KEY POINTS:
The emissions trading scheme has won cross-party support, crucially from National.
Legislation will be introduced by the end of the year on the scheme, to be phased in over five years.
It aims sets up a system requiring up to 200 big emitters to pay for their emissions by creating permits, the surplus of which can be traded domestically and internationally.
Costs are expected to be passed on to consumers eventually with estimates that the cost of petrol will increase 4c a litre from 2009, when oil companies join the scheme.
The Government caved in to forest owners who will now receive the carbon credits for their post 1990-planted forests - though they will also have to accept the liability of felling forests.
National gloated a little over the backdown but fairly solidly backed the scheme. Its position gives the Green Party the comfort of taking a more critical stance knowing that its support is not essential.
The scheme was also supported by every other party in Parliament.
Climate Change Issues Minister David Parker said that although New Zealand was a small country, the world looked to it "for environmental solutions, and to act as kaitiaki [guardian] of our land."
He said New Zealand's carbon emissions deficit (the difference between actual and the Kyoto targets) could be halved over five years from 45.5 million tonnes to 25 million tonnes or less.
Stung by criticism that the goal of carbon neutrality for New Zealand was too vague, Prime Minister Helen Clark also set out new sub-targets:
* To have 90 per cent of electricity generated from renewable sources by 2025.
* To reduce by half per capita emissions from transport by 2040.
* To have a net increase in forests of 250,000 hectares by 2020.
* To be one of the first countries to introduce electric vehicles widely.
She also said the electricity sector could be carbon neutral by 2025; the rest of the stationary energy sector (including gas, coal and geothermal power generators) by 2030, and the transport sector by 2040.
The scheme will be phased in from next year but, as foreshadowed, the heavy emitters in the agriculture sector won't be required to join up until 2013. The Government says that honours an undertaking it made to farmers in 2002.
Forestry will join from the start of next year; liquid fossil fuels (oil companies) from 2009; and electricity generation, industrial heat and power and heavy industry from 2010.
The allocations of the latter two sectors will be 90 per cent of their 2005 emissions.
Business NZ chief executive Phil O'Reilly said the business sector would be pleased the intentions on carbon trading were clearer, but there was still concern about the economic consequences.
New Zealand appeared to be the only country attempting a cap and trade scheme across all sectors and covering all six greenhouse gases.
Council of Trade Unions president Ross Wilson said the CTU was discussing with Government how it could engage its 350,000 members on reducing energy emissions.
Owen McShane of the Climate Science Coalition said the Government should fund research to establish whether there was scientific evidence to justify the carbon charging.
