New Zealand faces NZ$4.4 billion carbon offset bill
Sydney (11 June)
The New Zealand Government will need to buy NZ$4.4 billion (US$2.5 billion) worth of carbon credits by 2030 – under existing and planned policy settings – to meet its obligations under the Paris Climate Accords.
New Zealand has agreed to limit its net carbon emissions to 575 million tonnes of CO2e over 2021-2030 under the Accords. But the country’s net domestic emissions are expected to exceed its 2021-2030 limit by 85 million tonnes of CO2e, Treasury said on 11 June.
The New Zealand Government will need to buy offshore carbon credits – known as Internationally Transferred Mitigation Outcomes (ITMO) – to cover domestic emissions and stay within its Paris Accords limit. Treasury expects ITMOs to trade at NZ$54.40/t CO2e in 2027, it said.
Treasury’s ITMO price forecast is lower than international carbon credit price forecasts. Klik Foundation – which handles carbon offset obligations for Switzerland’s fuel import sector – expects its offshore ITMO purchase costs to average CHF 29/t CO2e (NZ$63/t CO2e) over 2022-2030, it said in June 2025.
But the New Zealand Government has ruled out large-scale carbon credit purchases. “We’re going to do everything we can to hit the 2030 [emissions target]. But I just want to reassure everybody [that] we are not shutting down farms … [and] we are not sending billions of dollars offshore,” Prime Minister Chris Luxon told reporters.
The New Zealand Green Party has called on the Government to confirm whether it plans to meet its Paris Accords obligations.
“If the Government is … planning on not meeting our [obligations], then they need to be honest about that. Climate commitments are baked into our free trade agreements with the United Kingdom and the European Union,” Green Party Co-leader Chlöe Swarbrick said.
“If Luxon walks away from that 2030 [commitment], he puts our trading relationships and exporters’ market access on the line too,” Swarbrick added.
By Avinash Govind