ETS to proceed on 1 July

New Zealand needs to make a modest step forward on climate change with an ETS on 1 July to provide incentives to invest in forestry, renewable energy and more efficient technology, Climate Change Issues Minister Nick Smith says. 

"This is a long-term issue requiring a steady and consistent approach. Our strategy has been to start the transition early but at a softer rate," Dr Smith said.

"There would be real instability and uncertainty in deferring the emission trading scheme's introduction at this late stage. I have been contacted by a number of businesses who are making substantial investments or have entered into significant contracts that would be severely disadvantaged by change.

"Claims that New Zealand is the first in the world to have an ETS is incorrect. Three quarters of countries facing Kyoto commitments, 29 out of 38, already have an ETS.

"New Zealand's scheme only provides for a half obligation. We've added a fixed price option of $25 a tonne and provided generous allocations for trade-exposed industries. National's changes have more than halved the costs to businesses and households.

"It is also not correct that the ETS is a tax. This completely ignores the carbon credits flowing to forest owners. In it's first year forest owners are budgeted to receive $1100 million in credits as compared to the $350 million in costs to businesses and households for emissions.

"The Government is cognisant of international developments and ensuring New Zealand businesses remain competitive. We have scheduled a review in 2011 and will not be proceeding with full obligations and additional sectors unless progress is made by New Zealand's trading partners."