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Climate talks in Mexico won't reach an agreement but significant progress is being made on core issues, Climate Change Minister Nick Smith says.

New issues around fresh water and fossil fuel subsidies, the latter dialogue led by International Climate Change Negotiations Minister Tim Groser, are also now part of the mix at the United Nations talks in Cancun.

The goal of the talks is a new 190-nation deal to replace the 1997 Kyoto Protocol, which obliges almost 40 developed nations to cut greenhouse gas emissions by at least 5.2 per cent below 1990 levels by 2008-2012.

Last year's talks in Copenhagen made little progress. The major dispute is that developed countries want emerging economies to also commit to emissions cuts, while developing countries, led by China, insist the developed world must first deliver results.

"There will not be a final agreement but there will be significant progress around many of the core issues," Dr Smith said this morning.

He was hopeful that a binding treaty could follow on from the talks. New Zealand will sign up to emission reduction commitments but only if other developed countries make similar pledges and if forestry rules are acceptable.

"The talks are in a very constructive mode and recovering from the train wreck of Copenhagen. We are making good progress on some of the issues that are important to New Zealand particularly around the issue of forestry.

"Those rules are just so important for New Zealand and recognising the carbon that is stored in wood products makes a very significant difference and provides some real opportunities for New Zealand."

The Government wants to be able to lock up emissions where wood is harvested but used in products such as for buildings or furniture - rather than have it count as being consumed and its emissions released on felling. It is seeking rules to allow forests planted pre-1990 to be harvested and re-planted in other parts of the country.

New Zealand also supports a Brazil proposal for a "reference level" on forestry for trees planted before 1990. The issue, Dr Smith said, was in New Zealand trees were planted sporadically over the years In some years many trees are ready to be harvested but whole decades go by when there is little felling. That impacted massively on how New Zealand's emissions added up.

"The age profile of those pre-1990 trees that are already in the ground has periods where New Zealand's emissions are up 30 per cent on existing rules and others where it is down 30 per cent on existing emissions simply because of the age spread of those pre-1990 trees."

The Brazil proposal would acknowledge that pattern and plot them into the future.

"We're going to call that the reference level and your emissions will be recorded (in the new agreement) by the degree that they vary from that reference level.

"You can then judge New Zealand on genuine emissions reduction and not these large variations that flow from the different age class of our pre-1990 forests."

Green Party co-leader Russel Norman yesterday said withholding commitments to specific emissions reduction target without changes to forestry rules was a "shockingly irresponsible act".

"The Government seems to be saying it will only commit to emissions reductions if forestry accounting rules make it possible to cheat."

Dr Norman said New Zealand would be able to increase emissions by getting weak forestry rules.

Dr Smith said it was Dr Norman who was being "reckless and irresponsible".

"There is no way in which New Zealand can make a commitment to reduce emissions by 10 or 20 per cent or whatever number you choose when rules over how you deal with those forests can completely swamp by as much as 30 per cent where those rules are finally agreed."

- NZPA