FAQs: What are emissions budgets?

Overview

• An emissions budget sets the maximum quantity of emissions of all greenhouse gases permitted during a particular five-year period.
• Emissions budgets set a pathway for Aotearoa New Zealand to meet its 2050 emissions reduction target as each budget is lower than the previous.
• Emissions budgets must be met, as far as possible, through domestic emissions reductions and removals.
• Emissions budgets are accompanied by an emissions reduction plan setting out policies and strategies for meeting the budget.
• Emissions budgets are set about a decade in advance – this helps to provide individuals and businesses with a clear sense of the direction of travel.

What are emissions budgets?

An emissions budget is the maximum quantity of (net) emissions that will be permitted in a specific five-year period. The budgets act as stepping stones that set the path to Aotearoa New Zealand’s 2050 emissions reduction target and contribute to the global effort under the Paris Agreement to limit the global average temperature increase to 1.5°C above pre-industrial levels.

A budget includes emissions of all the greenhouse gases listed in the Climate Change Response Act:

• carbon dioxide (CO₂)
• methane (CH₄)
• nitrous oxide (N₂O)
• hydrofluorocarbons (HFCs)
• perfluorocarbons (PFCs)
• sulphur hexafluoride (SF₆)

Each gas is expressed as a net amount of ‘carbon dioxide equivalent’, to compare the climate impact of the different gases to that of carbon dioxide.

Emissions budgets are one part of Aotearoa New Zealand's system for reducing domestic emissions of greenhouse gases. They are accompanied by an emissions reduction plan, which contains policies and strategies to reduce emissions and/or remove emissions already in the atmosphere.

How many budgets have been set?

Emissions budgets 1, 2 and 3 were set by the Government in May 2022. They set out the path from 2022 to 2035.

The budgets are expressed in megatonnes of carbon dioxide equivalent (MtCO₂e).

• Emissions budget 1 (2022–2025): 290 MtCO₂e / annual average 72.5 MtCO₂e
• Emissions budget 2 (2026–2030): 305 MtCO₂e / annual average 61 MtCO₂e
• Emissions budget 3 (2031–2035): 240 MtCO₂e / annual average 48 MtCO₂e

What role does the Commission play in emissions budgets?

Our role is to provide independent evidence-based advice to enable the government of the day to set emissions budgets that will help Aotearoa New Zealand meet its climate targets. We don’t set the budgets ourselves.

We are working on our advice for emissions budget 4, which will extend the path to 2040.

Find out more about our advice on emissions budgets.

We also monitor Aotearoa New Zealand’s progress towards meeting emissions budgets. annual reporting and reporting at the end of each budget period.

Why do emissions budgets matter?

Getting the budgets right is critical as they guide domestic action on climate change.

Well informed, properly considered emissions budgets can support a smooth and more equitable transition to a low emissions economy and society.

There are always three budgets in place, each covering a five-year period (except for emissions budget 1 which covers the period 2022–2025). This provides certainty for business, local government and communities to plan, invest and act.

How the Government can choose to meet its emissions budgets

Emissions budgets are for net emissions – so they can be met by both reducing gross emissions and by removing emissions already in the atmosphere.

The Commission has consistently advised that to meet budgets Aotearoa New Zealand needs to reduce gross emissions, not just increase removals of carbon dioxide by planting new forests.