New Zealand's Emissions Trading Scheme (NZ ETS) is the government's primary tool for meeting domestic and international climate change targets. The aim of the system is to encourage people to reduce greenhouse gas emissions.

How does the NZ ETS work?
The NZ ETS puts a price on greenhouse gas emissions.
It creates a financial incentive:
1. for businesses to reduce emissions;
2. for landowners to earn money by planting forests, which absorb carbon dioxide as they grow.

The government allocates carbon units to forest owners based on the amount of carbon dioxide absorbed by the trees growing on their land. Foresters can sell these (CO2 units) on the NZ ETS market. Businesses with emissions obligations must purchase enough of these units to cover the emissions produced by their operations. These units are then surrendered to the government.