Emissions deal for iwi on offer

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A sweetheart deal for iwi is on the table as the Government is forced to fall back on the Maori Party's votes to push through climate change legislation.

The deal would potentially deliver hundreds of millions of dollars in lucrative carbon credits to iwi, who would be able to enter contracts to plant forests on conservation and other Crown-owned land.

It also includes a beefed up home insulation package for the low paid, predominantly Maori, and a Treaty of Waitangi clause in the Government's emissions trading legislation.

The Government is under pressure to do a deal on emissions trading before a big climate change conference in Copenhagen next month. It needs the Maori Party after ACT and Labour refused support.

Labour is accusing National of a "$50 billion blunder" after an admission by the Treasury that the cost of the Government's planned changes to the Emissions Trading Scheme could be as much as double its earlier estimate.

Parliament's finance and expenditure committee was forced to report the Government's climate change bill back unchanged after failing to agree on any recommendations. Labour claims the committee found out about the debt blowout only on the final day of its deliberations.

Climate Change Minister Nick Smith said the legislation had to be passed before Christmas or households would face an average 10 per cent rise in power bills.

He confirmed meetings yesterday with the Maori Party and the powerful Iwi Leadership Group, representing big iwi groups who are threatening legal action over New Zealand's climate change targets. The biggest among them is South Island tribe Ngai Tahu, which says forestry land received in a treaty deal has plummeted in value because of the Government's climate change commitments.

Dr Smith confirmed a deal offering Crown land for afforestation by iwi was on the table. He also confirmed that an "afforestation fund", covering the cost of planting, was also on the table but said no decisions had been made and talks were only at an exploratory stage.

But he rejected claims of a preferential deal for iwi, saying similar deals had already been done with private operators to plant forests on conservation and other Crown-owned land. Such deals were "good for New Zealand".

National wants to amend the ETS by pushing more of the cost of emissions from the polluter on to the taxpayer.

It plans to delay the entry of the agriculture sector into the ETS by two years and offer a two-for-one deal on carbon emissions for a three-year transition period for major industrial and liquid-fuel sectors.

It also introduces a longer phase-out period for government subsidies, until 2050, and abolishes the cap on carbon emissions in favour of an industry average.

The Treasury initially estimated the slower phase-out of free carbon credits would increase net Crown debt by 6 to 8 per cent of GDP – but told the select committee that it had recalculated that at between 13 and 17 per cent, or $110b.

Dr Smith said the alteration made by Treasury was a "changed assumption" about the cost of carbon rather than a miscalculation by officials. He denied the $110b estimate represented a cost to the Crown, saying it was foregone revenue rather than debt.

CARBON DATING

What is the ETS? The Emissions Trading Scheme is a market for trading carbon units, which all sectors of the economy must join. Polluters pay to buy carbon units, while foresters and others who reduce their carbon emissions get credits.

Why do we need it? Labour and National both agree an ETS is the best way of getting polluters to reduce their carbon emissions, which is required under international treaties such as the Kyoto protocol.

What does it mean for me? The price of petrol, electricity, gas and other products made with fossil fuels is likely to rise once the ETS is fully operational. Taxpayers will also underwrite the initial cost of giving big emitters time to adjust to the scheme.

When does it start? Labour passed the scheme in September 2008. It begins next year for stationary energy and fossil fuels, such as power stations, with agriculture to follow in 2013.

What does National want to do? National wants to amend the scheme to give big emitters more time to adjust to the changes. It wants a longer phase-out of government subsidies, and for farmers to stay out of the ETS until 2015.