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California has invited New Zealand to join its battle against pollution, offering local businesses the potential to enter a ground-breaking market with the world's sixth largest economy.
Governor Arnold Schwarzenegger's chief environmental adviser, Terry Tamminen, said New Zealand would be "more than welcome" to join the Californian-centred emissions trading market, due to launch in 2012.
"We'd come down there in a heartbeat [to negotiate]," Mr Tamminen told the Listener magazine.
"And Governor Schwarzenegger would be pleased to welcome your leadership here."
California is leading climate change legislation in the United States, and its commitment to lower greenhouse gas (GHG) emissions to 1990 levels, or around 22 per cent, by 2020, has attracted interest and praise from around the world.
The state has committed to a "market-based system" in order to reduce emissions. It's widely assumed that will mean a cap and trade scheme similar to that already in place in Europe and favoured by the New Zealand Government.
Climate Change Minister David Parker said a decision on whether New Zealand would proceed with its own emissions trading market was due in the next three to four months.
Decisions over links with international schemes would also be made then.
He was noncommittal on the California scheme, "but it is gratifying that the sixth largest economy in the world is seeing New Zealand as a potential partner". He said linking with international schemes could help lower costs.
"So it is gratifying these schemes are popping up. It gives us more options and indicates we are on the right track in terms of our consideration of these sort of things ourselves."
In February, California joined Oregon, Washington, New Mexico and Arizona to sign a deal to create a "market-based programme to cap carbon emissions", expected to be a gigantic emissions trading market.
The states combined emit more than 80 million tonnes of carbon dioxide each year. The market has since expanded around the Pacific Rim. Three Canadian states and two Mexican states have agreed to join, and Mr Tamminen said Australia's six states agreed in principle last month to join.
But New Zealand, should it accept the invitation, could gain kudos as the first nation state to sign up. Local firms would gain significantly, by being able to buy and sell credits in a market vastly bigger than if they merely traded among each other.
In Parliament last week, Finance Minister Michael Cullen said he expected the scheme being devised by New Zealand officials would allow for international trading.
Mr Tamminen said a signing ceremony could be arranged "with all the pomp".
NZX CEO Mark Weldon said ensuring local firms could trade carbon credits with California was "incredibly sensible".
They could achieve lower-cost emission reductions by trading with a "60 foot Gorilla" like California.
NZX and a consortium of New Zealand businesses announced this month plans to establish a carbon market servicing the Asia-Pacific region under the name TZ1, so California's offer couldn't have come at a better time.
Mr Weldon said California would be keen to include New Zealand because of its proud environmental reputation and brand. Further, all businesses trading in a Pacific-Rim carbon market would gain from the addition of the New Zealand time zone.
Given that most of California's GHG emissions are from transport and most of New Zealand's are from agriculture, the two governments are likely to settle on quite different emission reduction schemes. But that didn't matter, Mr Weldon said, as long as "there are instruments, such as carbon credits, that you can swap".
It would be crucial for both governments to agree to compatible rules on issues such as measuring and verifying companies' emissions.
"If our Prime Minister sat down and had a chat with the Governor and agreed to credits that were equivalent and so on, well I think that's very do-able. No question, it would be a very good thing."
Green Party co-leader Jeanette Fitzsimons said the goal under the Kyoto Protocol was to reduce carbon emissions to 1990 levels by 2012 compared to California where the goal was to do so by 2020.
"I don't want to totally dismiss it but 2012 is another five years away. We can't afford to do nothing until then.
"We should keep talking to these people and learn how others are designing their carbon markets, but we are already in the Kyoto Protocol and it has a cap on emissions and we trade with other nations within that protocol."
