KEY POINTS:
The Government has confirmed it will not introduce petrol and other liquid fuels into its emissions trading scheme (ETS) until 2011.
The fuels were slated for introduction in January. It has been estimated the move would have pushed up the price of petrol by between 6c and 8c
a litre.
Prime Minister Helen Clark today said new projections that halved New Zealand's projected liability under the Kyoto climate treaty from about $1billion to $481 million gave the Government room to cushion consumers from some of the effects of the scheme.
Steeply rising oil prices were also already doing the job the ETS was intended to do in relation to petrol - with nil growth in demand forecast over the next year.
"Petrol consumption is down, that is fewer greenhouse gas emissions. So we need to take all those things into account," Helen Clark said.
"These changes will lessen the burden on businesses and households which have been facing steeply rising fuel costs," Miss Clark said.
United Future leader Peter Dunne said the Government's decision to delay the introduction of transport into the ETS was a welcome but essentially kneejerk reaction.
"Delaying the introduction of transport into the regime will spare motorists additional petrol costs in the interim but it really does nothing to address the overall likely cost impact on New Zealand households of climate change policies," Mr Dunne said.
The Government has also moved to assure voters that it will act to reduce the pain of energy price rises caused by regional petrol levies to fund infrastructure projects.
It will veto a quick 5c jump in the price of petrol next year in Auckland to help pay for transport projects, saying regional petrol taxes will be phased in.
Legislation is before Parliament that would allow councils to levy up to 10c a litre, but Prime Minister Helen Clark said such large increases would not be allowed immediately.
"There was a consultation in Auckland on going straight to a 5c levy. That's not something the Government is prepared to agree to. We have made that plain to Auckland."
As a result there would initially be a "much reduced amount" asked for in the first year, 2009.
Finance Minister Michael Cullen yesterday said the regional petrol tax in Auckland was necessary because it would help pay for electrification of the rail system.
He said the Government remained keen to pass the bill, but any petrol tax would have to be phased in over a period of years so that the initial impact was very small on motorists and the household budget.
Green Party co-leader Jeanette Fitzsimons today reiterated that the party would not support an ETS if it was watered down to the point it offered "no significant environmental benefit".
"We are not in this game just so some can make money speculating on carbon prices. Emissions reductions need to be real and soon, or it is not worth doing it."
She said the Government was coming under pressure from business interests and the National Party to delay the transport sector's entry into the scheme and give larger free allocations and longer phase-in times to other sectors.
However delaying transport's entry into the scheme could hurt people more in the long run, if as a result they failed to change their behaviour and continued buying large vehicles.
"It means another two years of worse traffic congestion and air pollution in cities. And it means a larger tax bill for everyone if transport users are not paying their way and credits have to be bought by the taxpayer."
- NZPA