When post-1989 forest land in the ETS changes ownership or agreements over the land change

How land transactions affect ETS participation

When post-1989 forest land is first registered in the ETS, the party that registers the land is responsible. Under the law, they are responsible for "participation" in the ETS. This means they must:

• report carbon stock changes in emissions returns
• tell us if they deforest the land
• tell us about changes to ownership, forestry rights, or leases over the land, if it means ETS participation will transfer (we’ll explain this on this page).

If the land ownership changes, participation can then transfer to another party. Changes to registered forestry rights or leases can also affect ETS responsibilities.

A transfer in ETS participation can happen with:

• sale of land
• succession (such as inheritance)
• a change of more than 40% of the members of an unincorporated body (for example, a trust)
• granting of a registered forestry right or lease
• transfer of a registered forestry right or lease
• expiry or termination of a registered forestry right or lease.

The table below shows who the ETS participation transfers from and to in different situations. It also shows whether the transfer of ETS participation is optional or not.

Who becomes responsible for ETS participation

When a landowner grants a forestry right or lease, the transfer is optional. For ETS participation to be transferred in this situation, the landowner and the forestry right or leaseholder must agree that ETS responsibilities will be transferred. You must send us a copy of your written consent before the forestry right or lease is registered. You can use the opt-in participation form or your own document to do this. You will still need to tell us about the transfer afterwards using a transfer form.

Opt-in to transfer ETS responsibilities – form [PDF, 322 KB]

Read more about forestry rights and leases and participating in the ETS

Tell us about a transfer

If participation in the ETS changes, you must tell us by using the correct form. All forms must be completed by both parties involved in the transaction.

Guide to forms for type of transaction

Use the Tell us about a transfer of ETS responsibilities form for these transactions:

• sale of land
• granting a forestry right or lease
• transferring a forestry right or lease.

Tell us about a transfer of ETS responsibilities – form [PDF, 513 KB]

Use the Tell us about the expiry or termination of a registered forestry right or lease form for transactions involving the expiry or termination of a forestry right or lease.

Tell us about the expiry or termination of a registered forestry right or lease – form [PDF, 897 KB]

Use the Tell us the members of an unincorporated body have changed form for transfers caused by a change in more than 40% of an unincorporated body.

Tell us the members of an unincorporated body have changed – form [PDF, 386 KB]

Use the Tell us about a change of land ownership by succession form for transactions involving succession, such as inheritance.

Tell us about a change of land ownership by succession – form [PDF, 442 KB]

You must submit the form within 20 working days of the transfer date. This is the date the transaction is registered on the land title. The only exception to this is if the ETS participation changes by "operation of law", for example, where the land changes hands through inheritance after someone passes away. In this case, you must tell us as soon as you can.

Find out more about inheriting ETS-registered forest land

Submitting an emissions return when ETS participation is transferred

If you transferred ETS participation to another party, you must prepare and submit an emissions return. You must send this to us within 20 working days of the transfer date. The transfer date is the date the transaction is registered on the land title.

This emissions return accounts for any changes in carbon stock on the land up until the transfer date. If the emissions return shows an increase in the amount of carbon stored in the forest land you will earn New Zealand Units (NZUs or units). If it shows a decrease in the amount of carbon, you will have to pay units to the government. This is also known as "surrendering" units.

After you tell us about the transfer, we will create your emissions return in the online system, Tupu-ake. We will notify you when your emissions return is available. You must complete it and submit it in the system.

Submitting an emissions return after inheriting land

If you inherit ETS-registered forest land, you are responsible for submitting the emissions return. Any resulting entitlements or liabilities will be received or incurred by the estate of the deceased.

When you inherit ETS-registered forest land, submit your emissions return using the form below:

Emissions return (succession) – form [PDF, 428 KB]

Your responsibilities when ETS participation transfers to you

When ETS participation transfers to you:

• you are responsible for all future ETS requirements
• you must have or open a holding account in the New Zealand Emissions Trading Register (NZETR)
• you must keep up to date with future emissions returns
• you must tell us if you deforest part or all of the land.

Open a holding account in the NZETR – New Zealand Emissions Trading Register

Find out more about emissions returns

If the forest is harvested before participation transfers to you

Sometimes forest land is transferred after harvest and before the forest is replanted or regenerates. If ETS participation transfers to you while the forest land is unstocked, you have certain responsibilities.

• If the forest isn't replanted or regenerated within 4 years, this is considered deforestation under the ETS. You will have to pay units to the government to account for the emissions from deforestation. You will be liable even if the trees were harvested before ETS participation transferred to you.
• If you replant within 4 years of harvesting, the land remains post-1989 forest land registered in the ETS. There are requirements around tree species and stocking density that the forest must meet. If the new trees don't meet species and stocking requirements within the required timeframe, the land is considered deforested under the ETS. You will be liable to pay units for the emissions from deforestation.
• If the land was registered using stock change accounting, you'll also need to account for emissions from the woody debris left on the land. The next section has more about this.

Find out more about stocking and growth thresholds for forest land

If the land was registered using stock change accounting

When forest land is registered in the ETS, changes in carbon stock need to be calculated and reported. From 1 January 2023, there will be 2 methods of carbon accounting for post-1989 forest land:

• stock change accounting
• averaging accounting.

The method you use depends on when the forest land was registered in the ETS.

If forest land is registered as using stock change accounting, you must include residual carbon in your emissions returns. Residual carbon is the carbon left in woody debris on the land after trees are harvested. This debris is assumed to decay at a rate of 10% per year. This means it will continue to release emissions for 10 years after the forest is harvested. If forest land transfers to you during these 10 years, the remaining carbon emitted from this debris will be your responsibility and included in your net emissions. This responsibility starts from the date the ETS participation transfers to you. This is the case even if you did not harvest the trees.

Find out more about stock change accounting

If you now hold 100 hectares or more of post-1989 land in the ETS

When preparing emissions returns, the total amount of land you have registered in the ETS matters. If you have 100 hectares or more registered, you must use a specific method for measuring carbon stock in your forest land. This involves establishing sample plots on your forest land and collecting forest measurement information.

Measuring your forest at sample plots to calculate a forest's carbon stocks

What happens to the New Zealand Units and the land's unit balance

Forest land registered in the ETS will have a "unit balance". This is the net total of units allocated to the land since it was registered. The unit balance is a number that stays with the land when the land is transferred.

The actual units are separate to this balance. If units were earned when the forest belonged to someone else, these units belong to them. The units will have been paid into their holding account. They do not have to be transferred with the land. This is a private matter for the 2 parties to consider as part of the transfer.

If you deforest the land after ETS participation is transferred to you, you will have to pay units up to the amount of the unit balance. If you are new to the ETS, you may have 0 units in your holding account. You will have to buy units to pay the amount due.

You can buy, sell, and transfer units through the NZETR. This is managed by the Environmental Protection Authority.

Find out more about the Emissions Trading Register – Environmental Protection Authority

Find out more

Choosing and mapping carbon accounting areas