KEY POINTS:
The Government's climate change policies will be enough to halve the country's projected deficit under the Kyoto Protocol, the Climate Change Minister says.
But there is a wildcard in the mix - the possibility that buoyant dairy prices and a hefty payout to farmers could attract more people into dairying; therefore increasing the country's greenhouse gas emissions.
David Parker said yesterday calculations were under way to work out the potential impact of the dairy price boom on future emissions.
"One of the effects of the increase in dairy price that we've had is a concern that we're going to have increasing conversion into dairy farming," he said. "It could be significant."
Strong dairy prices have resulted in Fonterra lifting its forecast payout to farmers and an extra $2 billion is expected to be pumped into the rural economy.
That has already had the spin-off effect of contributing to the Reserve Bank's decision to raise interest rates earlier this month.
With the payout for next season tipped to go even higher, the attraction of dairying as an earner is growing.
Mr Parker's concern is that more cows will mean more methane and there is also worry about potential environmental consequences, including water quality issues.
The Government is working on its climate change policies and Mr Parker said that after receiving 3000 written submissions from the public on the policy options, recommendations would be going to Cabinet "over the next months".
Announcements on the next step of decision-making will be made later this year.
The Government has already signalled it will go down the path of implementing a cap-and-trade system for emissions and Mr Parker indicated that by the end of this year he would present targets for the country's future level of greenhouse gas emissions.
The most recent estimate of New Zealand's likely net deficit under the first commitment period of the Kyoto Protocol was 41.2 million tonnes of carbon dioxide.
The figure is revised every year and Mr Parker said he expected the next one to be higher.
However, in the years following, the Government's climate change policies would be factored into the equation and Mr Parker said he expected them to bring the figure down considerably.
"I think it'll come back so that figure in tonnes could come back into the 20 million tonne region rather than 41.2 as it currently is," he said.
