No emissions trading could cost $1.5 billion - minister

It could cost taxpayers near to $1.5 billion if a climate change emissions trading scheme (ETS) is not put into place, Climate Change Minister David Parker said.

The legislation setting up the ETS has received a storm of criticism in recent week as its makes progress through Parliament.

The finance select committee hearing submissions on the bill has heard a succession of businesses complaining about the damage an ETS would do to them and the economy.

Mr Parker told Parliament there would be other costs if the ETS was not implemented and greenhouse gas emissions were not reduced.

The liability is an estimate of how much New Zealand will have to spend to buy carbon credits if climate change emissions are not reduced to levels agreed to under the Kyoto Protocol, or offset by tree plantings.

The Government recently released its latest estimate of the liability, which it said had fallen from 45.5 million tonnes or around $1 billion at the current carbon cost of $22 a unit, down to 21.7 millions tonnes of carbon or around $481 million.

The figures took into account the effect of the emission trading scheme, Mr Parker said.

Mr Parker said if the ETS was not put in place there would be an increase in greenhouse gas emissions and this would cost taxpayers.

The final report on the Kyoto liability tabled in Parliament today calculated what would happen to emissions if the ETS did not go ahead.

Mr Parker said it was estimated that the liability would then increase by between 15 and 50 million tonnes or between $356 million or close to $1 billion.

All of this would have to be covered by the taxpayer, Mr Parker said.

National MP Nick Smith accused the Government of manipulating figures to justify policy changes.

Mr Parker said this was not true.

The Government revealed the latest estimate and fall in liability as it announced delays to bringing petrol and diesel into the ETS from next January until 2011.

It has been estimated the move would have pushed up the price of petrol by between 6c and 8c a litre.

The Government also announced that polluting businesses would get breaks from paying for longer.

It had been originally planned to release the latest Kyoto liability estimate at a later date, but it was brought forward because ministers did not like the growing perception that it had blown out to $1 billion.

- NZPA