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Rules in plain English

Pines, carbon and farm-to-forest rules: what you can register in the ETS

Updated November 2026

Doug Wakelin, Rural/Lifestyle Sales Consultant, Property Brokers Te Awamutu

General information only. Check with your solicitor and the council before you rely on it.

Short answer. Since 31 October 2025 you can register up to 25 percent of the LUC class 1 to 6 farmland on each farm as exotic forest in the ETS, with extra LUC class 6 land through national ballots. Land in LUC 7 and 8, existing forest, unfarmed land and some other categories is exempt. Planting trees outside the ETS isn't restricted by these limits.

The rules at a glance

QuestionAnswerSource
When did the limits start?The Climate Change Response (Emissions Trading Scheme, Forestry Conversions) Amendment Act came into effect on 31 October 2025.MPI, page last reviewed 19 Jun 2026
What's restricted?How much LUC class 1 to 6 farmland you can convert to exotic forest and register in the ETS.MPI
The farm allowanceUp to 25 percent of all LUC 1 to 6 land inside the farm boundary. The boundary is set by the record of title, or adjacent titles owned by the same person. A notice is attached to titles used in the calculation.MPI
LUC class 6 ballotsAn extra 15,000 ha a year nationally, allocated by ballot and permit. A permit lasts until 31 December of the third full year after it's issued. A permit doesn't guarantee ETS eligibility.MPI
Exempt landLUC class 7 and 8, existing forest land before 31 Oct 2025, land not farmed in the past five years, new indigenous forest, highly or severely erosion prone land identified in a plan, areas not on the national LUC map, pre-1990 offsetting land, and some other categories.MPI
Transitional exemptionFor people who started the investment process before 4 Dec 2024, with a valid ETS application by 31 Dec 2027.MPI
What about trees outside the ETS?The limits don't prevent planting forests outside the ETS.MPI

What LUC means

Land Use Capability (LUC) sorts land into 8 classes by climate, soil, slope, vegetation and erodibility. Class 1 is the most productive and class 8 the least. MPI expects to use the New Zealand Land Resource Inventory as the default map, but the Act lets an owner map their land in more detail at their own cost.

Ask for the LUC split of a farm before you value any forestry or carbon potential. A hill country property can have a lot of LUC 6 and 7, and the answer changes what's possible.

What the market is saying

Bayleys' October 2026 pastoral insights say forestry and ETS changes have eased farm-to-forest competition in many regions, that forestry buyers remain active in selected locations, and that land values are increasingly assessed on farming returns and carrying capacity rather than carbon alone (Bayleys, October 2026). REINZ expects forestry to lag because of regulatory constraints (REINZ, 14 May 2026).

If you're buying or selling a farm with trees or carbon potential

  1. Is any of the land already registered in the ETS? Who holds the registration, and what obligations come with it?
  2. Is there a forestry right, lease or covenant on the title?
  3. Has the 25 percent allowance already been used on any title? MPI attaches a notice to the title.
  4. Are there native bush areas, covenants or significant natural areas? See also subdivision and district plan rules.
  5. What does the NES for commercial forestry require for harvest, roading and erosion on this land?
  6. Ask your solicitor and a carbon or forestry specialist about tax and liability. Doug doesn't give tax or investment advice.

Check before you rely on this

General information only, not legal, tax or investment advice. ETS settings change. Check with your solicitor, an ETS or forestry adviser, and MPI (ForestryETS@mpi.govt.nz or 0800 25 46 28, option 1).

Sources

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