Dunedin landfill prices could increase by up to a fifth because of a change made in last week's Budget.
Climate Change Minister Paula Bennett said last week the Government would be phasing out its two for one Emissions Trading Scheme (ETS) subsidy for major emitters over three years.
The subsidy meant some entities, including landfills, only had to pay for one emissions unit for every two tonnes of pollution they emitted.
"[Removing the subsidy] is a significant step in helping New Zealand meet its ambitious target of reducing emissions to 30% below 2005 levels by 2030.
"More importantly, it will support our efforts to grow a lower-emissions economy,'' Ms Bennett said.
The change had already been anticipated by the Dunedin City Council and a report tabled at last month's community and environment committee meeting estimated it could cost the council up to $981,880 per year.
If the costs were passed on to customers, landfill fees would increase by up to 20% once the subsidy was completely phased out in three years, the report estimated.
Council water and waste group manager Dr Laura McElhone said last week it would be up to councillors whether to pass the increased costs on to landfill users.
However, passing on the increase was the default option, as the landfill was operated on a user-pays basis.
The change would have implications for the forthcoming 2016-17 financial year, and fee increases next year were possible.
"The fees and charges for the new financial year have been set at the current market rate, but have not taken into account that increase [in costs] that we now know is coming on January 1.''
There would need to be a discussion with councillors about whether this increase would be passed on to landfill users next year.
The change comes after volatility in the ETS market, likely caused by businesses anticipating the removal of the subsidy, resulted in councillors voting last month to approve a 10% increase in all user charges for carbon-emitting waste.
At the time some councillors queried whether the increased charges would result in an increase in illegal dumping.
Carbon-producing waste makes up a large percentage of what ends up in the landfill and includes greenwaste, general solid waste and anything containing wood.
The change announced last week meant the 50% emissions unit cost would increase to 67% next year, then 83% in 2018, and all sectors in the ETS would pay the full market price from 2019.
The current price ceiling, which caps units at $25, will remain.
