1 Sep 2009

National under pressure to strengthen ETS proposal

10:06 pm on 1 September 2009

The National-led Government is under pressure to strengthen changes to its Emissions Trading Scheme if it wants to get multi-party support.

A select committee report released on Monday has found such a scheme should be the main way New Zealand tackles climate change.

The committee, which reviewed the Emissions Trading Scheme passed into law last year, was short on detail about what an amended scheme should look like, when some sectors should be covered by the scheme and how much they should pay.

Labour, the Greens, ACT and the Maori Party all issued opposing minority reports.

The National Party has only weeks to do a deal with other parties if it is to get an amended scheme into law before international climate change negotiations in Copenhagen in December.

Prime Minister John Key says progress has been made and he still hopes National can reach a deal with Labour.

"If you can get to a point where its settled between the two major parties then that can give a sense of security and predictability for the business community and for consumers," he says.

He acknowledged there would have to be some "give and take" on both sides.

Labour says it is willing to talk, as long as discussions focus on a scheme that retains the integrity of the current plan.

The party's leader Phil Goff on Tuesday urged Mr Key to meet with him to break an impasse. Mr Goff says he is still waiting for a reply to a letter he wrote to Mr Key on 11 August offering to meet.

Mr Key says he is willing to do this, but only when a deal is close to being struck.

Green MP Jeanette Fitzsimons says the Government will have to work hard to get legislation passed before the climate change conference, given the level of political disagreement.

Climate Change Minister Nick Smith says the scheme would be the most substantive economic reform since the introduction of GST and he would rather have no Emissions Trading Scheme than put the wrong structure in place.

Business, forestry groups critical of review

The parliamentary select committee review has been dismissed as a wasted opportunity by farming, forestry and business groups.

The committee's suggestion of a price cap on carbon credits, at least during the early years of the scheme, has attracted criticism.

Kyoto Forestry Association spokesperson Roger Dickie says foresters believe a cap would mean lower prices for carbon credits earned from forests, which would discourage new plantings.

However, he says, the report also makes it clear National does not have the political support for a price cap.

Federated Farmers president Don Nicolson says the review has failed to quantify the cost of the scheme to the productive sector.

Greenhouse Policy Coalition executive director Catherine Beard wants the scheme revised to reduce its cost and keep local industry competitive. The coalition supports a price cap on carbon credits.

Sustainability Council executive director Simon Terry says the current scheme will reduce emissions by only 1% in the next five years, and the review will do nothing to improve its effectiveness.

He believes says a price cap would mean taxpayers would subsidise major polluters.

"What we see is a report that is a restatement of what is already known, or already underway, except for identifying new mechanisms for giving even larger subsidies to major emitters," he says.