NZ Government to revise emissions scheme

WELLINGTON (Reuters) - New Zealand will revise its emissions trading scheme to lower the costs to businesses and households, although the scheme will still cover all sectors and gases, the government said on Monday.

The government said it had struck a deal with its support party, The Maori Party, and would introduce a bill revising the ETS to parliament next week.

The government would aim to have the legislation passed by the time of the conference to negotiate a successor to the Kyoto Protocol in Copenhagen in December, Climate Change Minister Nick Smith said.

“New Zealand needs an emissions trading scheme to discourage carbon pollution, improve energy efficiency and reward afforestation,” Smith said in a statement.

The minority National-led government suspended the previous Labour-led government’s scheme and launched a review of the scheme after coming to power following a general election last year.

National had criticized the old scheme before it came to power, describing it as too expensive and ambitious. Gaining the support of the Maori Party now gives National the numbers to pass the new legislation through parliament.

Many observers had picked a deal between National and the party it ousted from power, Labour. Smith said National would continue to work with other parties to seek a wide consensus for the changes.

Under the revised scheme the government will have a transitional phase with a 50 percent obligation and a fixed price option for emissions units.

The electricity sector has had its inclusion date postponed by six months to July 1 2010, while the transport sector will enter on the same date, six months earlier than previously.

Agriculture, which accounts for nearly half of New Zealand’s emissions, has had its entry date pushed back by two years to January 1 2015.

There will be a transitional period from July 1 2010 until January 1 2013, in which emitters will only have to meet 50 percent of their obligations, and will be able to take up an option of paying a fixed price of NZ$25 ($17.6) per tonne of emissions.

The estimated annual cost to households would be halved under the new scheme, to NZ$165 from NZ$330 during the transitional period, Smith said.

Emission units will be allocated on a production based industry average basis, as opposed to a fixed allocation based on 2005 levels under the previous scheme.


Reporting by Adrian Bathgate