The details of a carbon trading scheme aimed at limiting greenhouse gas emissions have been revealed.
Domestic consumers can expect to pay more for power and fuel as a result of the scheme which will require industry sectors to purchase trading units to offset the impact of their greenhouse gas emissions.
Official projections predict the scheme will result in an overall 4% to 5% increase in energy bills. Electricity prices could rise between $100-$300 a year and fuel prices will increase by up to four cents a litre.
The scheme is to be phased in over the next six years.
Forestry becomes liable next year, liquid fossil fuels and transport in 2009, industrial emissions and stationary energy in 2010, while agriculture is not affected until 2013.
Under the scheme, one emission trading unit will be equivalent to one metric tonne of emissions. Unit values have been given a value range of $15 to $25 a tonne.
The government estimates the scheme will halve the New Zealand's liabilities under the first period of the Kyoto Protocol.
Agriculture is responsible for about half of the country's greenhouse gas emissions through the use of fossil fuels and methane production from belching stock but the sector has been given six years grace because it plays a huge role in the national economy and because the science is not yet available for the sector to comply.
Earlier in the week Prime Minister Helen Clark suggested low income people will receive financial assistance to cover the extra costs.
The move to tackle global warming has been rubbished by the Climate Science Coalition - a lobby group which questions much of the information surrounding climate change and global warming.
Coalition spokesman Bryan Leyland says carbon trading is just another way for the government to make money. He says the government should look at all the facts of climate change, instead of jumping on the global-hype bandwagon.
Finance Minister Michael Cullen says a response is necessary because much of our exporting is threatened by possible international responses to climate change. He says it is conceivable New Zealand will see markets closed to our exports if the country is not seen to be taking firm action to be a part of international endeavours combating climate change.
The Agriculture and Forestry Minister said the measures to tackle climate change are an opportunity to protect New Zealand's environment, improve quality of life and give NZ businesses a competitive edge.
Jim Anderton said people wanted to see all sectors of the economy playing their part to address climate change and that is why the government decided to pursue an economy-wide emissions trading scheme.
"When combined with a package of complementary measures, we believe this provides the most flexible, fairest and comprehensive approach to addressing many of the climate change challenges," Anderton says.
He says the government will work in partnership with land-based primary industries to develop new mechanisms and tools to mitigate greenhouse gas emissions in the sector.
The Plan of Action will deliver:
- A five-year adaptation programme that will help the land management sector build the capability to address the risk and opportunities from climate change. As part of this programme a $5.7 million community irrigation fund will be established to help rural communities to adapt to increasing drought risk.
- A range of complementary measures to the Emissions Trading Scheme including the establishment of farm scale greenhouse gas monitoring and reporting, and a $50 million Afforestation Grant Scheme that allows landowners who elect not to enter the Emissions Trading Scheme to realise the climate change mitigation benefits of afforestation.
- A five-year work programme aimed at addressing barriers that hinder the private sector capitalising on climate change opportunities. This includes the development of a greenhouse gas footprint response for the primary sectors and reviewing market opportunities such as the creation of markets for emission-reducing technologies. In addition $10 million will be invested in research, development and commercialisation of biofuel and biochar.
- A strategic framework for research to provide a comprehensive research and technology platform to underpin the plan of action and to co-ordinate the investment of $10 million per annum by 2010 in new research funding into adaptation and mitigation of agriculture and forestry greenhouse gas emissions. This will build on the work of the Pastoral Greenhouse Gas Research Consortium (PGGRC), a joint government and industry funded research consortium which implemented a five-year research strategy in 2003.
- A Technology Transfer work programme to enhance the ability of the sector to quickly roll out and adopt to new technology.
Climate Change Minister David Parker says the latest projection for New Zealand's carbon balance for 2008-2012 reinforces the need for the substantial climate change initiatives.
The Minister released the projected balance for the first commitment period of the Kyoto Protocol - also known as the net position - estimated at a deficit of 45.5 million tonnes of carbon dioxide equivalent (Mt CO2e). The figure is an increase of 4.3 Mt CO2e over last year's estimate of the Kyoto deficit.
"Unless we change our economy and our society so that we use our resources more sustainably, and reduce our greenhouse gas emissions, our impact on the environment continues to climb," Parker says.
"I am confident that we can nearly halve this projected deficit to 25 Mt or less, through the implementation of an emissions trading scheme, and associated initiatives."
The Ministry's net position report is published on its website at www.mfe.govt.nz .
Treasury's latest price estimation for Kyoto compliant emission units calculates a likely cost of carbon of US$11.90, (NZ $15.48 at 30 June exchange rates). The report is available on Treasury's website at www.treasury.govt.nz/kyotoliability/ .
