New Zealand should be a "fast follower" and not a leader in the race to reduce greenhouse gases, says a report issued today.
The New Zealand Institute report recommends the country delay meeting its emission reduction targets under the Kyoto Protocol to 2020, instead of 2012.
The influential think-tank says the country should follow other comparable nations in taking action to cut emissions - intended to slow global warming by reducing the amount of carbon dioxide in the air.
And it criticises the Government's proposed emissions trading scheme, saying it "lacks strategic clarity".
"Should New Zealand aim to be a world leader with respect to reducing emissions, to move with the pack, or to do as little possible?" said institute chief executive David Skilling.
New Zealand ratified the Kyoto Protocol five years ago.
It requires the country to meet emissions targets between next year and 2012, or buy carbon credits on the international market to cover the difference.
The Government believes New Zealand will exceed its target by about 12 per cent.
The Treasury estimates that will cost $700 million, but that figure will rise if emissions are higher than expected, the cost of carbon credits is higher than predicted, or if the exchange rate falls.
Dr Skilling recommends deferring until 2020 New Zealand's commitment to meeting the Kyoto target of limiting greenhouse gas emissions to 1990 levels.
He acknowledged that reversing an international commitment would damage New Zealand's reputation as a good international citizen, but said other countries were likely to be in the same boat.
Canada had already announced it would not be bound by its Kyoto commitments because of the costs associated with failing to reach its target.
New Zealand's economy is one of the most emissions-intensive, mainly because of the strong role agriculture plays in it.
The greenhouse gas emissions involved in $1 worth of economic output are higher than those of any other OECD country except Australia.
Dr Skilling suggests a target for beyond 2020 of reducing emissions by 10 per cent every 10 years.
He is wary of concluding that a big shift in consumer preferences has started.
"Fonterra, Zespri and Air New Zealand tell me that there is certainly a lot of talk about it but they are not yet experiencing a lack of sales because of climate change concerns."
But the possibility of a rapid change in consumer attitudes in response to some future climatic calamities meant that starting a transition to a low emissions economy would be a prudent insurance policy.
National Party leader John Key says the New Zealand Institute is "on the right track" with the report.
"I think David is on the right track in my view, which really is saying lets get a bit of balance into this equation," Mr Key said on TVNZ's Breakfast programme.
"I think David's making the same point I've been making around climate change, which is I think you need to balance your economic opportunities with your environmental responsibilities.
"If you get those things out of whack what you're likely to do is export a whole lot of industries who say 'look New Zealand is no longer competitive, we'll just pack ourselves up and leave to another part of the world'."
But Mr Key said climate change was a serious issue and New Zealand had to play its part globally.
He said he thought new technology would play a crucial part in reducing New Zealand's emissions.
However, Green Party Co-leader Jeanette Fitzsimons said the institute sounded like a "carbon addict in denial".
"We have been warned, not least by scientists from the Nobel prize winning Inter-Governmental Panel on Climate Change, that the world has around 10 years to turn around our rapidly growing emissions. The Institute recommends that we can delay action as long as we like," she said.
"The Institute has revealed itself to be an outdated commentator who cannot, by its own lack of relevancy, make a useful contribution to the climate debate."
A spokeswoman for Climate Change Minister David Parker said not honouring the Kyoto commitments would do enormous damage to New Zealand's credibility and would harm trade relations with countries that had made commitments, especially in Europe.
Greenpeace climate campaigner Jim Footner said: "It sounds like a do-nothing approach in the face of probably the greatest environmental threat we will ever face."
- with NZPA