Emitters likely to miss deadline

Thermal power stations and large industrial emitters are due to be brought into the scheme in the new year. Photo / Supplied

Climate Change Minister Nick Smith all but admitted yesterday that large industrial emitters are unlikely to be brought into the emissions trading scheme on January 1 as the law currently requires.

Large industrial emitters and thermal power stations are due to be brought into the scheme in the new year.

The scheme allows for the former to be allocated free New Zealand units - tradeable emission rights - equivalent to 90 per cent of their collective 2005 emissions, to protect their international competitiveness, but detailed plans on how that allocation would occur remain undecided.

Large emitters have been arguing for some time that they can hardly be expected to prepare to comply with non-existent rules to give effect to policy that remains up in the air.

The basis of free allocation was one of the issues the select committee reviewing the scheme received a lot of submissions on, as were the rules for winding it back over time.

Smith told the local government and environment select committee that officials had advised him the timetable in the ETS legislation passed just before the election last year was always unachievable, even if there had not been a select committee review.

"There will need to be changes. We will make final decisions when we get the select committee's report." That is not expected until late next month or early August.

Officials had said theoretically the industrial and energy sectors could be brought into the scheme on January 1 without an allocation plan.

"But it is my view that is untenable," Smith said. "It would be very unfair to impose that requirement on them."

He did not think his comments would come as a surprise to industry. "It has been known for months."

But he would not go so far as to say that their entry into the scheme would be delayed, saying no decisions about the future shape of the scheme had been made or would be made until the select committee had reported.

And even then the Government will need to muster support from at least one of the next four largest parties in Parliament to get the numbers to pass amending legislation.

As the "machinations" in Australia showed, getting cross-party agreement in this area was incredibly challenging, Smith said. He indicated the choice of United Future leader Peter Dunne to chair the select committee had been made with potential consensus-building in mind.

"All MPs would acknowledge he had a greater capacity to broker a broad consensus than anyone else in the House."

Technical legislation pushing back compliance dates relating to the forestry sector is already before the House.