The Climate Change Response (Emissions Trading Scheme – Forestry Conversion) Amendment Bill, which introduces significant restrictions on the registration of new exotic farm-to-forestry conversions within the New Zealand Emissions Trading Scheme (ETS), has now been introduced to Parliament.

The Bill, led by Hon Simon Watts, was introduced on 10 June 2025, and will have its first reading no sooner than the 26 June 2025. The Bill will then be sent to a Select Committee for consideration where we anticipate that public consultation by way of a submission process will take place. The changes proposed by the Bill are expected to come into force on 31 October 2025 (with a few exceptions). 

The Bill largely follows the roadmap set out in the Government’s previous announcements about the policy change. However, with the introduction of the Bill, we now have the detail on how the proposal is intended to work in practice. 

Below we set out a high-level summary of the changes proposed by the Bill and then dive into the finer detail that the forestry sector has long been waiting for.

A high-level summary of the proposed changes

At a high level, the Bill proposes: 

• A restriction on registering new post-1989 exotic forestry in the ETS for land use capability (LUC) classes 1-5 where that forest has been converted from farmland to forest land after 4 December 2024. 
• A limit on the amount of new post-1989 exotic forestry on LUC class 6 land that can be registered in the ETS after conversion from farmland. An annual registration cap of 15,000 hectares of class 6 land for exotic forestry will be imposed. 
• No limits on the registration of new post-1989 exotic forestry on LUC class 7 and 8.
• A range of exemptions and allowances that apply to the restrictions, including:
  • An existing investment transitional exemption for anyone who can provide evidence that they made a qualifying forestry investment between 1 January 2021 – 4 December 2024; 
  • An allowance on up to 25% of LUC 1-6 land to be registered in the ETS on an individual farm; 
  • An exemption for ‘unfarmed land’ not used for farming purposes in the last five years and which contains predominantly exotic species;
  • An exemption in respect of specific types of Māori land;
  • An exemption for high or severe erosion prone land identified in a regional or district plan; 
  • An exemption for Crown-owned land made available for afforestation; 
  • An allowance for off-setting land for pre-1990 and post-1989 forest land; and 
  • An exemption for ‘unmapped land’ that has not been assessed for LUC. 

The Bill does not apply to the registration of new indigenous forest land in the ETS or post-1989 exotic forestry that meets the definition of ‘forest land’ on the 31 October 2025.

Previously, the Government signalled that the restrictions would be a three-year moratorium (a temporary ban) but the Bill is drafted in a way that makes the changes permanent (subject to normal legislative change processes). Only the amount of LUC class 6 land available for registration will be reviewed in 2029, and every five years after that.

The finer detail of the proposed changes

• LUC 6 randomised ballot: The Bill clarifies how the 15,000 hectares of LUC class 6 forest land registrations will be allocated amongst foresters each year. Previously, the Government had announced that allocation would occur on a ‘first in, first served basis’. However, the Bill introduces an annual ballot and permit system, to allocate the right to register LUC 6 land. The ballot will be randomised, with the first ballot expected to be held in mid-2026. It must also be conducted in a way that will allow for a minimum allocation to be reserved for “small applications” to register in the ETS. The size of a “small application” will be determined in new regulations which will administer the ballot and permit system. 
• LUC 6 permit system: If a forester is successful in the ballot, they will receive a permit allowing registration of the relevant LUC 6 land until 31 December of the third year after it was issued (i.e., 31 December 2029 for a permit issued for the mid-2026 ballot). There is a limited ability to seek an extension to this timeframe where the EPA is satisfied that a temporary adverse weather event or similar circumstances materially disrupted the applicant’s ability to register forest land before the expiry date. 
• Review of annual LUC 6 hectare limit: The annual limit of 15,000 hectares of LUC 6 land will be subject to review and potential adjustment in 2029, and on a 5-yearly basis after that.
• Existing investment transitional exemption: Anyone who can provide evidence that they made a “qualifying forestry investment” between 1 January 2021 and 4 December 2024 will be exempt from the restrictions and can continue to register their converted farm to forest land, where an application is submitted by 31 December 2027. Under the Bill, a qualifying forestry investment means any of the following:
  • a registered lease or a registered forestry right, or an agreement to obtain a lease or a forestry right; 
  • a conditional or unconditional sale and purchase agreement for land; 
  • an emissions ruling that land is eligible to be post-1989 forest land has been applied for or has been made by the EPA;
  • an application for resource consent has been made or granted under the Resource Management Act 1991 (RMA);
  • a permitted activity notice has been given by a local authority under the RMA; 
  • investment in preparation for afforestation has been made (e.g. ordering seedlings or land preparation for forestry); or
  • a third party has been contracted to undertake due diligence for the purposes of afforesting land or purchasing land with the intent to afforest it. 
• Allowance applying to 25% of farmland: The Bill allows for up to 25% of a farm’s total LUC 1- 6 land to be registered in the ETS, in addition to any area approved by an LUC 6 land permit obtained through the ballot and permit system. This exception is intended to ensure farmers retain flexibility and choice on land use. The 25% allowance is calculated as a quarter of all LUC 1-6 land within a farm boundary, defined by a farm’s record of title. If a farm has multiple records of title, these must be adjacent and owned by the same person to be considered together. The farm boundary will be defined as the outer boundary of the combined records of title. When land is used for a 25% allowance calculation, the regulator will attach a notice to the record(s) of title to prevent double dipping. 
• Exemption for unfarmed land: The restrictions will not apply if the land is not actively farmed and is “unfarmed land”. Unfarmed land is defined as land that has not been used for farming purposes in the previous 5-year period before the ETS application and contains predominantly exotic forest species planted in the 5-year period after use of the land for farming purposes ceased. A statutory declaration will be required to accompany an ETS application for LUC 1-6 unfarmed land. 
• Exemption for Māori land: Specific categories of Māori-owned land will be exempt from the restrictions, including:
  • Māori land held under Te Ture Whenua Māori Act 1993;
  • land on which the status was changed to general land under the Māori Affairs Amendment Act 1967; and
  • land pursuant to a Treaty settlement.
• Exemption for high or severe erosion risk: There is an exemption for land that has been identified as high or severe erosion risk land in a regional or district plan. This is on the basis that the Government wants to encourage the retirement of erosion-prone land from farming to prevent further erosion. 
• Exemption for Crown afforestation land: The is an exemption for certain Crown-owned land being made available for afforestation through partnership with the private sector. This excludes land that is used by Landcorp Farming Limited or administered under the Crown Pastoral Act 1998. 
• Allowance for offsetting land: No restrictions will apply in the context where the owner of pre-1990 or post-1989 forest land clears that forest land and makes an application to the EPA to offset the loss and avoid deforestation liabilities by planting an equivalent sized forest on another land area (being a farm-to-forestry conversion). 
• Reassessment of LUC: The current LUC online mapping system uses data obtained at the national level through the New Zealand Land Resource Inventory (NZLRI) and was last revised in 2021. While the NZLRI map is the default map for assessing LUC class, the Bill proposes to allow foresters to carry out a property-scale assessment of their land (at their cost). This proposal provides an avenue to obtain more accurate LUC data, producing fairer results for foresters and farmers. Under the Bill, new regulations can be made to prescribe a methodology for making a property-scale assessment of LUC. 
• Exemption for unmapped land: If any land is not included in the NZLRI map it will be considered unmapped land and is excluded from the restrictions on registration imposed by this Bill. Once the land is mapped and categorised with a LUC classification, it will be subject to the registration restrictions.
• ETS applications for LUC 7 and 8 land: Foresters commonly plant forests on land that contains a mixture of LUC classes. Once the restrictions take effect, unless an exemption applies or a forester holds an LUC 6 permit, only forest land that is classified as LUC 7 or 8 may be registered in the ETS. All applications will need to identify the land to which the application relates by reference to the NZLRI map, or a property-scale assessment. 

If you would like to know more about how the Bill may affect you, please reach out to one of our forestry and ETS experts.