ETS changes that will soften impact

Climate Change Minister Tim Groser said today's decisions would be likely to draw criticism from an "uber-green" lobby. Photo / NZH

The Government has confirmed previously proposed changes to the Emissions Trading Scheme intended to soften its impact on farmers, industrial and commercial emitters and including additional compensation for some foresters.

As proposed in a consultation paper in April, which was in turn produced in response to a review of the scheme last year, farmers will not have to buy carbon credits to offset livestock and pasture emissions until at least 2015.

Also, the price cap on carbon will not be increased from its current level of $25 a tonne, and the two for one carbon credit scheme for emitters will remain in place beyond the end of the year.

The Government will also introduce "off-setting" for pre-1990 forest land owners which allows them to avoid a deforestation liability by replacing a forest harvested by another which will sequester the same amount of carbon but not necessarily on the same land.

In a further break for pre-1990 forest owners, Climate Change Issues Minister Tim Groser said the full second tranche of compensation - where off-setting is not taken - would be allocated to pre-1990 foresters to compensate them for the fact that they had incurred a contingent deforestation liability but received no credits for their trees as they grow.

Many of those forests affected are Maori-owned and some have been set aside for Treaty settlements.

"Today's decisions are a reflection of the balanced and responsible approach this Government has taken to reducing greenhouse gas emissions" Mr Groser said in a statement.

"They offer Kiwi exporters, employers and households certainty in a challenging and changing world economy."

The decisions announced today followed consideration of the recommendations of the ETS Review Panel, what those affected by the ETS were saying, and a review of what New Zealand's trading partners are doing as well as feedback through community consultation.

"The National-led Government remains committed to doing its part to reduce greenhouse gas emissions, but it is worth noting that we are the only country outside Europe with a comprehensive ETS," Mr Groser said.

"In these times of uncertainty, the Government has opted not to pile further costs on to households and the productive sector."

The Goverment would release more information about the changes later this week and legislation giving effect to them will be introduced later this year.