New Zealand scraps Kyoto carbon-tax plan

WELLINGTON (Reuters) – New Zealand scrapped plans on
Wednesday to introduce a carbon tax from 2007, saying it would
not achieve its aim of cutting greenhouse gases.

The tax of NZ$15 ($10.20) a ton of carbon was due to be
introduced from April 1, 2007 under the country’s commitment to
the Kyoto protocol. It would have increased electricity, fuel,
gas and coal prices, bringing in about NZ$360 million a year.

“Officials now advise that the proposed carbon tax would
not cut emissions enough to justify its introduction,” the
Minister for Climate Change issues, David Parker, said.

The decision followed a review, which the ruling Labour
Party agreed to in order to get support of two smaller parties
for the new minority coalition government after the September
17 election.

Labour also could not guarantee a majority in the 120-seat
parliament to have such a tax approved.

A narrower-based carbon tax targeting the electricity
generators and major power users was possible and a more
broad-based tax might be considered after 2012, Parker said.

Alternative policies aimed at reducing emissions would be
considered early next year.

The scrapped tax would have cost the average household
about NZ$4 a week, although the government had intended to
recycle the revenue back into the economy through tax breaks
and concessions in other areas.

Agreements exempting high-energy-consuming businesses from
the charges in return for improved management of emissions were
likely to be retained in some form, Parker said, assuming a
narrower-based carbon tax goes ahead. Such businesses include
the aluminum smelter at the bottom of the South Island operated
by Rio Tinto subsidiary Comalco.

Under the 1997 Kyoto protocol, which came into force in
February, developed countries must reduce their greenhouse gas
emissions by about five percent from 1990 levels on average
within the first commitment period of 2008-12.

New Zealand produces 70 million to 90 million tonnes of
carbon dioxide a year, making it the fourth-largest per capita
producer after the United States, Australia, and Canada.

About half of its greenhouse gases come from the methane
and carbon-dioxide emissions of more than 50 million sheep and
cattle, whose products earn about a third of New Zealand’s
export earnings.

The United States, the world’s biggest air polluter, has
refused to ratify the protocol, which it sees as flawed because
it does not similarly bind developing countries. Australia has
also refused to ratify the protocol.

Ten days ago in Montreal, environment ministers agreed to a
road map to extend the Kyoto Protocol beyond 2012, as well as
agreeing to launch new global talks to fight climate change.

($1=NZ$1.38)