The Climate Change Commission has published its third annual monitoring report, warning that New Zealand is at risk of missing all its climate targets and that the next 12 to 24 months are critical to correct course (RNZ). Prime Minister Christopher Luxon said the country is on track to deliver emissions budgets one and two and is on track for net zero, possibly a few years early (RNZ).

The commission found the current emissions budget is at significant risk and the subsequent budget cannot be met with current plans and policies. Emissions budgets are the maximum quantity of emissions permitted over a five-year period, using a sinking lid approach where each budget sets a lower maximum. The Zero Carbon Act established the system of five-yearly emissions budgets to keep all future governments on track towards the net-zero goal (Beehive).

The government's own projections, most recently restated when a new methane target was set and passed in Parliament in December 2025, show New Zealand is on track to meet the net-zero target eight years ahead of 2050 (Beehive). The second emissions reduction plan, published by the Ministry for the Environment and amended in January 2026, states that New Zealand is expected to hit net zero as early as 2044 (Ministry for the Environment).

Luxon's confidence is rooted in those government projections. The commission's report, however, identifies specific fault lines in the policy mix. It said the Emissions Trading Scheme is not efficiently driving emissions reductions due to low market confidence, price volatility, and uncertainty about the long-term future of the scheme. The commission believed the ETS would need to be amended by 2030 to be effective (RNZ).

Green Party co-leader Chlöe Swarbrick accused the government of actively undermining confidence in the ETS. Labour leader Chris Hipkins said New Zealand was making good progress on emissions until about 2024 and accused the current government of unwinding that progress (RNZ).

The commission's report noted that the 2024 stalling in emissions progress was largely due to a dry year that led to coal being used for electricity generation. The government has plans for a liquefied natural gas import terminal to address dry year risk. Policies weighing against emissions reduction include removing agriculture from the ETS and committing to the LNG terminal, according to the report. The government's Gas Transition Loan Scheme and time-of-use charges were identified as policies that could reduce emissions (RNZ).

Hipkins did not support putting agriculture back into the ETS, preferring more investment in agri-tech instead. The commission identified increased uptake of EVs and solar as initiatives that could get emissions reductions back on track. National, Labour, and the Greens are all proposing household solar at the election. Te Pāti Māori co-leader Rawiri Waititi said renewables would lift more people out of poverty (RNZ).

Looking at what this means for the political and policy landscape, the gap between the government's headline projections and the commission's granular assessment is striking. The government points to modelling showing net zero by 2044, eight years ahead of the 2050 statutory target. The commission, tasked with independently monitoring that trajectory, says the current budget is at significant risk and the next cannot be met with existing policy. The 12-to-24-month window the commission has identified places the imperative for course correction squarely within the current parliamentary term, regardless of which party forms the next government.

The fault lines the report identifies are structural. The ETS, the principal mechanism for pricing carbon across the economy, is not functioning as intended. Low market confidence and price volatility have eroded its effectiveness, and the commission has flagged the need for legislative amendment by 2030. The political dispute over who is responsible for that erosion, with Swarbrick pointing the finger directly at the government, will likely intensify as the election approaches. The decision to remove agriculture from the ETS and commit to an LNG import terminal represents a calculated trade-off, accepting near-term emissions from fossil fuel infrastructure and agricultural methane in exchange for dry-year energy security and sectoral relief. Whether the government's proposed mitigations, the Gas Transition Loan Scheme and time-of-use charges, can close the gap the commission has identified is the substantive policy question. The convergence of National, Labour, and the Greens on household solar suggests at least one area of cross-party consensus, though the scale and mechanism of any subsidy regime remain to be defined.

The broader context is that New Zealand's climate policy architecture, the Zero Carbon Act, the emissions budgets, and the independent monitoring function of the Climate Change Commission, was designed to insulate long-term decarbonisation from short-term political cycles. The commission's report tests that design. It is one thing for the government of the day to dispute the commission's findings; it is another to do so when the commission is explicitly warning that the statutory mechanism for delivering on those targets is not working. The 2024 dry-year spike, which forced coal back into the generation mix, is the kind of shock the system was designed to absorb without derailing the trajectory. The fact that it did stall progress underscores the commission's concern about the adequacy of current policy buffers.