Carbon Wrap Up June 2026 brings together the latest official New Zealand carbon emissions data and NZ ETS announcements. This edition has been written from primary sources only - government publications, official statistics, regulator material and Climate Change Commission advice. The aim is not to repeat third-party market commentary. It is to draw a Carbon Trader® view from the underlying data and the official documents that shape New Zealand's carbon market.
The core picture is now clearer. New Zealand's gross emissions are moving down only slowly, net emissions are being helped by forestry removals, government NZU auctions are not clearing at current price settings, and the Government is consulting on ETS settings that attempt to balance market confidence, surplus drawdown and the risk of future undersupply. For businesses, foresters, landowners and advisers, the important point is that the ETS is not quiet. It is being actively recalibrated.
Official emissions data - the decline is real, but still shallow
The Ministry for the Environment's latest New Zealand's Greenhouse Gas Inventory 1990-2024: Snapshot records gross emissions of 75.8 million tonnes of carbon dioxide equivalent in 2024. That was 0.1 percent lower than 2023. Net emissions were 54.8 Mt CO2e, down 2 percent. Agriculture and energy remained the largest contributors to gross emissions, at 53 percent and 38 percent respectively.
The split between gross and net emissions matters. Gross emissions are the emissions generated before land-use and forestry removals are counted. Net emissions include the land use, land-use change and forestry sector. New Zealand's net position improved more than its gross position because forestry removals increased and deforestation emissions were lower. That is useful, but it also means the national emissions story can look better on a net basis than it does when looking at actual sector emissions.
The inventory also shows why the emissions path is not a straight line. Energy emissions rose in 2024 because low rainfall reduced hydroelectricity generation and more fossil fuel generation was required. Agriculture emissions fell slightly, supported by fewer sheep and lower urea and limestone application, although higher dairy productivity partly offset that decline. Industrial processes and product use emissions fell, with reduced refrigerant emissions and lower methanol production contributing to the decrease.
Stats NZ's December 2025 quarter greenhouse gas emissions release adds a more frequent data point. It reported that seasonally adjusted total emissions for industries and households were nearly unchanged in the December 2025 quarter, moving by only 0.05 percent. Quarterly statistics and the national inventory measure emissions differently, but together they point to the same practical conclusion: New Zealand emissions are not accelerating downwards at the pace carbon market participants would ideally want to see.
June NZ ETS auction - no bids is a market signal
The official Interim Auction Monitor Report for the 9 June 2026 auction records that the second NZ ETS auction of 2026 did not clear. No bids were received during the bidding window, no participants took part, and no NZUs were required to be transferred.
The numbers explain the outcome. The auction offered 2.6 million NZUs, made up of 1.3 million units from the June auction and 1.3 million units carried over from the previous auction. The price floor was NZ$71. The secondary market closing price was NZ$52.75 on 8 June and NZ$52.35 on 9 June. When the official floor is materially above where units can be sourced elsewhere, the auction is unlikely to attract demand.
Our conclusion is direct: the failed auction is not simply an administrative result. It is evidence that current government auction supply is priced above the level at which the market is willing to buy new units. The ETS is still functioning in the sense that units continue to exist, move and be surrendered, but government primary supply is not currently the marginal source of NZUs for buyers.
The unsold units will carry over, and 3.9 million NZUs, excluding cost containment reserve units, are scheduled to be available at the next auction on 8 September 2026. That auction will be a useful test. If the gap between the secondary market and the floor remains wide, the market may again prefer existing supply over government auction supply.
ETS settings consultation - the most important live policy process
On 12 June 2026, the Ministry for the Environment opened consultation on proposed updates to ETS settings and regulations. Consultation runs until 12 July 2026 and covers NZU auction volumes and price settings for 2027-2031, along with technical regulatory changes. Final settings are expected to be published in the New Zealand Gazette by 30 September 2026 and come into force from 1 January 2027.
The 2026 ETS settings consultation document presents three auction volume options. Option 1, based on the Climate Change Commission's recommendation, would offer 14.7 million units across 2027-2031. Option 2, the Government-recommended option, would offer 13.0 million units. Option 3 would lower auction volumes to 7.7 million units. The main difference between option 1 and option 2 is 2031, where the Government proposes a lower volume.
The proposed price controls are also important. The auction price floor would rise from NZ$75 in 2027 to NZ$92 in 2031. Cost containment reserve tier one trigger prices would rise from NZ$213 to NZ$264, and tier two would rise from NZ$267 to NZ$328. These settings do not set the secondary market price. They frame the prices at which government auction supply is withheld or additional reserve supply can enter the market.
The Carbon Trader® view is that the Government is trying to avoid two opposite failures at once. If auction volumes are too loose, the ETS may struggle to support emissions budgets and price confidence. If auction volumes are too tight, participants may face a future shortfall and disruptive volatility. The consultation document acknowledges this tension. That makes the 2027-2031 settings process more than a routine annual update.
The stockpile is both buffer and drag
A key feature in the consultation document is the private stockpile of NZUs. The Ministry states that around 136 million units were banked in private accounts as at December 2025. Banked units support liquidity and can reduce price volatility, but surplus units can also weaken the emissions constraint if they allow emitters to meet obligations without needing new abatement or new auction supply.
This is the central tension in the NZ ETS right now. The stockpile helps the market function when auctions do not clear, but it may also hold prices below the auction floor for longer if enough holders are willing to sell. The Government's stated approach is to manage the surplus towards zero by 2030. That is why the consultation options remain relatively tight even though auctions are not clearing today.
In plain terms, a failed auction does not automatically mean the market needs more government units. It may mean the market is still using accumulated stockpile units. The risk is timing. If the stockpile proves more liquid than expected, prices may stay low and auctions may keep failing. If the usable stockpile tightens faster than expected, the market may move quickly from no auction demand to a supply squeeze.
Climate Change Commission advice - policy credibility remains central
The Climate Change Commission's NZ ETS unit limits and price control settings for 2027-2031 advice recommends maintaining current auction volumes through to 2030, setting 2031 volumes on the basis that surplus units have been depleted, and retaining price control settings with inflation adjustments from 2029.
The Commission also warns that low and volatile ETS prices, policy uncertainty and possible future undersupply all matter. Its advice notes that the NZ ETS currently covers less than 40 percent of domestic net emissions and that auctioned NZUs are only a small part of the total unit system. That is an important reminder for anyone treating the ETS as a single complete solution. The ETS is central, but not comprehensive.
Our read is that credibility is now as important as mechanical supply settings. Carbon markets need participants to believe the long-term policy direction. When official documents repeatedly refer to confidence, surplus, short-term sentiment and future undersupply risk, the practical message is that regulatory consistency is now part of market infrastructure.
Emissions budgets and methane - the next strategic debate
The Climate Change Commission has also opened public input on its update to 2024 emissions budgets advice. This work covers advice on the fourth emissions budget and whether earlier budgets should be revised. Input is open until 19 July 2026.
The update follows changes to the biogenic methane component of the 2050 target. The Commission's webinar material states that biogenic methane targets are now a 10 percent reduction below 2017 levels by 2030 and a 14 percent to 24 percent reduction by 2050. The previous 2050 range was higher.
This matters because agriculture is New Zealand's largest gross-emitting sector, while the ETS has a limited role in pricing biogenic methane. The future emissions budget debate is therefore not just about NZU supply. It is also about how much of New Zealand's emissions pathway is expected to come from ETS-covered sectors, forestry removals, agricultural methane policy, industrial change, transport and energy decisions.
Technical ETS regulation updates - measurement still matters
The Ministry for the Environment is also consulting on proposed changes to NZ ETS regulations for 2026. These include technical updates to default emissions factors for 2027 based on recent data, and waste updates affecting waste sector participants and remediation projects for historic contaminated waste.
These changes are less visible than auction prices, but they matter for integrity. A carbon market depends on accurate measurement. If emissions factors are out of date, surrender obligations and reported emissions can drift away from the best available evidence. Tightening data quality and updating default factors therefore supports market credibility, even when the changes look technical.
Refrigerants are another area to watch. MfE's priority product stewardship page confirms that the Government has approved drafting regulations to support product stewardship for refrigerants. This aligns with the inventory's finding that reduced refrigerant emissions helped lower industrial processes and product use emissions in 2024.
Auction operator change - September will test more than price
The Ministry for the Environment has appointed CBL Markets Australia, a subsidiary of Xpansiv, as the new supplier to run NZ ETS auctions. The official announcement says NZX will operate the June 2026 auction, while Xpansiv will take over from September 2026. The contract runs to 31 December 2030, with an option to extend to the end of 2035.
The September auction will therefore test two things at once. It will test whether market pricing has moved close enough to the auction floor to restore participation, and it will test whether the new auction platform transition is smooth for participants. Good platform operation cannot solve a price gap, but poor transition would add unnecessary friction at exactly the wrong time.
Climate tort law announcement - more weight on the ETS
In May, the Government announced that it would amend the Climate Change Response Act 2002 to prevent findings of liability in tort for climate change damage or harm caused by greenhouse gas emissions. The official Beehive release, Government brings certainty to climate change tort law, says New Zealand already has a legal framework to manage greenhouse gas emissions through the Climate Change Response Act and the ETS.
The carbon market implication is straightforward. If the Government intends emissions liability and obligations to sit primarily inside statutory climate frameworks, then the design and credibility of those frameworks become more important. A stronger role for the ETS as the central pricing mechanism increases the importance of auction design, unit supply, market governance, emissions measurement and clear long-term signals.
Carbon Trader® view - what the official sources tell us
The official evidence points to a carbon market in transition rather than a carbon market in pause. Emissions data is improving slowly, but not decisively. Auction demand is absent at the government floor, but secondary market supply is still available. The Government is consulting on tighter or broadly stable auction volumes, not a loose supply reset. The Climate Change Commission is warning about both low confidence today and possible undersupply later. Methane and the fourth emissions budget process are reopening questions about how much work the ETS can realistically do on its own.
For active market participants, the immediate watch points are simple: the ETS settings consultation closing on 12 July 2026, the Commission emissions budget input closing on 19 July 2026, the next NZ ETS auction on 8 September 2026, final settings decisions by 30 September 2026, and new settings taking effect from 1 January 2027.
The main conclusion is that New Zealand's carbon market is now being shaped by the interaction between official supply settings and accumulated private supply. That is why the auction floor, stockpile, forestry removals, emissions budgets and policy credibility all need to be read together. Looking at any one of them in isolation gives an incomplete picture.
Official sources linked in this wrap up
Ministry for the Environment - New Zealand's Greenhouse Gas Inventory 1990-2024: Snapshot
Stats NZ - Greenhouse gas emissions, industry and household, December 2025 quarter
Ministry for the Environment - NZ ETS Interim Auction Monitor Report: 9 June 2026 auction
Ministry for the Environment - Consultation opens on proposed ETS settings and regulations
Ministry for the Environment - Proposed changes to NZ ETS regulations 2026 consultation document
Climate Change Commission - NZ ETS unit limits and price control settings for 2027-2031
Climate Change Commission - Have your say: Update to 2024 emissions budgets advice
Climate Change Commission - Webinar: Updating 2024 emissions budgets advice
Ministry for the Environment - New supplier to run New Zealand Emissions Trading Scheme auctions
Ministry for the Environment - Priority product stewardship
Beehive - Government brings certainty to climate change tort law
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