The Climate Change Commission has released its yearly check-up on New Zealand's climate progress, and its warning is blunt: New Zealand is at risk of missing all its climate targets, and the next 12 to 24 months are critical to fix things (RNZ). Prime Minister Christopher Luxon disagrees, saying the country is on track to meet its targets and could reach net zero — meaning the country produces no more emissions than it removes — a few years early (RNZ).

The commission found that the current emissions budget is at significant risk, and the next one cannot be met with the policies in place now. Emissions budgets are like a spending cap, but for pollution: they set the maximum amount of greenhouse gases New Zealand can produce over five years, and each new budget lowers the cap. The Zero Carbon Act set up this system to keep every future government on track toward net zero (Beehive).

The government's own numbers, updated when a new methane target passed in Parliament in December 2025, show New Zealand reaching net zero eight years ahead of the 2050 goal (Beehive). The second emissions reduction plan, published by the Ministry for the Environment and updated in January 2026, says New Zealand could hit net zero as early as 2044 (Ministry for the Environment).

Luxon's confidence comes from those government projections. But the commission's report looks at the detail and finds specific problems. It said the Emissions Trading Scheme — a system that charges businesses for the pollution they produce, to encourage them to cut back — is not working well. Market confidence is low, prices are unstable, and there is uncertainty about the scheme's long-term future. The commission said the scheme needs to be changed by 2030 to do its job (RNZ).

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

The commission noted that the 2024 stall in progress was mostly caused by a dry year. With less rain, hydro lakes ran low and coal had to be burned to keep the lights on. The government plans to build a liquefied natural gas (LNG) import terminal to cover dry years in future. But the report says some government decisions are working against emissions reduction, including taking agriculture out of the trading scheme and committing to the LNG terminal. The government's Gas Transition Loan Scheme and time-of-use charges were identified as policies that could help reduce emissions (RNZ).

Hipkins did not support putting agriculture back into the scheme, saying he would rather invest in new farming technology. The commission said more uptake of electric vehicles and solar power could help get progress 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).

The gap between what the government says and what the commission found is hard to miss. The government points to modelling showing net zero by 2044. The commission, whose job is to check that work, says the current budget is at risk and the next one cannot be met with existing policy. Its 12-to-24-month warning means any fix needs to happen within the current parliamentary term, no matter who forms the next government.

The problems the report identifies are built into the system. The trading scheme is the main tool for pricing pollution across the economy, and it is not working as it should. Low confidence and unstable prices have weakened it. The commission says the law needs to change by 2030. The political fight over who is to blame, with Swarbrick pointing at the government, will likely heat up as the election gets closer. Taking agriculture out of the scheme and committing to an LNG terminal means accepting more emissions now, in exchange for energy security during dry years and relief for the farming sector. Whether the government's other policies can close the gap is the real question. The fact that National, Labour, and the Greens all back household solar is a rare point of agreement, though the details of any subsidy are not yet settled.

The broader context is that New Zealand set up its climate system — the Zero Carbon Act, the emissions budgets, and the commission's watchdog role — to keep long-term goals safe from short-term politics. This report puts that design to the test. It is one thing for a government to push back against the commission's findings. It is another to do so when the commission is warning that the system for hitting those targets is not working. The 2024 dry year, which forced coal back into the mix, is exactly the kind of shock the system was meant to handle without going off track. The fact that it did cause progress to stall is what lies behind the commission's concern about whether current policy is strong enough.