ETS rollout should slow down - review

JOHN HARTEVELT

A Government-led review of the controversial Emissions Trading Scheme has called for a slow down of its implementation.

The report on a review in to the ETS, released this afternoon by Climate Change Minister Nick Smith, said energy, transport and industrial sectors should be phased in to the full scheme via three steps in 2013, 2014 and 2015.

Those three sectors were all due to come and pay for emissions from 2013. The review recommends that their obligations under the ETS be gradually introduced by 2015.

The changes recommended would ''raise some fiscal costs for the Government,'' which would in turn be carried by taxpayers.

''On the other side of the ledger, the panel recognises that ETS costs for businesses will rise a little faster than many of them had hoped and advocated,'' the review says.

The review panel has left unchanged, however, the controversial plan to introduce agriculture to the scheme from 2015.

Farmers and climate change critics have argued for a longer delay or for agriculture to be left out altogether.

But the review recommended ''no fundamental changes'' to the regime for agriculture, with changes instead suggested to stiffen up the phase-in period.

''This will provide greater clarity about the phase out of allocation, without significantly increasing short-term costs. The panel also recommends the Government explores a wider range of issues relating to allocation settings,'' the report says.

The review panel ''strongly'' believed ETS obligations for agriculture should be at the farmer level, rather than the processor level as currently legislated.

''This will ensure those who are best able to reduce their emissions are motivated to do so,'' the report said.

Further debate over agriculture's introduction to the scheme is likely when another review, being carried out by an Agricultural ETS Advisory Committee, is completed.

Overall, the review found there would be continued ''uncertainty'' about the future of international climate change agreements in the short to medium term.

It was unlikely that a successor to the Kyoto Protocol would be in place by the end of 2012, but New Zealand would continue to face ''strong international drivers'' to take responsibility for its emissions.

''The Panel considers that these drivers, including prospects for a new international agreement, can only increase over time.''

Some businesses felt a much stronger impact from the ETS than others and the review panel also found the scheme was ''particularly significant'' for lower income households, where Maori in particular were over-represented.

Smith said the report was consistent with the Government's climate change policy goal of New Zealand doing its fair share.

The proposals to phase in agriculture were ''well considered,'' he said.

''The Government does not support the introduction of agricultural emissions into the ETS before 2015. ... Agricultural emissions will only be included if practical technologies are available to enable farmers to reduce their emissions and more progress is made by our trading partners on measures to reduce emissions,'' Smith said.

The report and ''the bulk of the submissions'' to it supported most features of the ETS, he said.

Detailed work on the 61 recommendations was already under way.

''There are both upside and downside fiscal implications in different recommendations that will need to be considered. Changes to the scheme would require legislation and the Government will finalise its policy once the detailed work is complete.''

- © Fairfax NZ News