New Zealand scraps Kyoto carbon-tax plan
Posted on: Wednesday, 21 December 2005, 01:12 CST
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)
Source: REUTERS
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