Key Points:

New Zealand's new direction on climate-change policy will be as cautious as that revealed by Australia this week, Prime Minister John Key suggested yesterday.

Mr Key was commenting in Parliament following the Australian Government's commitment on Monday to cut carbon emissions by as little as 5 per cent below 2000 levels by 2020, and at a time when National's priority in Parliament this week is to undo the flagship policy of the previous Labour Government.

Energy Minister Gerry Brownlee capped off a series of moves to weaken or overturn Labour's climate change measures by issuing instructions to the Energy Efficiency and Conservation Authority to stop any ban on incandescent light bulbs.

National is also repealing a compulsory obligation on oil companies to sell biofuels.

And it is overturning the ban on new thermally generated power plants.

It has set up a select committee to review Labour's emissions-trading scheme after Mr Key campaigned on needing greater compatibility with Australia's scheme.

Asked in Parliament yesterday by one of his own MPs about "the need to be cautious" in implementing an emissions-trading scheme, Mr Key cited Australia's scheme - called a carbon pollution reduction scheme.

"We need to make sure that New Zealand's measures to reduce greenhouse gas emissions are aligned as appropriate with those measures taken in Australia."

He said the Government would be "balancing our environmental responsibilities with our economic opportunities."

Environment Minister Nick Smith also indicated that New Zealand would be readjusting its ambition more in line with Australia, telling Newstalk ZB that countries had been promising huge targets, that Australia was honest and should not be condemned for it.

Australia's white paper on Monday agreed to cut carbon emission by 15 per cent on 2000 levels if a comprehensive global agreement could be reached in Copenhagen next year which involved big emitters such as India and China. Without such a post-Kyoto agreement - which covers 2008 to 2012 - Australia said it would commit to a 5 per cent reduction.

National has a long-term policy of reducing carbon emissions by 50 per cent of 1990 levels by 2050.

But it has no medium-term target of the sort that will be negotiated at Copenhagen.

And Climate Change Negotiations Minister Tim Groser has been arguing the case at a climate change meeting in Poland that New Zealand needs more generous consideration than under Kyoto when calculating methane and land-use measures for carbon credits or liabilities under any new agreement.

New Zealand agreed to limit its emissions in the 2008-12 Kyoto period to 1990 levels but is already 25 per cent ahead of that.

In Parliament yesterday Mr Key confirmed, under questioning from Greens co-leader Jeanette Fitzsimons, that the National Government would not actually suspend the present emissions-trading scheme as stated in its confidence and supply agreement with Act.