Bipartisan talks on emissions trading scheme falter

Talks between the Government and Labour on changes to the emissions trading scheme have run into trouble, although both parties say they still want to do a deal.

The two sides have met four or five times. Labour leader Phil Goff has written to Prime Minister John Key saying that, while Labour was committed to a deal, it could not agree to proposals the Government had put up.

The forestry industry has expressed concern that in a bid to harmonise the scheme with the proposed Australian one, the Government wants a price cap and more generous allocation of free emission permits to trade-exposed emitters. Both measures could limit potential returns to foresters with carbon credits to sell, as well as transferring costs from emitters to taxpayers.

Labour's climate change spokesman, Charles Chauvel, said as far as he was concerned, negotiations with the Government were still "on foot".

But he warned of decisions which "could cost households and businesses, other than heavy polluters, billions of dollars over the next decade".

"For example, the subsidy to agriculture alone between 2008 and 2012 will be about $900 million (at a carbon price of $30 a tonne), compared to what the sector would pay if charges were set in proportion to its emissions. If the carbon price goes to $50 per tonne, the value would be about $1.5 billion," Mr Chauvel said.

"Yet there is talk of giving agriculture an even softer ride, rather than sending the price signal to start using current technologies, and start planting trees, to reduce emissions now."

He was also critical of the quality of the Treasury advice to the Cabinet on the 2020 emissions target.