Editorial: Parties should work together on emissions

National's pre-election promise to replace the previous Government's emissions trading scheme with something less ambitious has come to an impasse.

A parliamentary review of options, agreed with the Act Party after the election, has published a report this week that leaves the Government without sufficient votes. Both Act and the Maori Party continue to oppose the trading scheme from different directions.

Act, still unconvinced that greenhouse gas emissions pose a problem, would prefer a carbon tax to production permits if the state has to interfere.

The Maori Party doubts a cap on emissions and a trade in permits can fix the problem. It would prefer a carbon tax for simplicity. The Greens take a similar view though they agreed to Labour's trading regime enacted last year.

With the world now preparing for a United Nations conference in Copenhagen, where it is hoped new commitments and procedures will be agreed, National needs a consensus. And since the international consensus favours emissions trading, it is clear National needs to come to an agreement with Labour.

A bipartisan policy on a subject as far-reaching as climate change would be highly desirable even if the Government had a majority on the issue. Investors in major sectors of the economy need to know that decisions will endure well beyond the life of this Government and the next.

Targets may be set at Copenhagen for 2020 and the ultimate goal looks out to 2050. The longer this country dithers, the further it drifts behind the emission reduction commitments made at Kyoto for the period to 2012 and the more costly its catch-up will be.

Labour has been quick to respond to the need for a bipartisan solution. Its minority report on the parliamentary review stresses the need for consensus and sets out its conditions for a deal. It would support an emissions trading system that captures all greenhouse gases, including those from agriculture and forestry.

It reasonably argues that to exclude farm methane emissions because they represent nearly half New Zealand's total contribution to global warming would be as senseless as Australia exempting coal-fired electricity or the United States excluding motor vehicle emissions.

Labour is prepared to delay the application of the next stages of the scheme enacted last year but it wants entry years specified for all sectors. It does not agree with capping the price the market might set for carbon emissions in this country since that would defeat the purpose of confronting industry with a true cost and encouraging emissions reductions where they are most worthwhile.

But the scheme enacted by Labour was unduly insular and government-controlled. National seems more open to industries buying carbon permits internationally even if this does not count towards reduction targets for this country that carry a potential liability for taxpayers.

A bipartisan agreement will not be easy. Fundamentally, Labour regards climate repair as a "moral imperative", National sees it as an international obligation. Labour wants this country to show leadership, National is wary of taking on more costs than others.

But in their agreement on a market mechanism covering "all gases all sectors" there is room for compromise on matters of detail. The emissions permits should be traded internationally and directly by producers, not between governments. Any price caps to avoid initial turbulence should be temporary. Forestry credits should be designed to encourage new planting, particularly of native trees.

New Zealand should be in the vanguard of environmental improvement. If the two parties can get together on this project, the country would be well served.