NZ Government announces ETS amendments

The NZ Government has sided with advice from industry and farming lobbies, pushing out both the dates and levels at which New Zealand will face higher carbon costs under the country's emissions trading scheme.

The decisions announced on Monday also mean the scheme will not be reviewed again until 2015, a year later than previously proposed, reflecting submissions complaining of "review fatigue" on the four year-old scheme, Climate Change Minister Tim Groser said.

The temporary system whereby major emitters buy only half the offset units they need to cover half their emissions - known as "one-for-two" - will stay in place until "at least 2015", capped at $25 per tonne of carbon.

The government has also turned down recommendations from the review committee that reported last year to restrict the purchase of international carbon credits by New Zealand emitters.

Depressed global carbon prices have allowed emitters to purchase units for as little as $6 a tonne in recent times compared with the capped price of $25. However, the current weakness in carbon prices was an international political problem stemming from the European Union, and carbon prices were unlikely to be so low for long, said Groser. However, consultations will be undertaken on an auction system to encourage local emitters to buy New Zealand-produced offset units rather than import them.

Also announced is a deal for so-called pre-1990 forest owners, who will still be able to collect a second tranche of compensation at harvest, if they choose not to reforest the land. However, if they plant an offsetting forest elsewhere, such compensation won't be available, following changes to international rules on forestry offsetting at the Durban global climate change summit last December.

For releases relating to the announcement click here and here and reaction, here.

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