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Climate change policies to ensure NZ’s future

Tuesday 30 April 2002

The Government’s preferred policy package on climate change has both environmental integrity and careful regard for the nation’s economic interests, says the Convenor of the Ministerial Group on Climate Change, Pete Hodgson.

The package, released today, sets out for consultation the Government’s preferred policies for meeting New Zealand’s targets under the Kyoto Protocol to the United Nations Framework Convention on Climate Change. The Protocol, which the Government expects to ratify in August, requires New Zealand and other developed nations to reduce the greenhouse gas emissions that contribute to climate change.

The package builds on “foundation” policies including the Growth and Innovation Framework, the National Energy Efficiency and Conservation Strategy, the New Zealand Transport Strategy (under development), the New Zealand Waste Strategy, climate change research and partnership with local government in planning for emissions reduction.

Key policies completing the package are:

- A price on carbon dioxide emissions, applied at first through an emissions charge on carbon fuels. The price will approximate the international price of carbon, but be capped at $NZ25 a tonne of carbon dioxide equivalent, and will apply in the Kyoto Protocol’s first commitment period 2008-2012 and not before 2007. Revenue will not be used to improve the Crown’s fiscal position but will be recycled, for example through the tax system. The Government retains the option of introducing emissions trading as an alternative to an emissions charge if the international carbon market is functional and the price is reliably below the $NZ25 cap.

- Provision of government incentives for projects that will deliver defined reductions in greenhouse gas emissions, in any sector of the economy. Incentives can include funds or the allocation of emissions units and the government will seek bids from firms or groups. To qualify, projects must be additional to business-as-usual. The provision of incentives will accelerate the uptake of emission reduction initiatives, including new technologies and practices, that would otherwise be uneconomic.

- Negotiated Greenhouse Agreements for sectors and industries that would face difficulty in adjusting to a full price on emissions in the first commitment period. These sectors and industries are identified as having their competitiveness at risk. Negotiated Greenhouse Agreements would comprise a contractual commitment by the industry or sector to achieve international best practice in managing emissions, in return for exemption from an emissions charge.

- Exemption for the agricultural sector from any price measure (emissions charge or trading regime) in the first commitment period, provided the sector is willing to invest, in partnership with the Government, in research to identify options for reducing agricultural emissions. The Government retains the option of imposing a research levy if the research effort falls below what is required.

- Government retention of the sink credits and associated liabilities allocated to New Zealand under the Protocol in recognition of the carbon sink value of post-1990 forest plantings. These credits will be retained and managed by the Government at least for the first commitment period, with a portion of the revenue used to provide incentives for the establishment and enhancement of sinks. As with emissions charges, additional revenue from the sale of sink credits will be recycled back into the economy. The Government, rather than forest owners, will assume the liability created by the Protocol for deforestation, although the liability will be capped nationally at 5% of the area of forest expected to be harvested over the first commitment period.

“This package lines up with the Government’s principles of ensuring that policy achieves permanent reductions in emissions over the long term, that it is responsive to the changing international context, consistent with a growing and sustainable economy and not a disadvantage to the vulnerable in our society,” Mr Hodgson said. “It is also guided by the key messages received from the first round of public consultation.”

“New Zealand is taking climate change seriously. We have much to lose if global warming continues unchecked, and much to gain by contributing to the international effort to tackle it through the Kyoto Protocol. The policies announced today are designed to take us the first steps towards a more sustainable energy future.”

The preferred policy package will be subject to further public consultation, with written submissions due by June 14. Public meetings and hui will be held through May.

Copies of the discussion document describing the Government’s preferred policy package and the rationale behind it are available from the climate change website at www.climatechange.govt.nz Hard copies are available from the Climate Change project (04) 918 3129 or info@climatechange.govt.nz


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