans. Learn more here.
18 June 2025 - Second Auction
The second government auction for 2025. Market watchers will assess demand and any pricing trends from the March auction. Learn more about : NZ ETS Auction Schedule
30 June 2025 - Provisional Emissions Return Deadline
If you're registered in the ETS for post-1989 forest land, you’ve got the option to submit a Provisional Emissions Return (PER) each year. It’s a way to report your forest’s carbon stock changes for the previous calendar year, and claim NZUs if there’s been an increase. For the 2024 calendar year, the deadline to submit your PER is 30 June 2025.
PERs aren’t mandatory, but they can help you spread out your returns and claim carbon revenue more regularly instead of waiting until the end of the mandatory emissions return period in 2025.
31 July 2025 – Climate Reporting Deadline for 31 March 2025 Year-End
Climate Reporting Entities with a 31 March financial year-end must submit their climate risk disclosures. Learn more here.
October 2025 – New LUC Restrictions expected to come into effect.
The legislation restriction ETS registration of exotic forest on LUC1-6 land is expected to come into effect in October 2025. Learn more here.
30 November 2025 – Climate Reporting Deadline for 31 July 2025 Year-End
Climate Reporting Entities with a 31 July financial year-end must submit their climate risk disclosures. Learn more here.
31 December 2025 – Deadline for NZ ETS forest registration for the current Mandatory Emissions Reporting Period.
We are currently in MERP4 - the ‘mini-MERP’; only 3 years long. This MERP ends at the end of 2025, and any Post-1989 eligible forest not registered in the ETS by this date will lose entitlement to any qualifying sequestration for the 2023-2025 3y period. Note that under current rules the forest must be registered, not merely submitted, and as above, processing delays should be considered. If you’re considering registration, we recommend proceeding with urgency.
ETS Fees and Charges — What You Need to Know
In October 2023, we broke down the new fees introduced for the Emissions Trading Scheme (ETS). Now, just over a year later, there’s been a change: the annual per-hectare fee for post-1989 forest land has been reduced to $14.90/hectare per year (down from $30.25/ha/year).
It’s a welcome reduction - but it’s just one of several changes landholders need to stay across in 2025. These include updates to FMA requirements, transitional exemptions for new planting, and proposed public-private afforestation partnerships on Crown land. We touched on some of these in our January CarbonCurious session, and we’ll keep sharing updates as things evolve.
Note: If you're registered for the ETS, you should have received an invoice for the annual participation fee in March, reflecting the new reduced rate. As the registered party, it's your responsibility to pay this fee. If you haven’t seen your invoice yet, you should be able to find it in Tupu-ake, or you can follow up with MPI to make sure it’s sorted.
Even if you're a CarbonCrop customer, you’re still responsible for making sure this fee is paid - we don’t cover it on your behalf. If you get stuck though, we are here to help - please get in touch.
To learn more about these changes check out our blog post or watch the recording of our January session.
Things you might have missed
External
Government announces second international climate target under the paris agreement
Updates to the New Zealand Emissions Trading Scheme market model
New Zealand to allow carbon capture, storage to reduce emissions
Farming cooperatives can get a bad environmental rap, but they can also be a force for good
When planting trees to slow climate change, don’t plant the same tree all the time
Partnering to plant trees on Crown-owned land: Request for Information
Internal
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Ngā mihi,
CarbonCrop Team
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