* Government says waiting for post-Kyoto pact before setting
* New Zealand carbon prices plummet
* Policy proposals likely to keep carbon prices cheap
By Gyles Beckford
WELLINGTON, Nov 2 Just two years after expanding
a scheme that was feted as the world's only emissions trading
scheme outside of Europe, New Zealand has effectively put the
scheme on hold, just as other nations step into the carbon
The government says it can comfortably meet its 2008-12
emissions target under the U.N. Kyoto Protocol climate pact and
will gauge the need for tougher action when it sees what other
countries commit to in talks for a new U.N. pact from 2020.
New Zealand has said it would opt for emissions cuts of
between 10 and 20 percent f rom 1990 levels by 2020 depending on
the ambition of the next pact. In the meantime, the government
says the local carbon price should be kept as low as possible.
"This means the emissions trading scheme will continue to
deliver a price signal that falls far short of what is required
to achieve any emission reductions at all," said Lizzie Chambers
of New Zealand online trading platform Carbon Match.
Parliament is expected to approve amendments within weeks to
allow the unlimited flow of cheap U.N.-based carbon offsets to
New Zealand that have driven down the price of domestic
pollution permits to a tenth of what they were last year.
The proposals also extend indefinitely a sweetener for
polluters to submit one permit for every two tonnes of
emissions. New Zealand is the only country to offer the scheme,
which halves carbon costs and was previously due to end in late
2012 or early 2013.
The result is that New Zealand polluters can meet their
emissions obligations at a fraction of the cost paid by their
competitors in Europe and Australia. Cheap carbon costs give
businesses little incentive to invest in ways to cut emissions.
"Hollowing it out like this makes a farce of our climate
change commitments," independent Parliamentary Commissioner for
the Environment, Jan Wright, said in a recent statement,
referring to the amendments.
The government is under little pressure from voters to
toughen a scheme launched in 2008 by a previous administration,
unlike neighbouring Australia where voters have mandated tougher
action on climate change.
Low domestic carbon prices will lead to fewer trees being
planted and even deforestation, New Zealand's Forest Owners
Association says.Forest plantations had been a
major source of domestic permits, called New Zealand Units
(NZUs), before the influx of cheap international permits.
New Zealand's scheme is the only national programme that
allows polluters to meet all emissions obligations with
U.N.-backed carbon offsets. Europe and Australia have imposed
strict limits on the use of U.N. offsets.
The U.N. offsets, called Certified Emission Reductions
(CERs) hit all-time lows last week, touching 71 euro
cents a tonne on limited European demand due to the economic
crisis. CERs have fallen from around 13 euros in June last year.
Unlimited imports of the offsets have driven the price of
NZUs to NZ$2.50 ($2.06) a tonne, down from NZ$20 18 months ago.
By comparison, Australia's carbon tax, which started in
July, is A$23 ($23.8, NZ$29) a tonne with no imports of UN
offsets till 2015. European pollution permits called EUAs are
trading around 8.2 euros ($10.60, NZ$12.90) a tonne.
As New Zealand eases measures to curve carbon emissions,
others in the region are rolling them out. South Korea is
launching a scheme in 2015, while China is embarking on seven