NZ Launches Carbon Removals Framework to Boost Climate Action and Innovation

Climate Change Minister Simon Watts has unveiled a new Assessment Framework for Carbon Removals, marking a significant step toward expanding New Zealand's climate response beyond forestry and enabling landholders, farmers, and businesses to participate in emerging carbon markets. Alongside this framework, the Government has announced a series of targeted reforms to the Climate Change Response Act (CCRA), aimed at improving efficiency, reducing compliance costs, and accelerating progress toward the country's 2050 net-zero goal.

"The Carbon Removals Assessment Framework is a crucial step toward recognising and rewarding non-forestry carbon removals in New Zealand, unlocking new opportunities for landholders and businesses," said Minister Watts. "It supports our vision for a climate strategy that drives emissions reductions while growing the economy."

Expanding Carbon Removal Beyond Forestry

The new Carbon Removals Assessment Framework delivers a priority action from the second Emissions Reduction Plan (ERP) and fulfills an election commitment to explore biodiversity credits for nature-based climate solutions such as wetland restoration and peatland rewetting.

While forestry remains a cornerstone of New Zealand's climate policy, the framework opens new avenues for recognising carbon sequestration from non-forestry sources, such as soil carbon, marine ecosystems, and regenerative land management practices.

"Forestry is already a critical part of our climate response, but we also want to enable businesses and organisations to explore other ways to reduce emissions," Mr Watts explained. "This includes developing pathways for farmers and landholders to be rewarded for on-farm activities that remove carbon from the atmosphere."

Unlocking Nature-Based and Technological Solutions

The framework provides a clear, science-based process for assessing the credibility and environmental integrity of carbon removal projects. It offers detailed guidance on how to demonstrate measurable, verifiable, and permanent carbon sequestration, ensuring that only robust, high-quality removals can access domestic and international carbon markets.

The Ministry for the Environment (MfE) says the framework will help:

• Identify eligible carbon removal activities beyond forestry, such as wetland creation, soil carbon enhancement, and coastal ecosystem restoration.

• Support research and innovation in low-emission technologies and natural climate solutions.

• Facilitate biodiversity credit systems that recognise co-benefits like water quality improvement, habitat creation, and soil regeneration.

The move aligns with global climate trends, as countries increasingly seek to diversify their carbon removal portfolios through nature-based solutions and advanced technologies such as direct air capture and biochar.

Streamlining Climate Legislation

In parallel with the new framework, the Government has announced targeted amendments to the Climate Change Response Act (CCRA) to simplify administrative processes and reduce duplication between government agencies and the Climate Change Commission (CCC).

"New Zealand's climate change system can be unnecessarily complex and duplicative in parts, which creates high compliance costs and slows effective action," said Mr Watts. "These changes are designed to make the system more efficient, without lowering our ambition."

Key reforms include:

• Removing redundant requirements for the CCC to provide advice on policy direction before the Government develops emissions reduction plans.

• Simplifying consultation processes for both the CCC and government agencies to reduce delays.

• Adjusting the New Zealand Emissions Trading Scheme (NZ ETS) to provide greater market stability, including:

  • Revising Industrial Allocation settings to offer clearer investment signals and reduce barriers to decarbonisation.

  • Changing the ETS settings cycle from annual to biennial, allowing more stable planning and regulatory certainty.

  • Removing the requirement for ETS settings to strictly align with Nationally Determined Contributions (NDCs), providing more flexibility in domestic implementation.

• Expanding recognition of carbon removals within the ETS framework, potentially allowing new types of verified carbon sinks — such as soil, wetlands, and marine ecosystems — to be included in the future.

• Introducing technical updates to simplify compliance and make participation in the ETS more accessible for stakeholders.

These reforms, expected to be included in an amendment bill in 2026, aim to create a more agile, transparent, and cost-effective system that supports innovation while maintaining the integrity of New Zealand's climate commitments.

Revising the Carbon Neutral Government Programme

Another major change announced by Minister Watts is the adjustment of the Carbon Neutral Government Programme (CNGP) timeline. The original 2025 neutrality target has been extended to 2050, aligning it with New Zealand's broader legislated net-zero target.

"The original 2025 deadline was too soon for organisations to meaningfully reduce their emissions," said Watts. "The revised timeline provides a more realistic pathway for transitioning government operations, while ensuring lasting emissions reductions rather than short-term offsets."

The new target will encourage government departments to focus on structural emissions reductions, energy efficiency, and the use of low-carbon technologies, rather than relying heavily on carbon offsets.

A Science-Based, Market-Ready Future

The new carbon removals framework is designed to help landowners, businesses, and investors understand the environmental, scientific, and policy requirements necessary to qualify for carbon markets. It sets out assessment standards for measuring carbon storage, permanence, leakage risks, and environmental co-benefits — factors critical to ensuring the credibility of New Zealand's carbon removal efforts.

By expanding recognition beyond forests, the framework supports innovation in regenerative agriculture, wetland restoration, and peatland rewetting — areas with enormous potential for both climate mitigation and biodiversity enhancement.

"This framework gives landholders and innovators confidence to invest in projects that remove carbon and restore nature," Mr Watts said. "It's about ensuring that credible, science-based removals are recognised and rewarded."

Aligning Economic Growth with Climate Action

The initiatives announced by Minister Watts highlight the Government's dual commitment to climate action and economic growth — a strategy that leverages innovation and market mechanisms to reduce emissions without stifling productivity.

By integrating environmental integrity with economic opportunity, the reforms aim to make New Zealand a leader in high-quality carbon removal markets and a model for nature-positive development.

The Assessment Framework for Carbon Removals and further details on the proposed CCRA reforms are available on the Ministry for the Environment's website: 👉 https://environment.govt.nz/publications/assessment-framework-for-carbon-removals/