Business New Zealand is warning that a beefed-up emissions trading scheme (ETS) would undermine New Zealand's competitiveness, with few international competitors introducing similar schemes.

Executive director Catherine Beard told the finance and expenditure select committee in Parliament last night that limiting the ability of groups to buy carbon reduction units overseas would increase costs over rivals.

"Any increased stringency in the scheme would increase costs and undermine our international competitiveness at a time when exporters are struggling with a high and volatile dollar and a sluggish global economy, for doubtful environmental benefits," Ms Beard said.

"We have no objection to New Zealand doing its fair share in tackling the global emission reduction challenge, but we are concerned that New Zealand does not move ahead of other countries in stringency and cost, which will merely put our otherwise internationally competitive exporters at a disadvantage."

Ms Beard said there was "much global political rhetoric" about the need for a carbon price, but there was little sign of action.

Environmental groups are pushing for a limit to be placed on the sourcing of carbon reduction units from overseas, claiming a plunge in the price of carbon is undermining incentives to reduce pollution.

Earlier Jan Wright, the parliamentary commissioner for the environment, said the latest changes would render the ETS "almost toothless", undermining the Government's target of halving greenhouse gas emissions by 2050.

She warned the ETS could cost taxpayers $670 million more than estimated.

Green Party co-leader Russel Norman said the scheme could put the Government's plan to return to surplus by 2015 in doubt.

“The National Government's putting one of its flagship economic policies - the return to surplus - at risk by proposing to subsidise the cost of major carbon polluters indefinitely."

- © Fairfax NZ News