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Emissions trading scheme follow-through in doubt if competitors don't progress

Thursday 8th April 2010

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The government will proceed with introducing the emissions trading scheme in June to keep faith with the forestry sector but full implementation is not assured, says Environment Minister Nick Smith.

The loss of confidence in the forestry sector from "messing around" with the ETS was too high a price to pay to delay its partial implementation this year, Smith told Radio New Zealand.

However, if major trading partners including Australia and the US failed to progress their schemes, the government would consider deferring its full implementation from January 2013.

"I think we would be unlikely to proceed with the step up, that is, the removal of the 50% obligation up to a full obligation on the 1st of January 2013 if progress hadn't been made amongst key trading partners," Smith said.

He was responding to calls from the Business New Zealand lobby group to delay application of the ETS to transport fuels and "stationary industry" - essentially large energy consumers such as power stations and metal producers - because the international landscape on emissions trading has changed so much since the failure of the global climate change summit in Copenhagen in December.

At June 1, stationary industry and transport fuels will be required to declare 50% of their greenhouse gas emissions and pay up to a capped $25 per tonne of carbon dioxide emitted, ahead of a review next year and an intended move to obligations for all emissions from 2013.

Prime Minister John Key also confirmed New Zealand's scheme was "unlikely to be amended".

The extended period of uncertainty over the shape of the ETS was blamed by forestry industry participants first for a frenzy of mid-2000's felling of plantation forestry, and for a failure to commit to replanting because investors could not be sure whether the carbon sequestered by plantation forests would be valuable under whatever climate change response policy finally emerged.

Recent figures show the industry has begun to replant, based largely on the passage of the ETS legislation last year.

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