KEY POINTS:
The vast majority of businesses will not need to worry about the 200-page emissions trading bill the Government introduced to Parliament yesterday: It expects fewer than 200 firms to take part in the emissions trading scheme.
For the rest, as for individual consumers, it will be more like a carbon tax, pushing up the price of petrol and diesel from the start of 2009, and electricity from the start of 2010.
Unlike a tax, however, there is no certainty as to how much the increase in energy prices will be.
And the legislation does not include any provision for a price cap or a price floor.
There would, however, be provision for the Government in some circumstance to buy units internationally and release them into the New Zealand market, Climate Change Minister David Parker said. This might be necessary if there was a gap between the Kyoto Protocol's first commitment period, which runs until the end of 2012, and the start of any successor international regime.
The legislation provides for periodic reviews of the emissions trading scheme which among other things will take account of what other countries are doing to price emissions.
The bill provides more detail about the process for making an allocation of free units to large smokestack emitters for whom exposure to a carbon price on all of their emissions, and not just the marginal ones, would be commercially life-threatening.
The process includes provision for public input to the allocation plans, in contrast to the negotiated greenhouse agreements under the now defunct carbon tax regime which were conducted entirely behind closed doors.
The policy, as announced in September, would "grandfather", or give a free allocation to cover, 90 per cent of emissions in 2005 for firms emitting more 50,000 tonnes of CO2 equivalent a year.
That would be phased out by 2025.
The regulatory impact statement accompanying the bill said that was still the preferred approach, but noted concerns from both the energy-intensive and agricultural sectors about the speed of the phase-out and indicated that it was still a live issue with Climate Change Leadership Forum.
The forum, chaired by Stephen Tindall, is the main forum for ongoing consultation with the private sector until the bill reaches a select committee next year.
Catherine Beard, executive director of the Greenhouse Policy Coalition which represents the large emitters, said the main issue with the bill was that it set up an emissions trading scheme that was likely to be a lot tougher than other countries would be prepared to adopt in the future.
The GPC wants a price cap to act as a safety valve to avoid volatility and exposure to high carbon prices that would cause economic damage.
It also wants a "more realistic" timeframe for transitioning to a lower-carbon economy and firms to face intensity or unit-based caps rather than absolute ones.
PAYING THE PRICE
* The Government introduced legislation yesterday to set up the emissions trading scheme it outlined in September.
* It ignores calls for a "safety valve" price cap.
* It allows for public input before free units are allocated to large trade-exposed emitters.
* And it bans the construction of any more fossil-fuel baseload power stations for the next 10 years.
