NZ to bring in carbon trading, but still lags Kyoto

By Gyles Beckford

WELLINGTON (Reuters) - New Zealand said on Thursday it would bring in carbon trading over the next six years as part of efforts to reduce greenhouse gas emissions, though admitted even these measures will not meet its Kyoto Protocol target.

A mandatory cap-and-trade emissions scheme and incentives for tree planting to reduce emissions, blamed for global warming, will progressively be introduced from next year, if the government can get the measures through a parliament that rejected a carbon tax two years ago.

"An emissions trading scheme will create an incentive for businesses and households to make decisions that are good for the environment, and will discourage actions that cause greenhouse gas emissions," Finance Minister Michael Cullen and Climate Change Minister David Parker said in a joint statement.

The cap-and-trade scheme will restrict or cap groups or companies in the amount of a greenhouse gas they can emit. Those using less than their limit can sell excess credits.

The first stage of the scheme will start next year with a free allocation of carbon credits to foresters, with the aim of increasing commercial forest area by 250,000 hectares (618,000 acres) by 2020.

Liquid fossil fuels would be brought into the trading scheme in 2009, electricity generators and industry the year after, and the country's economically key agricultural sector in 2013.

New Zealand is a signatory to the Kyoto Protocol, which requires it to reduce greenhouse gas emissions to 1990 levels by 2012. About half the country's emissions come from livestock.

Parker said latest estimates showed that by 2012 the country would produce 45.5 million tones more carbon than allowed under Kyoto, which at June 30 would cost the country NZ$704 million ($518 million), based on multiplying the excess emissions by end-June carbon market prices.