KEY POINTS:
While the Government struggles to get its Emissions Trading Scheme (ETS) down the legislative slipway and launched before the election, its Australian counterpart has outlined its own scheme.
There are as many differences as similarities between them.
Both are intended to apply to electricity generation from 2010. In Australia's case, "stationary energy" accounts for about half of its emissions, because of its reliance on coal-fired generation.
In New Zealand's case, agriculture accounts for half of all emissions, but it is an export industry, raising a difficult trade-off between environmental integrity and international competitiveness. It will be the last sector to come into the scheme, in 2013, and for the first five years at least, only at the margin, for the increase above 90 per cent of 2005 emissions levels.
Australia does not envisage including agriculture (about 16 per cent of its emissions) until 2015 at the earliest. It will not decide until 2013.
Neither Government is in any hurry to add to the price of transport fuels.
Australia plans a Clayton's approach initially, where any increase in petrol or diesel prices from the ETS will be offset, cent-for-cent by a reduction in the excise on those fuels. That would entirely eliminate any price signal for the first three years of the scheme.
The New Zealand Government opted to push back transport's entry into the scheme from 2009 to 2011.
The New Zealand scheme makes landowners liable for the emissions deemed to occur when forests are felled and not replanted.
The Australians are not including deforestation in their scheme.
Both countries have provisions to grandfather, through an allocation of free emission units, most of the emissions from the trade-exposed smokestack sector. Not enough detail is available about either to judge the relative stringency or leniency of the schemes.
The Australians favour an intensity approach where the emitter's liability is per unit of output rather than based on an absolute cap.
The New Zealand Parliament's finance and expenditure select committee also made provisions for an intensity approach, but the essential details have been left to yet-to-be-drafted regulations.
The Australians plan to limit the extent to which emitters can use Kyoto units bought on the international market to meet their obligations.
New Zealand has no such restriction, taking the view that it is immaterial to the planet where emissions reductions occur and that unrestricted access to the market in credits arising from UN-approved climate-friendly projects in developing countries should reduce the cost of the scheme.
In Europe, where there are also limits on the use of imported Kyoto credits, carbon prices are consistently higher than in the Kyoto market in certified emissions reductions.
Whether the same will apply in Australia is a moot point, however, as Canberra plans to have a price cap. That is a major difference between it and the New Zealand and European schemes.
If the cap is set low, relative to international prices, there may be no incentive to import Kyoto units.
