• ETS implementation to be delayed.
• Forestry and business left in limbo.
• Nats still committed to Kyoto.

It’s pretty much back to the drawing board for the Emissions Trading Scheme under the coalition agreement between National and ACT. A high-level Select Committee is to be set up to review the ETS legislation and recommend amendments or alternatives. The coalition document specifically mentions carbon taxes as being back on the agenda, which ACT Leader Rodney Hide appears to favour, although it’s hard to see a carbon tax being a genuinely viable option.

As part of the deal, the Govt will delay the implementation of the ETS until after the Select Committee review is completed. The decision has exasperated the forestry sector, which has been gearing up to take advantage of carbon credits as the first sector to come into the ETS, and is now left in limbo. Kyoto Forestry Association spokesman Roger Dickie says the forestry sector was beginning to experience a revival, with new plantations of up to 25,000 trees on the drawing board, which are now looking likely to be scrapped.

Business leaders are generally welcoming the ETS review, despite the fact it means more uncertainty. Business NZ CEO Phil O’Reilly says even if companies have already spent money setting up systems that may no longer be needed, they’re happy at the prospect of a more business-friendly regime in the longer term. The coalition agreement says National remains committed to introducing measures to meet NZ’s Kyoto obligations. But the ETS will be amended to “balance our environmental responsibilities with our economic needs.” ACT says it is not opposed to NZ adopting “responsible” climate change policies. What it opposes is an ETS, which it claims was never adequately justified. ACT Leader Rodney Hide says if a rigorous Select Committee inquiry establishes a credible case NZers will benefit from a particular course of action, ACT will support legislation giving effect to such action.

The terms of reference for the Select Committee have yet to be finalised. ACT has released its preferred terms, which include going back to basics and hearing “competing views on the scientific aspects of climate change from internationally respected sources.” National has yet to produce its terms of reference but John Key says the final ones will need to be thrashed out between the two parties.

Key stresses he believes human-induced climate change is real and it’s still possible National will pass an amended ETS into law before next October. It’s ironic ACT is now resurrecting the idea of a carbon tax, which Labour originally favoured during its second term, but failed to get the numbers to pass the legislation. At the time, ACT had voiced opposition to a carbon tax and favoured emissions trading.

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