EXPLAINER: Changes announced to the Climate Change Response Act 2002
The Ministry for the Environment has announced proposed amendments to the Climate Change Response Act 2002 (CCRA), New Zealand’s central climate framework law.
These changes will be split between two bills. One bill, the Climate Change Response (2050 Target and Other Matters) Amendment Bill, will be introduced via urgency before the end of the year. A second bill, the Climate Change Response (Efficiency and Effectiveness) Amendment Bill, has a first reading expected in early 2026.
This article is an explainer of the proposed changes. We will prepare a more detailed response once we have more information about the wording of the proposed changes.
High-level takeaways
Many of the changes will weaken and reduce the integrity of the CCRA. This is the latest in a series of steps hollowing out New Zealand’s climate laws. If the Government is committed to meeting its targets, it should strengthen, not loosen, the statutory guardrails that keep policy aligned with them. The proposals will:
Remove the requirement for New Zealand’s ETS and budgets to align with our international legal obligations under the Paris Agreement, weakening the explicit statutory alignment to international law. This sharply calls into question the extent and genuineness of the Government’s commitment to the Paris Agreement.
Reduce public and expert input into key decisions. The Climate Change Commission’s role providing advice on emissions reduction plans will be reduced, and the public will no longer have the right to be consulted on emissions budgets or on the Commission’s advice - lowering scrutiny, expert input, and reducing opportunities for public participation.
Change the sequencing of decisions, including shifting ETS settings decisions to biennial decisions, and re-sequencing advice on targets, budgets, and ERPs.
Change several climate policies, including: shifting the Government’s own carbon-neutral goal from 2025 to 2050; capturing CO2 imports into the ETS; reforming industrial free allocation; and introducing a new carbon-removals framework.
Amend the purpose of the Climate Change Response Act, adding in reference to “efficient and effective policies”. This is a material change to the framing of the Act.
Several changes are being progressed very quickly under urgency, likely without public consultation. This is unnecessary and harmful. All amendments should be made in one omnibus bill in 2026, with a robust legislative amendment process and public input.
In addition, any changes to the CCRA should be made on a bipartisan basis. One of the biggest strengths of our climate framework law was that it was passed with hard-fought, bipartisan support in 2019. To preserve policy stability and certainty, the Minister should ensure any changes to the CCRA are made with cross-party support - not rushed through without the support of the opposition. This is critical for us to maintain an enduring climate legal framework.
Some of the proposed changes appear reasonable and will streamline some duplicative processes in the CCRA. Those more limited changes may receive bipartisan support.
2025 Bill: Climate Change Response (2050 Target and Other Matters) Amendment Bill
The Government will make a number of changes under urgency before the end of 2025.
The announcement is strangely light on detail about several previously signalled changes, such as whether the Minister will change the timetable for setting and revising emissions budgets. The materials released last night do not clarify whether those timing changes will proceed, or how they might be drafted.
1) 2050 Methane Target
As separately announced on 12 October, the Government will introduce an amendment bill before the end of 2025 to weaken our 2050 biogenic methane target in line with the science of “no additional warming”. The current target is for 24-47% below 2017 levels by 2050. The signalled new target will be half as ambitious: 14-24% reductions by 2050.
2) Removing the requirement for ETS settings to accord with the NDC
A surprising element of the changes to be introduced under urgency is the announcement that the Government will remove the requirement in the CCRA for NZ ETS settings to accord with our Paris Agreement targets (our Nationally Determined Contributions, or NDCs).
Currently, under s 30GC of the CCRA, when recommending price and unit setting controls, the Minister must be satisfied that the limits and price control settings are “in accordance with” the emissions budget, 2050 target, and our Paris Agreement target (our Nationally Determined Contribution, or NDC). While the settings do not need to be in strict accordance with the budgets or NDC, the Minister must be satisfied that any discrepancy is justified.
This proposed amendment changes this, stripping out the requirement that ETS settings accord with NDCs in its entirety. The stated rationale is to protect the stability and ongoing confidence of the ETS market, and to reflect the fact that the ETS is a domestic instrument only.
The elephant in the room is that the Government is projected to fall short of achieving our 2030 NDC by 84 million tonnes of CO2-e. For context, that is equivalent to roughly one entire year of New Zealand’s emissions.
In our view, delinking ETS settings from the NDC, and doing so under urgency, signals the absence of any credible plan for meeting that 84 million tonne gap. If the government had any credible plan and was genuinely committed to achieving our NDC, there would be no need to amend the statute designed to ensure ETS settings align with our international obligations. This change will only reduce domestic legal pressure to close that gap, weakening a core mechanism designed to keep our climate policy settings aligned with our Paris target.
2026 Bill: Climate Change Response (Efficiency and Effectiveness) Amendment Bill
Below, we highlight nine key aspects of what appears likely to be included in the 2026 Amendment Bill:
1) Narrowing the Climate Change Commission’s role
The Minister has proposed refocusing the Commission’s function to that of a “system monitor”. The Climate Change Commission will no longer provide advice on emissions reduction plans and will not be required to run broad public consultation for that advice. Ministers could still commission advice on specific issues under s 5K, and the Commission would continue to advise on emissions budgets and the 2050 target.
Emissions reduction plans set out the economy-wide policies and strategies for meeting our emissions budgets. Removing the Commission’s advisory role for ERPs will reduce scrutiny of government decision-making, reduce the quality of information available to the public, reduce the public's ability to be involved and engaged in climate decision-making, and remove some of Aotearoa New Zealand’s most senior expert voices from advising on critical climate policy decisions.
As we have pointed out before, this change can also be viewed as a very cynical one. One of the reasons the Climate Change Commission exists is to provide impartial, independent advice free from political interference. In its last ERP advice, the Commission made several recommendations that the Government chose to ignore - from reforming the Emissions Trading Scheme, to expanding the scope of the Equitable Transitions Strategy (which the Government ended up scrapping entirely).
2) Reducing opportunities public input and consultation
The proposals will remove key opportunities for public input into critical decisions on our climate policies and targets. In particular, they will remove Minister’s specific duty to consult on emissions budgets (consultation becomes optional), and replace the Commission’s specific consultation duty with a more general ‘engagement expectation’. The effect will be less public input and scrutiny in key climate decisions.
3) Changes to timing and sequencing of cetain advice and decisions
The Minister will propose making a series of changes to the CCRA to create a “more logical sequence of advice and decisions” and avoid duplication. Key changes include:
Requiring decisions for NZ ETS settings to be made every two years, rather than every year;
Resequencing the advice and decisions on the 2050 target, emissions budgets, and emissions reduction plans.
Better aligning the timing of the Climate Change Commission’s advice on ETS settings and the annual monitoring report with the publication of the government’s emissions projections, so both are based on consistent and more accurate emissions projections.
4) Amending the purpose of the Climate Change Response Act
The Government intends to insert “efficient and effective” policies into the Act’s key requirements and purpose. This change will shift the framing of the Act in an ambiguous and potentially unhelpful way (what is ‘efficient’ in the context of climate policy?). We will need to wait for the final suggested drafting of the purpose clause to understand how it will affect and work alongside the current purpose clause. It is important to note that the purpose provision in statutes is incredibly important, as the meaning of any individual statutory provision is ascertained in light of the wider purpose and context of the statute. This means that any new wording in the purpose provision will affect how other obligations in the CCRA are interpreted and applied.
5) Delaying the Government agency carbon neutrality goal
The Government has also decided to substantially revise the Carbon Neutral Government Programme, which currently aims for government organisations to achieve carbon neutrality by 2025. The deadline for carbon neutrality is being shifted from 2025 to 2050, despite the Cabinet Paper also noting that often “actions to reduce emissions also generate cost savings”.
6) Changes to Emissions Reduction Plans and National Adaptation Plans
The Government has proposed making several changes relating to emissions reduction plans and national adaptation plans:
Simplifying the requirements of emissions reduction plans;
Changing the process for amending or replacing emissions reduction plans and policies;
Enabling the Minister to make amendments to a national adaptation plan.
7) ETS Changes (market design, technical, and industrial free allocation changes)
The Government has flagged proposed amendments to the industrial free allocation scheme, which provides free NZUs to emissions-intensive and trade-exposed firms. Current settings are not fit for purpose, and are distorting the NZ ETS market.
The Cabinet Paper flags two key changes: removing the legislative provisions that allow the Minister to review allocative baselines and eligibility for existing industrial free allocation activities. It also flags changes relating to the Minister’s ability to call for in-force electricity contracts between firms receiving industrial free allocation. On a more promising note, the Cabinet Paper also notes that the Minister has directed officials to undertake work to inform the future of industrial allocation, which is a sensible idea.
In addition to industrial free allocation, the Ministry has identified a range of technical changes to the ETS, including relating to penalties, and capturing imported CO2 as a new mandatory activity in the ETS.
8) Narrowing Climate Implications of Policy Assessments
Currently, agencies are required to estimate and disclose the greenhouse gas implications of policy proposals, known as Climate Implications of Policy Assessments (CIPA). The purpose of CIPAs is for Ministers to be aware of the implications of policy decisions on New Zealand’s future emissions.
The Minister has proposed reframing the purpose of CIPAs, so that they only apply when Cabinet decisions “may have a material impact on meeting an emissions budget or the published ERP”, rather than assessing emissions impacts more generally. The proposal also suggests increasing the trigger for policies captured by CIPAs.
The overall effect will be to reduce the number of proposals that will require a CIPA - reducing the information available for Ministers and the general public on the emissions impacts of policy proposals. It also means that a policy that has a “material impact” on meeting our NDCs will not trigger a CIPA, if that policy also does not have a “material impact” on meeting an emissions budget or ERP. Given the lack of alignment between the third emissions budget and 2030 NDC, this could present real issues.
9) Adding carbon removal activities
The Minister has also proposed adding “carbon removal activities” to the CCRA, with the aim of recognising and better incentivising removal activities other than forestry.
At one level, incentivising other forms of carbon removal is sensible, particularly given New Zealand’s well-established over-reliance on monocultural pine plantations. However, any changes that would allow more removals into the ETS need to be dealt with very carefully, given the ETS market is already flooded with removals. Removals should be in parallel to, not as a substitute for gross emissions reductions.