Keys says ETS in good shape

The Huntly Power Station, one of New Zealand's biggest single source emitters of CO2. Photo / Amos Chapple

Prime Minister John Key has defended New Zealand's emissions trading scheme (ETS) amid criticism it is soft compared with a new Australian scheme.

Australian Prime Minister Julia Gillard yesterday announced a carbon tax which would force the 500 worst Australian polluters to pay A$23 ($29.50) for every tonne of carbon dioxide they emitted.

The Green Party said the Australians were leaving New Zealand for dust because of the lower $12.50 a tonne carbon price here.

Key today said a review of the ETS was underway and the Government would await its result.

"But I think we're actually in good shape -- we have an emissions trading scheme which currently costs the average household I think about $160 or $180 a year," he said.

"The Australian scheme is proposing to cost Australian households $560 a year, so as you can see New Zealand's doing quite well."

New Zealand had got in early and its scheme was working, he said.

The New Zealand ETS started on July 1, 2010, whereas the Australian scheme would start on July 1, 2012.

"All of the new applications for energy generation have come in the renewable space, and we're working very aggressively to find scientific solutions," Key said.

"New Zealand's profile is different to Australia's, and Australia's emissions are largely coming from coal fired power plants and industrial production. New Zealand's are coming from agricultural emissions."

Green Party co-leader Russel Norman yesterday said the New Zealand economy could suffer if it did not improve its ETS and increase the price of carbon.

"If we continue with a weak carbon price, we'll fall behind Australia economically as their businesses become more carbon efficient under the new scheme," he said.

"The support now being offered to clean technology in Australia, both in the carbon price and the $10 billion for clean energy announced today, means we risk losing some of our best and brightest clean technology companies to Australia. Instead, we'd be left with subsidised polluting industries.

"We're already spending about $1b a year subsidising carbon pollution, and as the price of carbon goes up, that bill will go up too. We can't afford to carry polluters while driving away our clean tech entrepreneurs."

A higher carbon price would stimulate the green economy and New Zealand would be left behind, Norman said.

Climate Change Minister Nick Smith yesterday told NZPA the Australian proposal was "very similar" to New Zealand's, and Australia's moves would influence our ETS.

"We have had close contact with the Australian officials around the design of their scheme and their intention to move to a full emissions trading scheme in 2015.

"We intend to continue to work closely with the longer term objective of the two schemes of being able to be integrated."

However, Smith did not think the schemes could be completely aligned by 2015.

"My hope would be that we can move more closely together with time, but this is one step at a time... I would hope that by 2015 our schemes were moving closer and this step by Australia today is a significant step along that line."

NZPA