Parties warm to greenhouse gas policy

Some signs of a consensus across the political divide emerged yesterday in the vexed area of what to do about climate change.

The Government and the Opposition gave strong signals that they favour a mechanism to curb emissions of greenhouse gases.

A cap-and-trade system, also known as emissions trading or carbon trading, would put a market price on something that is now free - the right to emit greenhouse gases - with a view to encouraging people to switch to cleaner technologies. It works like fishing quotas. It limits the amount a user such as a power station burning fossil fuel is allowed to emit.

If it wants to emit more, it must buy permits to cover excess, either from another emitter or an eligible forest owner whose trees earn credits for the carbon they take out of the atmosphere. If demand exceeds supply the price of permits will rise and flow through to consumers.

Climate Change Minister David Parker told a symposium organised by Victoria University's Institute of Policy Studies that price-based measures such as emissions trading, applied broadly across the economy, were likely to form part of the policy mix for the period after 2012.

"It may be we do something before that in, for example, the electricity generation field," he told the Herald, "but we have previously made promises to the agriculture sector that they will not face price-based measures before then [2012]."

National's climate change spokesman Nick Smith told the same conference that a tradeable emissions permit system offered New Zealand the best way forward. "By putting a price on emissions such a system would elicit the least-cost combination of emission reductions and forest planting to absorb emissions."

National favoured a phased introduction starting with the electricity sector, followed by industry, then the transport sector and lastly agriculture.

Acknowledging the need for the system to apply broadly across the economy, they felt that the stringency of the obligation on any sector had to reflect the feasibility of cutting emissions and take account of the risk that too strict a target could drive some energy-intensive industries overseas.

Agriculture accounts for half the country's emissions, but while there are things you can change about a car, with a cow that is not possible.

"Agriculture can expect more lenient treatment than for example the electricity sector," Mr Parker said.

Dr Smith said, "There is a clear case for agriculture to be last in the queue and I don't think you would even do it until there were some reasonable cost technologies to enable farmers to reduce their emissions."

Mr Parker said: "We will all pay the cost of greenhouse gas emissions one way or another, so the question is how to allocate it fairly."