Penalties for not following ETS rules

Who the rules apply to

The rules for the ETS apply to everyone participating in the ETS for forestry. This means people or organisations that:

register land into the ETS
deforest pre-1990 forest land, or are planning to
establish forest land to offset the emissions from deforesting pre-1990 forest land elsewhere, and then deforest this land.

Find out more about different types of forest land in the ETS, including pre-1990 forest land

Who is responsible if you appointed an ETS representative

Some parties appoint a representative, such as a forestry consultant, who is authorised to complete ETS tasks for them. If you are participating in the ETS and have appointed a representative, you are still liable for ensuring you follow the rules and meet your ETS obligations. This includes when someone is acting on your behalf. If something goes wrong, or if your representative makes a mistake, you could receive a penalty.

Find out more about appointing a representative to help with ETS tasks

Offences and penalties in the ETS

If you don’t follow the rules for the ETS, you may be committing a criminal offence. If convicted, you could receive a fine and/or be sent to jail.

On this page, we’ll explain many of the different situations where penalties can apply, including penalties for:

providing false or misleading information
evasion or similar offences
not submitting emissions returns on time
submitting an inaccurate emissions return
failing to collect and keep records for emissions returns
clear-felling or deforesting post-1989 forest land registered as permanent forestry
not telling us about certain situations
not providing information to an enforcement officer
failing to surrender or repay units on time.

Providing false or misleading information to the registrar

If you participate in the ETS, you’ll set up a holding account in the New Zealand Emissions Trading Register (NZETR). Holding accounts are a bit like bank accounts but they hold New Zealand Units (NZUs, emissions units).

The Environmental Protection Authority (EPA) administers the NZETR. This role is the ‘registrar’ in the ETS.

If you knowingly provide false or misleading information to the registrar, you are committing an offence. If you are convicted, you could be fined:

up to $50,000 if you are participating in the ETS as an “individual” – this means individually or as a member of a party made up of individuals, such as partners or trustees
up to $200,000 if you are participating in the ETS as an incorporated entity, such as a business.

Evasion or similar offences

You could be convicted of an offence involving ‘evasion’ under ETS rules if you deliberately try to deceive us:

for “material benefit”, for example, for financial gain such as giving false information so that you can claim more units than you are entitled to
to avoid “material detriment” or losses, for example by giving false information to avoid surrendering or repaying units.

You could be convicted if you:

include deliberate errors in the information that you’re required to collect
include deliberate errors when calculating changes in forest carbon for emissions returns
omit or avoid including information when we ask to verify your calculations
don’t submit emissions returns when required
don’t keep records
don’t provide information when we have a valid reason to ask for it
provide altered, false, incomplete, or misleading information (including emissions returns).

If you are convicted of an evasion offence, you could:

be imprisoned for up to 5 years, and/or
receive a fine up to NZ$50,000.

Not submitting emissions returns on time

If you are required to submit an emissions return, you must submit it on time. If you don’t submit your emissions return on time, you may be fined.

The amount you could be fined depends on:

the circumstances that led to the late or inaccurate emissions return
the number of units involved
our assessment on why it was filed late (level of culpability)
the current carbon price
whether you told us about this voluntarily
whether this happened before 1 January 2021 – if this is the case, the fine will be calculated using the previous method.

Find out how we calculate fines for late or inaccurate emissions returns

You are also committing an offence if we find that you fail to:

notify us about the deforestation of pre-1990 forest land (excluding situations where you don’t need to notify us)
submit an emissions return without reasonable excuse.

If you are convicted, you could be fined up to:

$8,000 for your first offence
$16,000 for your second offence
$24,000 for your third offence.

More about when you must notify us about deforesting pre-1990 forest land

Emissions returns and when to submit them

Submitting an inaccurate emissions return

The calculations for your emissions return must be:

in line with the methods for land in the ETS
accurate.

Find out more about the methods used to calculate emissions returns

Read about what happens if we find an error in an emissions return

You could be fined for submitting an inaccurate return. The amount you could be fined depends on:

the circumstances that led to the late or inaccurate emissions return
the size of the error
our assessment of the reasons behind this error (level of culpability)
the current carbon price
whether you told us about this voluntarily
whether this happened before 1 January 2021 – if this is the case, the fine will be calculated using the previous method.

Find out how we calculate fines for late or inaccurate emissions returns and how we manage mitigating circumstances

Failing to collect and keep records for emissions returns

When calculating and reporting carbon emissions and removals for your emissions returns, you must:

collect enough information to monitor and calculate the carbon emissions and removals in the forest
keep records of the information and carbon calculations, including your assessment of your liability to surrender units or entitlement to receive units
keep records of areas of post-1989 forest land in each emissions return and their forest type (radiata pine, Douglas-fir, exotic hardwoods, exotic softwoods or native species)
keep records of the areas of pre-1990 forest land that were cleared
store these records for at least 20 years.

The regulations for forestry in the ETS on the NZ Legislation website give more detail about what records you need to keep (Climate Change (Forestry) Regulations 2022):

You must also provide information and produce documents when these are requested by our enforcement officers. Giving copies of your records to our officers when asked is a legal requirement. The law also says when we can ask for these. For example, we may ask to see your records if we want to verify the calculations supporting your emissions return.

If we find that you fail to keep records without reasonable excuse, you are committing an offence. If you are convicted, you be fined up to:

$8,000 for your first offence
$16,000 for your second offence
$24,000 for your third offence.

Clear-felling or deforesting post-1989 forest land in permanent forestry

If your post-1989 forest land enters the ETS as permanent forestry, you must ensure it is not clear-felled or deforested later. You may receive a fine if any area of your forest is:

clear-felled so that 30% or less crown cover remains in each hectare, or
deforested.

Find out more about what to do if post-1989 forest land (permanent forestry) is clear-felled or deforested

Not notifying us about certain situations

Sometimes the rules for the ETS mean you must tell us about changes in your situation within a specific timeframe. This includes, for example, notifying us about:

deforesting pre-1990 forest land, when the rules say you must let us know
when the responsibility under the ETS for the post-1989 forest land is transferred to another party
notifying us about changes relevant to emissions rulings
failing to comply with the conditions of an emissions ruling.

If you don’t notify us about certain situations when you were supposed to, you are committing an offence. If you are convicted, you be fined up to:

$8,000 for your first offence
$16,000 for your second offence
$24,000 for your third offence.

Find out what to do when deforesting pre-1990 forest land

Find out more about how and when to notify us when forest ownership, rights, or leases change

Not providing information to an enforcement officer

If an enforcement officer is investigating an issue for compliance in the ETS, they can ask relevant people to provide information. Sometimes they may ask someone to provide an oath that is spoken or in writing. You’re committing an offence if you refuse to give your oath when requested. You’re also committing an offence if you refuse to answer questions when our enforcement officers are investigating cases of non-compliance.

If you commit and are convicted of one of the following offences, you could be fined:

up to $25,000 if you are participating in the ETS as an individual
up to $50,000 if you are participating in the ETS as an incorporated entity.

You can also receive a fine if you knowingly don’t:

collect the information that you are required to collect
calculate changes in carbon in the forest land
keep records
submit an emissions return when you’re required to
keep records as required if you received units under the Forestry Allocation Plan for pre-1990 forest land

You could also be fined if you:

knowingly provide altered, false, incomplete, or misleading information (including emissions returns) to us
wilfully obstruct, hinder, resist, or deceive us
wilfully interferes with any survey, investigation, test, or measurement carried out by an enforcement officer or a person assisting an enforcement officer when it is necessary for us to visit and enter land or a premises as a part of one of our investigations
refuse to give us the information we have requested.

Your rights when answering questions

You cannot excuse yourself from answering a question when we have a valid, legal reason to ask you or your organisation. This applies even if answering the question may mean you could be liable to a penalty or other loss. On the other hand, your testimony can’t be used as evidence in criminal proceedings against you, except in the case of perjury.

Failing to surrender or repay units on time

Sometimes your emissions return will show that you must pay (surrender) units after

harvesting registered post-1989 forest
deforestation
deregistering from the ETS.

Sometimes you may also owe units because you received too many and must repay them.

You can be fined if you don’t pay the units you owe. The size of the fine will depend on the number of units involved.

The Environmental Protection Authority (EPA) administers this penalty and their guidance shows how this is calculated.

Guidance on penalties under the Climate Change Response Act 2002 – EPA [PDF, 742 KB]

Infringement offences

In addition to the penalties above, you could also receive an infringement notice and fine if you don’t:

submit emissions returns on time
collect and keep accurate records
tell us within 20 days if you deforest pre-1990 forest land
tell us about changes in ownership of, or agreements about, post-1989 forest land
keep us informed about emissions rulings.

The fine payable for an infringement offence is:

$1,000 for an individual
$2,000 in all other cases.

More information about receiving, paying, and querying infringement offences

Where to find the rules for the ETS

Rules for the ETS in the Climate Change Response Act (2022) and related secondary legislation, such as regulations and standards, include:

Paying and deferring fines

If you’re fined, you’ll receive instructions from the EPA about how and when to pay the fine. Usually fines are due to be paid within 20 working days after you receive a notice from us stating you’ve received a penalty. They are owed to the Crown.

Applying to defer a payment and accruing interest on ETS fines – EPA online guidance [742 KB, PDF]