KEY POINTS:
A private sector grouping - led by Business New Zealand - is to develop a framework for a post-2012 regime for trading rights to emit greenhouse gases which are blamed for global warming.
The group includes three major electricity generators - Genesis, Contact and Mighty River Power - coal producer Solid Energy and major Energy users New Zealand Steel, Rio Tinto Aluminium (formerly Comalco), Fonterra and Fletcher Building.
The work will be done by the New Zealand Institute of Economic Research and Frazer Lindstrom, a consultancy headed by Stuart Frazer, who negotiated the New Zealand Refining Company's greenhouse agreement with the Government - the first of its kind.
They will review emissions trading systems in operation overseas such as the European emissions trading scheme, or systems being designed, such as the ones by the Australian state governments.
Their brief is to develop a framework for emissions trading in New Zealand after 2012 which can be integrated with international schemes.
That would include evaluating options for allocating tradeable emission rights among various sectors.
Both major political parties have indicated they favour emissions trading as a means of "internalising" the environmental costs of greenhouse gas emissions - the principle of "polluter pays" - and ensuring the right to emit flows to those who value it most.
Business NZ chief executive Phil O'Reilly said it was important the regime that emerged was as apolitical as possible and not subject to constant change whenever there was a change of Government or minister.
"By being proactive in this way, the generators and other large emitters would be saying to the politicians, 'Here is something we could live with and here is how you could make it work'.
"By then [2012 when the Kyoto Protocol ends] it is likely we will see the emergence of solid, wide-reaching markets internationally."
