Greenhouse gas emitters are about to lose a 50 percent subsidy.
A special 50 percent reduction on climate change obligations for New Zealand citizens and companies will be scrapped.
This has been hinted at for some time but Climate Change Minster Paula Bennett confirmed it in an address to the energy sector in Wellington this morning.
More on the ETS review
The so-called one-for-two scheme was introduced in the depth of the Global Financial Crisis to minimise the economic impact of fighting climate change.
It meant that people and companies such as petrol firms would have to pay for only half the value of their emissions via purchases of so-called carbon credits.
Typically, these came from forestry companies whose trees absorbed carbon, as they grew, and were sold on the Emissions Trading Scheme (ETS).
But Mrs Bennett told the audience this concession would go.
"This isn't really a case of if we remove one-for two, but more when and how," she told her audience.
"It was always a temporary measure.
"It is abundantly clear that if the ETS is going to work, carbon must cost more than it does right now."
Mrs Bennett added the ETS, which was intended to curb emissions, was not working well.
There would need to be more investment in tree planting, and companies emitting large quantities of greenhouse gases would have to do more than they did now.
Business leaders are going along with the plan, even though they said it would push up costs.
Employers and Manufacturers Association chief executive Kim Campbell said the cost of axing the scheme would have to be shared by everyone, and others were already doing this.
"Regardless of what the government says, the world has actually got it," he said.
"Travel anywhere - they're recycling, they're insulating their homes, they're buying LED bulbs, they're buying electric cars anyway because, frankly, the world doesn't want to choke to death."