Plan to hit brakes on ETS signalled

Full entry of the energy, transport and industrial sectors into the Emissions Trading scheme is likely to be delayed under expected government changes. File photo / Thinkstock

The Government is signalling it will hit the brakes on New Zealand's Emissions Trading Scheme by delaying full entry of the energy, transport and industrial sectors and covering agricultural emissions only if technologies are available to reduce the burden on farmers.

The Emissions Trading Scheme Review Panel's report "Doing New Zealand's Fair Share'' was released today and Climate Change minister Nick Smith said the key recommendation was that "implementation of the scheme be slowed down''.

He indicated the Government viewed the report's recommendations favourably.

"This is a good report on which to base future decisions on the ETS.

"Climate change policy comes down to a difficult choice between how much and how quickly we want to reduce emissions and how much households and businesses are prepared to pay.

"The report is consistent with the Government's climate change policy goal of New Zealand doing its fair share on this global issue'', Dr Smith said in a statement.

Under current ETS legislation the energy, transport and industrial sectors, which currently have to meet half of their emissions obligations would have stepped up to a full obligation in 2013.

"The Report's recommendation to slow this by phasing it in three steps in 2013, 2014 and 2015 would ease the price impact on households and businesses'', Dr Smith said.

"The Report notes this slower timetable would not detract from investment in low-carbon technologies like renewable energy generation as they have quite long lead times.''

Dr Smith also said the report's recommendation to slow down the entry of agriculture "is also well considered''.

The Government did not support the introduction of agricultural emissions into the ETS before 2015 and said the advice of the Agricultural ETS Advisory Committee would be
considered before it was brought in then.

"Agricultural emissions will only be included if practical technologies are available to enable farmers to reduce their emissions and more progress is made by our trading partners on measures to reduce emissions.''

Dr Smith said the Government was ``calibrating New Zealand's approach relative to our key trading partners''

"Australia is particularly significant given the extent that our economies are integrated. The Review Panel's approach fits neatly with the Australian Government's carbon pricing proposals introduced to its Parliament this week. While New Zealand has started earlier and more softly, the two schemes will be closely aligned in 2015. This review positions us well to advance the joint officials working group announced by both Prime Ministers towards linking the two schemes for the period beyond 2015.''

Dr Smith said the Government was working on its response to the report's 61 recommendations.

"There are both upside and downside fiscal implications in different recommendations that will need to be considered. Changes to the scheme would require legislation and the Government will finalise its policy once the detailed work is complete.''