Government Defers Decision On A Carbon Charge

The Government has decided to defer until early 1998 a decision on whether to introduce a low level carbon charge. The Minister for the Environment, Simon Upton, stated that it would make no sense for New Zealand to act unilaterally when we are advocating at the global level more flexible and sophisticated international mechanisms which would allow greenhouse gas emissions to be reduced in a much less economically disruptive way."

Under the current policy, introduced in 1994, a decision on whether to introduce a low level carbon charge was to be taken in June 1997, based on an assessment of whether New Zealand was on track to achieve its goal of reducing the growth in gross CO2 emissions by 20% and stabilising net CO2 emissions at 1990 levels by 2000.

Current projections indicate that New Zealand is not on track to achieve the stabilisation of net CO2 emissions at 1990 levels by the year 2000 (net CO2 emissions are derived by offsetting CO2 absorption by planted forests "sinks" against gross CO2 emissions). New Zealands CO2 absorption by planted forests has been considerably lower than expected.

New Zealands gross CO2 emissions have continued to increase apace with continuing economic growth, but a reduction in the growth of gross CO2 emissions, relative to the "Business as Usual" projection, is likely to be achieved. New Zealand's position in terms of all greenhouse gases is more favourable, because of a sharp decline in methane emissions. Overall, emissions of all greenhouse gases are expected to be 4% above 1990 levels by 2000.

"The effect of todays announcement is to defer a decision on a carbon tax until early 1998, when the outcome of the current international negotiations will be known and the implications for New Zealand better understood" said the Minister.

The Minister also confirmed that, under the existing policy, work had commenced on the design of a low level carbon charge. A technical document on this subject will be made available in the near future to provide further information on the options to reduce CO2 emissions. This will complement the June, 1996, report by the Working Group on CO2 Policy and provide further information for debate. Work continues on alternative instruments, such as emissions trading, and other measures consistent with a least cost approach.

Submissions on the Working Group's report and the Working Group's response to submissions, will also be published shortly. Together, the three documents provide a wealth of information to inform the climate change debate, at a time when New Zealand must seriously consider the form of any new commitments in the negotiations. "Informed debated", said the Minister, "will provide valuable feedback to the Government as it faces a number of key international and domestic decisions on climate change over the next 18 months".