The Green Party is threatening to withdraw its support from the emissions trading scheme, angry at Government back-pedalling on climate change policy.
Prime Minister Helen Clark confirmed yesterday that Labour's flagship emissions trading scheme would not apply to fuel till 2011, to head off concerns about rising petrol, food and housing prices.
The scheme was tipped to add six to eight cents a litre to petrol.
The start of a five-year phase-out period for big emitters receiving free carbon credits to protect them from competitors in countries without emissions trading would also be pushed back, from 2013 to 2018.
The move brought an angry response from Greens co-leader Russel Norman, and could harm Government hopes of passing the required legislation. He said the Greens were considering whether to vote for the watered-down law.
If the Greens pulled out, Labour could have trouble passing the legislation as NZ First and UnitedFuture harbour concerns.
A key factor in Miss Clark's decision was news that petrol and diesel use would be almost a billion litres below predictions for the next four years as rocketing prices drive people from their cars.
Improvements in motor technology and new laws governing fuel efficiency were credited with a predicted zero growth in fuel use to 2012. Those predictions would mean pump sales would be 725 million to 900 million litres lower than expected.
But Dr Norman said that did not mean fuel should temporarily escape the scheme. "Zero growth in fuel use is being used by the Government to justify a backdown, to say petrol and diesel use will fall in the next four years. It won't. It just won't grow as expected."
With the Greens threatening to pull out, Miss Clark said Labour would look to National for support.
"We are genuinely looking for a cross-party consensus around the emissions trading scheme. The National Party, for example, supported the introduction [of the climate change bill]. We would like them to support the final bill."
But National leader John Key accused Labour of failing to deliver on climate change. "We still have growing greenhouse gas emissions, record deforestation, and a Kyoto liability which has turned from a credit to a deficit."
Labour's U-turn came as new figures showed the Government's liability under the Kyoto protocol - which requires it to cut emissions to 1990 levels by 2012 or buy carbon credits - had halved from Treasury figures of more than $1 billion to $481.6 million.
- With NZPA
- The Dominion Post