New Zealand 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 greenhouse 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 largely stalled trading scheme to parliament next week. At present, only forestry is operating under the existing scheme.

While there are some details still to be finalized, the announcement would allow large emitters to start budgeting for their carbon costs, said Wayne King, a director at consulting firm Carbon Market Solutions.

“Its essentially a positive move in that it provides some certainty for business about the shape of emissions trading,” King said.

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

Business and industry groups described the revised scheme as more balanced, which would go most of the way to meeting the needs of most sectors of the economy.

“The less rushed roll-out plan will be welcomed by industry and the energy sector, along with the agricultural sector which has also been given more time before entering the scheme,” Business NZ chief executive Phil O’Reilly said in a statement.

However, environmental group Greenpeace described the revised scheme as “an insult to New Zealanders”, which would shift the burden from polluters to taxpayers.


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 in parliament.

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

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, Smith said.

The government has said its target to cut greenhouse gas emissions would be between 10 and 20 percent by 2020 on 1990 levels, depending on the outcome of the Copenhagen meeting.

Under the revised scheme, 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.

The electricity sector has had its inclusion date postponed by six months compared with the earlier scheme 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.

King said bringing electricity and transport in on the same date was a sensible move, although postponing the entry of electricity was disappointing.

Smith said the scheme was being closely aligned with Australia’s proposed carbon pollution reduction scheme, by being production-based with similar intensity tests and a similar timetable for phasing out government support. ($1=NZ$1.42) (Editing by Kazunori Takada)