KEY POINTS:
Two unlikely political allies have accused the Government of vastly understating the financial deficit New Zealand will face from the Kyoto Protocol.
National Party climate change spokesman Nick Smith yesterday claimed the deficit was more likely to be $1.7 billion than the $567 million being estimated by the Treasury.
He is supported by the Greens, whose only reservation is that Dr Smith's estimate may be too low.
Dr Smith is also backed by climate change consultant Murray Ward, a former senior manager and principal adviser to the Government.
At issue is the way the Treasury is calculating the liability.
Dr Smith has asked the Auditor-General to investigate, because he thinks that the price of carbon being used in the calculation is too low and that the final liability takes into account an old deforestation policy which the Government has not yet passed into law.
He also said forecasts of deforestation had gone up, but that hadn't been factored in.
"The official deficit is based on projected deforestation of just 26,000ha, yet MAF papers now estimate that 47,000ha will be deforested during the first commitment period of the Kyoto Protocol," Dr Smith said.
"This increases New Zealand's carbon deficit from 41 million tonnes to 59 million tonnes."
The liability is calculated using various projections for what will happen in particular areas, such as energy, waste, agriculture and deforestation.
Using those, it is estimated that New Zealand faces a liability of 41.2 million tonnes of carbon.
A price is then attached to that, and in February, the price being used was $13.76 a tonne.
Dr Smith and Greens co-leader Jeanette Fitzsimons say the price of carbon will be much higher than the amount Treasury is using, and cite international projections of closer to $30 a tonne.
Ms Fitzsimons said the Government's current liability figure was "unrealistic" and a carbon price of $30 a tonne should be used at the very least.
But Climate Change Minister David Parker said Dr Smith's claim that the liability could be as high as $1.7 billion was "absolute nonsense".
"There's no way those figures are correct," he said.
The Treasury figure was not based only on a European price for carbon, on which Dr Smith had based his claims.
