On 5 August 2026 the Ministry for Cities, Environment, Regions and Transport published the Government's final decisions on ETS settings and regulations. The decisions were announced by Climate Change Minister Simon Watts, they close the consultation that ran from 12 June to 12 July 2026, and they take effect on 1 January 2027.
Our read is straightforward and, for once, mostly positive. This is a decision that chose predictability. Auction volumes for 2027 to 2030 are unchanged from the settings already in place. Price controls that were due to expire in 2030 have been extended through 2031 with inflation adjustments. The annual settings review survives intact after a proposal to move to a two-yearly cycle was dropped. For anyone who holds, buys, sells or must surrender NZUs, the supply path for the next five years is now published, numbered and visible.
That matters more than it might sound. A carbon market is a policy market. Its central input is not weather or demand, it is what the Government says it will do, and how much of that participants believe. A five-year table of confirmed numbers is genuinely useful infrastructure for planning.
What the Government confirmed
The headline decision is that a total of 12.8 million New Zealand Units will be made available at auction across the 2027-2031 period. Volumes for 2027 to 2030 stay where they were, and 1.1 million NZUs will be offered in 2031. That is marginally below the volume signalled at consultation, reflecting updated industrial allocation forecasts rather than a change of direction.
The Government also confirmed the second emissions budget ETS cap at 81.9 Mt CO2e and the provisional third emissions budget ETS cap at 24.8 Mt CO2e.
The confirmed price control settings are as follows.
| Price control setting | 2027 | 2028 | 2029 | 2030 | 2031 |
|---|---|---|---|---|---|
| Auction price floor | $75 | $78 | $84 | $89 | $93 |
| Cost containment reserve trigger, tier 1 | $213 | $224 | $241 | $253 | $266 |
| Cost containment reserve trigger, tier 2 | $267 | $280 | $301 | $316 | $332 |
| Tier 1 reserve volume (million units) | 2.1 | 1.9 | 1.7 | 1.4 | 1.2 |
| Tier 2 reserve volume (million units) | 3.8 | 3.4 | 3.0 | 2.5 | 2.3 |
| Total cost containment reserve (million units) | 5.9 | 5.3 | 4.7 | 3.9 | 3.5 |
The confirmed unit limits, in millions of units, are as follows.
| Unit limit | 2027 | 2028 | 2029 | 2030 | 2031 |
|---|---|---|---|---|---|
| Base auction volume | 4.3 | 3.3 | 2.4 | 1.7 | 1.1 |
| Cost containment reserve volume | 5.9 | 5.3 | 4.7 | 3.9 | 3.5 |
| NZUs available by auction | 10.2 | 8.6 | 7.1 | 5.6 | 4.6 |
| Industrial allocation | 4.0 | 3.8 | 3.7 | 3.7 | 3.6 |
| Approved overseas units | 0 | 0 | 0 | 0 | 0 |
| Overall limit on units | 14.2 | 12.4 | 10.8 | 9.3 | 8.2 |
Two features stand out from the tables. First, base auction volume falls by roughly three quarters across the period, from 4.3 million units in 2027 to 1.1 million in 2031. Second, the overall limit on units falls from 14.2 million to 8.2 million. The reserve tiers taper alongside them. This is a supply path that narrows steadily and predictably, and it has now been published five years ahead.
Why this is a constructive outcome
It would be easy to file this announcement under "no change" and move on. We think that undersells it, for five reasons.
A cliff edge was removed. The existing price control settings were due to run out in 2030. Extending them to 2031, with inflation adjustments, means participants no longer face a gap in the published framework at the exact point where auction volumes are at their tightest. Removing an unnecessary unknown is real value, even when the numbers themselves are unremarkable.
Stability was chosen over reinvention. Holding 2027-2030 volumes at existing levels means nobody who planned against the current settings has to redo that work. Businesses that built surrender forecasts, forestry revenue models or procurement budgets on the previous numbers can carry them forward.
The responsiveness of the system was protected. The proposal to move ETS settings to a two-yearly cycle will not proceed, and the biennial settings change is being removed from the Climate Change Response Amendment Bill. Consultation feedback and Climate Change Commission advice both emphasised the value of a responsive settings process. An annual review means that if conditions shift, the correction window is twelve months rather than twenty-four.
The market now has a visible corridor, not just a floor. The auction price floor rises from $75 in 2027 to $93 in 2031. The cost containment reserve gives the other side of that corridor: if auction prices reach $213 in 2027, tier one reserve units become available, and tier two follows at $267. Those figures escalate to $266 and $332 by 2031. For an emitter building a five-year compliance budget, that framing is useful. It is not a promise about secondary market prices, but it does describe the conditions under which the Crown adds supply or withholds it.
Technical integrity work proceeds, with one sensible exception. Most of the proposed ETS regulation updates will be implemented. The exception is the update to the default emissions factor for waste participants, which will not proceed. Waste sector participants therefore avoid a mid-cycle change to the factor that drives their obligation, while the rest of the measurement tidy-up goes ahead. Accurate factors are quiet infrastructure, but they are what makes a surrender obligation defensible.
What did not change, and why that is also good
These decisions apply from 1 January 2027. They do not alter 2026 auction settings. The scheduled September 2026 auction proceeds under the settings already published, so there is no mid-year change for participants to absorb and no reason to revisit arrangements already made for this calendar year.
Equally, approved overseas units remain at zero across the whole 2027-2031 period. The New Zealand scheme continues to be met with New Zealand units. That keeps the unit definition simple and keeps the integrity conversation focused on domestic measurement rather than import eligibility.
The practical read: the secondary market does the work
Here is the part worth sitting with. The confirmed base auction volume for 2027 is 4.3 million units, falling to 1.1 million by 2031. Compare that to the private stockpile: the Ministry for the Environment reported approximately 136 million NZUs banked in private accounts as at December 2025.
Government auctions are, and will remain, a small share of the units actually available. As base volumes taper, that share gets smaller. The units that change hands in practice largely come from existing holders, and they move between parties rather than from the Crown to a bidder.
That is not a criticism of the auction. It is a description of where the working market sits. If your NZU strategy is built primarily around quarterly auctions, these confirmed settings are a reminder that the auction is a narrowing channel. The broader question, for buyer and seller alike, is whether you can find a counterparty, agree terms, settle cleanly and evidence the whole thing afterwards.
That is the problem Carbon Trader® was built to solve.
How Carbon Trader® helps you act on these settings
Confirmed settings are only useful if you can translate them into decisions and then execute those decisions with proper records. The platform is organised around that translation.
Start by knowing your position
For emitters and compliance buyers, My Obligations converts activity data into an estimated surrender position using the statutory emissions factors, then compares that position against the units you actually hold in custody. Coverage and shortfall are shown as a single position, with the 31 March and 31 May statutory dates built into the calendar and automatic reminders ahead of them. A public calculator on the emitters page lets you model an activity before you hold an account.
The practical link to this announcement is simple. If your obligation is going to persist through a period where auction supply narrows every year, the useful move is to know the size of that obligation early rather than discover it in the week before a return is due.
For foresters and unit holders
If you hold units, the confirmed schedule tells you what Crown supply will look like in each year you might choose to sell into. Carbon Trader® gives you several ways to bring units to market rather than one: a public listing on the marketplace, a response to a buy request posted by a buyer who has already stated what they want, or a negotiated RFQ where price and terms are agreed privately before anything is committed. Forestry participants can also work through the forestry tools, which are built around how registered forest activity actually generates and reports units.
For buyers who want a defined process
A buy request lets a buyer state quantity, timing and requirements, and have sellers come to them. For larger or more sensitive volumes, the managed settlement service and the broker desk add a human layer to sourcing and coordination, and structured auction programmes handle competitive processes where a simple listing is not the right instrument.
Settlement you can evidence
The most common failure in an over-the-counter carbon trade is not price. It is one party paying before delivery, or delivering before payment, with nothing in between. Escrow settlement holds funds while unit transfer is arranged, releases on completion, and produces a settlement statement that records each step with a timestamp. When your auditor, your board or your accountant asks what happened, the answer is a document rather than an email thread.
Custody, and delivery straight to surrender
Wallet and custody workflows keep purchased units in a visible holding rather than an unrecorded transfer, and withdrawals can be tagged with a purpose so that units acquired for compliance are delivered towards surrender rather than simply moved. For an emitter, that closes the loop between "I identified a shortfall" and "the obligation is covered", with the intent recorded at each step.
A reference price, published daily
Confirmed floors and trigger prices only tell you where the Crown acts. They do not tell you where units are trading. Market data, watchlists and the free public market pulse daily close give an observable reference point from platform activity, which is what you need when you are deciding whether an offer in front of you is reasonable.
Reporting, audit and system connections
Statements, exports and delivery logs support internal reporting, and the Enterprise API connects the platform to finance and reporting systems for organisations that need carbon activity to appear alongside everything else rather than in a spreadsheet on someone's desktop.
Fees you can see before you commit
Carbon Trader® publishes its fee schedule in full, with a calculator that quotes the cost of a specific transaction before you decide. When you are planning against a five-year supply path, knowing your transaction costs in advance is part of the plan.
A practical timeline to 1 January 2027
There are roughly five months between this announcement and the settings taking effect. That is a comfortable window, and it is worth using while it is comfortable.
Now: read the confirmed tables against your own five-year position. Emitters should quantify their expected annual obligation. Holders should look at the auction volume path for the years in which they might realistically sell.
Before the September 2026 auction: if you intend to participate in that auction, remember it runs under the current settings, not these ones. Verification, organisation authority and account preparation take time, and they take it before the deadline rather than during it.
Before December 2026: confirm internally who is authorised to list, bid, respond to buy requests, approve settlement instructions and sign off reports. This is the least glamorous item on the list and the one that most often causes a delay at the wrong moment.
From 1 January 2027: new limits and price controls apply. Anything modelled on the old expiry date of 2030 can now be extended a year on published figures.
Ongoing: the annual settings review continues, so expect the next consultation cycle in 2027. Being on the record during consultation is one of the few ways market participants get to shape the framework they operate in.
Carbon Trader® view
This announcement is a decision to keep the system legible. It extends the published framework by a year, holds the near-term numbers steady, keeps the review cycle annual and lets the technical integrity work proceed. None of that is dramatic. All of it reduces the amount of guesswork required to operate in this market.
The confirmed tables also make one structural point hard to miss. Crown auction supply narrows every year to 2031, while the units already in private hands dwarf it. The centre of gravity in the New Zealand carbon market sits with holders trading between themselves, and that has now been signalled five years in advance. Whether you are a forester deciding when to realise units, an emitter covering an obligation, or an organisation that simply needs the transaction to be clean and documented, the useful preparation is the same: know your position, know your counterparty, and settle in a way you can evidence afterwards.
The settings are published. The rest is execution.
Official sources
Ministry for the Environment - Annual updates to emission unit limits and price control settings
Climate Change Commission - NZ ETS unit limits and price control settings for 2027-2031
Ministry for the Environment - 2026 ETS settings consultation document
Ministry for the Environment - New Zealand Emissions Trading Scheme
Environmental Protection Authority - New Zealand Emissions Trading Register
Carbon Trader® - Carbon Wrap Up June 2026
Important notice
This article summarises publicly announced ETS settings and explains platform workflows. It does not provide financial, legal, tax or investment advice, and nothing in it is a recommendation to buy, sell, hold or surrender units, or a forecast of future NZU prices. Figures are as published by official sources at 5 August 2026 and are subject to the final gazetted instruments. Readers should confirm settings against the primary sources linked above and seek their own professional advice before making commercial decisions.
Contact us
Need help working out what the confirmed 2027-2031 settings mean for your surrender position, your forestry units or your procurement plan? Contact Carbon Trader® for platform guidance and operational support.