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Last Updated:[08-04-2010 08:25:56 EDT] Zoom in Zoom out Back to Tradenews

Carbon Reduction by NZ Relies on Progress Achieved by Others

tradenews New Zealand Climate Change Minister Nick Smith told Radio New Zealand that the implementation of Emission Trade Scheme (ETS) would be based on the progress actualized by other developed countries, especially Australia, the US, Japan and Europe. He said if there was no progress, the government would be unlikely to proceed with the step-up in obligations from January 2013.

Nevertheless, both Smith and NZ Prime Minister John Key, at different occasions reiterated that the ETS would take effect on the energy and transport sectors in July despite calls from business groups, farmers and Act, an agro-friendly and anti-ETS organization. The business groups fear NZ firms bearing the cost of the domestic ETS will be competitively disadvantaged compared with rivals from countries with no effective carbon pricing mechanism, a view that is shared by the Federated Farmers and Act.

According to latest reports, apart from the Federated Farmers and Act and nine other business groups including Major Electricity Users' Group, the Employers and Manufacturers Association (EMA) has also joined the side in exerting pressure on the government to delay international commitment on carbon reduction. The EMA chief executive Alasdair Thompson said "Our financial situation is far too fragile to absorb the extra $255mn the government calculates the ETS will cost all of us."

Though Smith claims an average NZ family could expect a meagre 165 NZ dollars (US$116) annual increase in expenses from July, it is estimated, particularly since the ETS would be covering transport and energy, the annual family expenditure would be manifold than his assumption. The ETS would be introduced in come July on the energy, transport and industrial sectors with a 50 percent obligation.

The NZ ETS legislation allows for a formal review of the scheme in 2011 along with an increase in obligations from Jan 1, 2013. The ETS is effective on forestry from 2008; and agriculture, which makes up the half of NZ's emissions, will be included in the scheme in 2015. Some of the major reasons for growing opposition in NZ against the ETS are cited as the absence of consensus among many nations on paucity of time on implementation, trade disadvantages, cost escalation on essentials and stringent NZ ETS norms on all sectors.

By Jose Roy

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