The Climate Change Commission has released its third annual monitoring report, warning that New Zealand risks missing all its climate targets and that the next 12 to 24 months are critical to turn things around (RNZ). Prime Minister Christopher Luxon said the country is on track to meet its first two emissions budgets and to reach net zero, possibly 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 current policies. Emissions budgets cap the total greenhouse gases New Zealand can produce over a five-year period, with each budget setting a lower ceiling than the last — a sinking-lid approach. The Zero Carbon Act set up this system to keep governments of all stripes on track toward the net-zero goal (Beehive).

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

Luxon's confidence comes from those government projections. The commission's report, however, identifies specific weak points in the policy mix. It said the Emissions Trading Scheme (ETS) — the market-based system that puts a price on carbon to encourage businesses to cut emissions — is not working efficiently because of low market confidence, price swings, and uncertainty about its long-term future. The commission said the ETS would need to be amended by 2030 to be effective (RNZ).

Green Party co-leader Chlöe Swarbrick accused the government of 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 reversing that progress (RNZ).

The commission's report noted that the 2024 stall in emissions progress was largely caused by a dry year that forced coal to be used for electricity generation. The government has plans for a liquefied natural gas (LNG) import terminal to address dry-year risk. Policies working 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, saying he preferred more investment in agri-tech. The commission identified increased uptake of electric vehicles 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).

The gap between the government's headline projections and the commission's detailed assessment is striking. The government points to modelling showing net zero by 2044, eight years ahead of the 2050 statutory target. The commission, whose job is to independently monitor 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 puts the need for course correction squarely within the current parliamentary term, no matter which party forms the next government.

The weak points the report identifies are structural. The ETS, the main tool for pricing carbon across the economy, is not working as intended. Low market confidence and price swings have eroded its effectiveness, and the commission has flagged the need for legislative amendment by 2030. The political dispute over who is responsible, with Swarbrick pointing the finger at the government, will likely intensify as the election approaches. The decision to remove agriculture from the ETS and commit to an LNG terminal is a calculated trade-off — accepting near-term emissions from fossil fuel infrastructure and agricultural methane in exchange for dry-year energy security and relief for the farming sector. 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 fact that National, Labour, and the Greens all support household solar suggests at least one area of cross-party agreement, though the scale and mechanism of any subsidy scheme are not yet defined.

The broader context is that New Zealand's climate policy architecture — the Zero Carbon Act, the emissions budgets, and the independent monitoring role of the Climate Change Commission — was designed to protect 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 reinforces the commission's concern about whether current policy has enough built-in resilience.