KEY POINTS:
Prime Minister Helen Clark has rejected a National Party call for a delay to the introduction of her Government's proposed climate change legislation.
Helen Clark said last night such a move would only add to taxpayers' costs.
National Party leader John Key said New Zealand should not introduce its emissions trading scheme until Australia had developed one too.
Helen Clark said the Government was never relying on National's support for the scheme and would continue with cross-party talks to try to get it passed.
"The bill remains live," she said.
Mr Key indicated yesterday that National would not support the emissions trading bill when it came out of the select committee stages, due to happen on June 10.
National had not given up on the scheme, but it wanted to slow it down even if that meant taking it beyond the election, which must be held by November 15.
He set out six National concerns, including the potential for a government to unduly swell its own coffers, and that New Zealand was developing a scheme ahead of Australia.
Mr Key said the timetable for the bill was rushed and reckless.
He wants any major changes made to the scheme later by the Government to be sent back to the select committee for public hearings.
Helen Clark, just back from a trip to Japan and South Korea, said last night: "The longer we delay, the greater the cost to taxpayers.
"The longer we delay, the more the National Party wants to force the cost on to the general public than on to emitters."
Under an international agreement, New Zealand will be faced with a bill at the end of the first five-year Kyoto commitment period, in 2012, the size of which will depend on how far short it has fallen of its commitment to reduce its carbon emissions to 1990 levels.
The emissions trading scheme is a financial incentive to reduce pollution, making big emitters buy permits to emit carbon and rewarding them with credits if they come under target.
The credits can then be sold to those who need permits.
The big emitting companies will either absorb the costs themselves or, more likely, pass on the extra cost to their customers, such as oil companies to motorists.
Exporters, such as in agriculture, are being given more favourable terms on which to join the scheme.
New Zealand's overall 2012 liability is regularly assessed. Two weeks ago it was revised down from more than $1 billion to $481 million.
Helen Clark said a delay in the start of the scheme - effectively delaying reductions in emissions - would increase New Zealand's liability.
"The forward projection of the fall of the New Zealand liability in the first commitment period is in no small part due to forecasting in the effects of the emissions trading scheme, so the greater you delay, the greater the cost to the Kiwi taxpayer."
Under pressure because of soaring petrol prices, Helen Clark two weeks ago announced a delay to the liquid transport fuels entry to the scheme, from January 2009 to January 2011.
She denied the emissions trading scheme legislation had been rushed.
"The classic thing when people really don't want to vote for something but are grasping for excuses is to claim it is rushed."
Climate Change Minister David Parker said the scheme would not result in a surplus of credits for the Government in the short term, and any later surplus would depend on New Zealand's target under future international agreements.
Business NZ chief executive Phil O'Reilly welcomed Mr Key's position, saying National's policy appeared to have taken account of concerns expressed to the select committee.
Greens co-leader Jeanette Fitzsimons said her party would wait to see what improvements it could make to the scheme before deciding whether it could support it further.
She said it needed to be more effective, and agriculture had to take some responsibility sooner than proposed.
Mr Key also said National would vote against the Biofuels Bill, which phases in mandatory levels of biofuel sales from July 1.
THE SIX CONDITIONS
John Key says National's support for the emissions trading scheme (ETS) depends on six conditions.
Climate Change Minister David Parker responds to each of them:
ONE
Key: The ETS must strike a balance between New Zealand's environmental and economic interests. It should not try to make New Zealand a world leader on climate change; Kiwis can't afford to pay the price for that particular experiment.
Parker: The ETS is designed to balance environmental and economic interests. The Government's recent delay of the entry of the fuel sector until 2011, and extension of the phase-out of free allocation until 2018, are examples of balancing economic imperatives with the environment.
TWO
Key: The ETS should be fiscally neutral rather than providing billions of dollars in windfall gains to the government accounts at the expense of businesses and consumers. National does not think it is responsible for the Government to use green initiatives to swell the Crown coffers at the expense of Kiwis' wallets.
Parker: The ETS would not result in a surplus of credits for the Government in the short term, and any surplus that might result later depends on New Zealand's target under future international agreements. The five-yearly reviews of the scheme are the way to take account of that.
THREE
Key: The ETS should be as closely aligned as possible with the planned Australian scheme, with common compliance regimes and tradability. In my second speech as National Party leader, I called for close co-operation with our biggest trading partner on this, and I continue to call for it. Given the Australian timetable for developing an ETS, I believe it's still possible.
Parker: New Zealand officials are in close contact with Australian officials as both sides develop their schemes. They are very likely to be compatible, but New Zealand's priority is to design a scheme that is best suited to our strengths and weaknesses, not Australia's.
FOUR
Key: The ETS should encourage the use of technologies that improve efficiency and reduce emissions intensity, rather than encourage an exodus of industries and their skilled staff to other countries.
Parker: The select committee and the Government are already considering intensity-based allocation within a cap.
FIVE
Key: The ETS needs to recognise the importance to New Zealand of small and medium enterprises, and not discriminate against them in allocating emission permits.
Parker: This matter is under consideration by the select committee.
SIX
Key: The ETS should have the flexibility to respond to progress in international negotiations rather than setting a rigid schedule. This way, industry obligations can be kept in line with those of foreign competitors.
Parker: This has already been achieved, by way of a five-yearly review that is proposed on the phase-out of free allocation.
