20 September 2007 Media Statement

Government announces emissions trading scheme

An emissions trading scheme will reduce greenhouse gas emissions, promote environmentally friendly behaviour and create business opportunities for New Zealanders, according to Finance Minister Michael Cullen and Climate Change Minister David Parker.

The scheme, announced by the Labour-led government today, will be phased in from next year, beginning with the forestry industry, and including all sectors and gases over time.

“Climate change is a real threat from which New Zealand is not immune. We must do our bit to help the world deal with it. As part of our response to climate change, Cabinet has agreed to the key design features for a New Zealand emissions trading scheme,” said Dr Cullen.

“An emissions trading scheme will create an incentive for businesses and households to make decisions that are good for the environment, and will discourage actions that cause greenhouse gas emissions.”

New Zealand’s forestry industry will receive incentives to plant trees equivalent to hundreds of millions of dollars under the scheme.

“Forestry is critical to New Zealand’s response to climate change. We want to see more forests planted, and we want to see harvested forests replaced. The government, therefore, has agreed with the forestry sector that they should receive a free allocation of carbon credits,” Dr Cullen said.

“Consistent with the commitments we have made to farmers, the government is proposing that agriculture will not join the scheme until 2013, and the sector will also receive generous free allocation equivalent to 90 percent of their 2005 emissions.

“We have designed the scheme to assist business as much as possible without defeating the purpose of the scheme, and other industries will also receive transitional assistance.”

New Zealand is one of a number of countries, such as the UK, Australia, the EU and parts of the US, which have or are developing such schemes.

“This is the way the world is heading,” David Parker said. “For those at the forefront of carbon-friendly services and technologies there are considerable opportunities emerging from such an economic transformation. Sectors such as tourism and viticulture have already identified this and are planning and investing based on sustainability. Energy efficiency in businesses will also improve their competitiveness.

“There will be increased costs in, for example, petrol and energy. The government will look at what assistance households need to adjust to these increases. There will also be increased efforts to make all households more energy efficient – through insulation, solar panels, and other measures.

“The development of an emissions trading scheme demonstrates the government listened during consultation on policy options earlier this year,” said Mr Parker.

“Submissions received during this consultation on the five climate change and energy discussion documents made it clear that there is a high level of support for emissions trading.

“The government is now committed to providing opportunities for detailed engagement with interested parties, such as industry, consumer groups, NGOs and Maori, to ensure the final design of the scheme is fair and can be implemented effectively,” said David Parker.

The engagement, which is happening from now until November this year, will focus on the core design elements and will include a series of hui to address priority issues for Maori.

Once emissions trading scheme legislation has been introduced, the public will be able to provide further input as part of the select committee process.

“The government looks forward to working collaboratively with all those involved, as it develops a scheme that will work for New Zealanders in the long term,” said Mr Parker.

For more information see: www.climatechange.govt.nz

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