Government Passes ETS Forestry Bill to Protect Farmland and Rural Communities

The Government has delivered on a major election commitment with the passing of the Climate Change Response (Emissions Trading Scheme Forestry Conversions) Amendment Bill, aimed at protecting New Zealand’s most productive farmland from widespread forestry conversion while preserving the integrity of the Emissions Trading Scheme (ETS).

The announcement was made jointly by Agriculture and Forestry Minister Todd McClay and Climate Change Minister Simon Watts, who described the legislation as a balanced, common-sense approach to supporting both farmers and foresters.

Restoring Balance Between Farming and Forestry

Minister McClay said the Bill fulfils a key promise to halt the large-scale conversion of productive farmland into pine forests, which has been a growing concern for rural communities.

“We campaigned on stopping the wholesale conversion of farms into pine forests, and we have delivered. This Bill restores balance. It protects food production, supports rural communities, and ensures foresters can continue to invest with confidence,” McClay said.

The Minister added that both sectors remain vital to regional economies, creating jobs, generating exports, and contributing to New Zealand’s prosperity.

Key Changes Introduced by the Bill

The legislation introduces a set of measures designed to curb inappropriate forestry conversions while still allowing flexibility for landowners and maintaining climate credibility under the ETS. Key provisions include:

• Limits on exotic forestry registrations for actively farmed Land Use Capability (LUC) classes 1–6, representing New Zealand’s most productive farmland.

• Flexibility for farmers to plant and register up to 25% of their productive land in forestry.

• Exemptions for Māori-owned land, recognising specific cultural, historical, and economic circumstances.

• Two annual ballots allowing up to 15,000 hectares of new exotic forestry on LUC 6 land.

• Transitional provisions for investors who committed to forestry projects in good faith before December 2024.

• A review in 2028 to assess whether hectare limits remain fit for purpose.

McClay described the measures as “practical and common-sense,” emphasising their dual purpose: enabling farmers to keep producing food while ensuring foresters can continue contributing to New Zealand’s climate goals.

Strengthening the ETS and Rural Resilience

Climate Change Minister Simon Watts said the Bill ensures the ETS remains fit for purpose, with fair and transparent settings that provide certainty for both foresters and farmers.

“We are ensuring the ETS rewards good land use choices while safeguarding rural livelihoods. This Bill puts sensible limits in place that support meeting our climate commitments,” Watts said.

The Government has also acknowledged calls from rural landowners for stronger oversight of forestry management practices, particularly regarding pest control, weed management, and fire risks. Work is underway to strengthen these safeguards, ensuring rural communities are not left vulnerable to unmanaged risks from large-scale forestry operations.

Supporting Rural Communities

The Government framed the Bill as part of its broader commitment to back rural New Zealand by safeguarding productive farmland, restoring certainty for landowners, and supporting farmers and growers to continue producing high-quality, sustainable food and fibre.

“When rural communities do well, it means stronger jobs, incomes, and opportunities for every New Zealander,” McClay said.

Timeline for Implementation

The legislation will come into force in October 2025, giving landowners, forestry investors, and regional councils time to adjust to the new rules.

The passage of the Bill is being seen as a significant step in balancing climate action with economic and social resilience, ensuring New Zealand continues to meet its environmental commitments while supporting its farming backbone.