Government favours emissions trading system

The Government has indicated it favours an emissions trading system in the energy sector as part of a suite of measures designed to boost clean energy and reduce pollution.

Since it dumped a proposed broad-based carbon tax in 2004, it has been struggling to come up with concrete measures to reduce New Zealand's growing emissions.

Energy Minister David Parker today released the Government's draft energy strategy.

Two accompanying discussion documents show the idea of a more narrow carbon tax, focused on the energy sector is still alive.

But Mr Parker signalled the Government favoured an emissions trading system over a simple tax.

Under most variations this involves capping the amount of allowable emissions in particular sectors. Companies must then trade for the permitted units.

Widening a trading system to other sectors would be considered after 2012.

Mr Parker said ensuring future electricity was renewable was a key plank of the strategy which provides principles and key policy options out to 2050.

However ensuring security of supply was equally crucial.

The strategy includes goals such as improving car efficiency and increasing support for public transport.

It also tagged funding to start wave or tidal electricity production and said the electricity market would face increased competition because of reduced restrictions on generation and retailing by lines companies.

Other policy options in the discussion documents included: