New Zealand households can expect to pay more for their power, gas and petrol bills when a carbon tax is introduced in 2007.
The government has announced a carbon tax of $15 a tonne as part of its obligations under the Kyoto Protocol on climate change which it signed in 2002.
The tax is aimed at reducing the carbon dioxide levels released into the environment.
The tax will raise around $360 million and the government says that revenue will be recycled back into the economy to encourage energy efficiency.
The carbon tax will add around one cent to the cost of a unit of electricity, about four cents to a litre of petrol, 46 cents to a nine kilogram bottle of LPG and 68 cents to a 20 kilo bag of coal.
The government says the impact on the typical Kiwi household will total about $4 a week for electricity, petrol, and other fuels.
The government has also released a consultation paper seeking feedback on how the carbon tax will apply to specific industries that are directly affected, such as fossil fuel producers and importers.
Two weeks ago the government announced a streamlining of the process to obtain Negotiated Greenhouse Agreements (NGAs).
Firms with NGAs can gain exemptions from the carbon tax in return for moving to world's best practice in emissions management.
They are available to firms whose international competitiveness would otherwise be at risk.
And a pilot grants package was announced recently through which firms in energy intensive sectors can apply for funding to introduce and demonstrate energy efficient technologies relevant to each sector.
Convenor of the Ministerial Group on Climate Change, Pete Hodgson, says climate change is a direct threat to the New Zealand environment, economy, and way of life and the government takes the threat seriously.
"If we are going to tackle climate change, we need to start taking environmental costs into account in the economic choices we make," Hodgson says.
"The carbon tax introduces a price differential between clean and polluting energy sources that reflects their environmental costs, so individuals and businesses can make informed choices."
The carbon tax will not lead to an increase in government revenue, he says, and net proceeds from it will be used for tax changes elsewhere, which will be announced as part of the business tax package in the budget.
"As tax tends to dissuade consumption it makes sense to shift it onto those things we want less of such as greenhouse gases.
"If the revenue raised is used to reduce tax on those things we want more of, such as investment in new technology to make our economy more productive, we can start to make a difference to both," Hodgson says."
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