KEY POINTS:
Farmers will avoid having to pay for their greenhouse gas emissions for several years yet under the Government's flagship climate change policies, set to be unveiled today.
It is understood that dairy farmers, who contribute a large part of New Zealand's emissions through cow belching, will not be part of the new emissions trading scheme at all during the first Kyoto Protocol commitment period, from 2008 until 2012.
Also likely to be included in a widely anticipated series of announcements in the next two weeks are interest free loans for homeowners to improve the insulation of older homes.
There is also likely to be some relief for upset foresters who have been arguing over whether they are entitled to carbon credits.
The emissions trading scheme is the method the Government has chosen to put a price on carbon, something it must do in order to honour New Zealand's obligations under the Kyoto Protocol.
The scheme will push up electricity and petrol prices for consumers, and Prime Minister Helen Clark has indicated people on low and fixed incomes will get some assistance.
New Zealand's unique emissions profile, in which around half of the country's greenhouse gas emissions come from the agriculture sector, means the trading system has been awkward to design.
Various sectors will be phased into the trading scheme over time.
The energy sector, encompassing transport as well as electricity generation, is likely to be drawn into the scheme early, meaning it will have to bear the liability for its growing emissions before other sectors.
Fossil-fuel based electricity generators and major emitting manufacturers will face bills in the not too distant future, while generators slanted toward renewable energy like wind and hydro will do well out of trading..
One of the key questions around the scheme has been at what level of business the obligation for emissions will kick in. For instance, in the dairy sector it could be that farmers individually account for their emissions or that their higher level producer, Fonterra, does. It is understood the Government is set to opt for the higher level arrangement, making it possible that there will be very few traders involved in the system initially.
Agriculture will be phased into the emissions trading system last because of the difficulty farmers face in reducing methane emissions from cows.
Other keenly awaited aspects of the trading system will be the decision about the level the cap on emissions is set at, and how permits for emissions will be allocated.
