The Government's embrace of the previous Administration's carbon pricing regime has always been less than fulsome.

Already, it has acted to water down Labour's law. Now, it has seized the opportunity offered by the Caygill review of the emissions trading scheme to proceed further down the same path. Indeed, in its extraordinary generosity to farmers, it plans to surpass that document's recommendations. In the process, a scheme noted for its modest impositions will become truly timorous.

The Government has accepted the Caygill panel's view that, while the ETS is the most effective policy for reducing emissions at least cost, the full entry of the energy, transport and industrial sectors, currently scheduled for 2013, should be postponed. They would now meet their full emissions obligations through a phasing-in process in 2013, 2014 and 2015 "to ease the price impacts on households and businesses", said the Climate Change Minister, Nick Smith.

The review panel also said, however, that farming should be treated the same as other export industries. The agricultural gases methane and nitrous oxide should, therefore, be brought into the regime in 2015, as the current law requires. But Dr Smith said agricultural emissions would be included only if "practical technologies are available to enable farmers to reduce their emissions and more progress is made by our trading partners to reduce their emissions".


This means that, for the foreseeable future, farmers will escape responsibility for their emissions, even though these amount to half the country's total. In effect, a major part of the bill to meet the country's obligations under the Kyoto Protocol will pass from them to the taxpayer. This might be justifiable if there was merit in Dr Smith's reasoning. There is not.

The whole point of the ETS is that emitters take financial responsibility. If others can reduce emissions more cheaply than them, the market allows the emitters to pay them to do that. Secondly, as the Caygill review makes clear, farmers have enough opportunities to reduce emissions to warrant their inclusion in the scheme from 2015. Improved management practices and animal, crop and pasture genetics have already reduced emissions substantially, and the planting of trees on marginal land offers further potential.

The incentive to pursue these will become stronger once farmers are in the ETS. At the moment, however, they seem eager to delay this as long as possible, presumably in the hope that some stroke of science will diminish their culpability. Yet buoyant prices for dairy products, in particular, mean they will never be better placed to play their part.

In discussing the overall application of the brakes, Dr Smith suggested this country's approach was being calibrated to match that of Australia. "While New Zealand has started earlier and more softly, the two schemes will be closely aligned in 2015," he said. There is an element of wishful thinking about that. The conflict between Australia's major parties makes it debatable whether the Gillard Government's carbon pricing policy will survive, let alone become an emissions trading scheme in four years. Equally, it is a moot point whether Australia will choose to tie itself to the small New Zealand regime or to the European Union.

Most fundamentally of all, scientific concerns over the catastrophic impact of climate change remain, even if public perception has been dulled by recession and the failure of the Copenhagen summit.

If this gives the Government some leeway, a progressive stand remains in New Zealand's best interests. For that to happen, no sector should be excused its share of the burden.