Minister defends ETS

Households can more than offset the cost of the Government's emissions trading scheme (ETS) and still get benefits from tax cuts, but Minister for Climate Change Nick Smith admits the Government now needs to get that message out.

Dr Smith defended the introduction of the scheme from July 1 during the National Party Mainland conference of South Island electorates in Oamaru on Saturday.

The costs of the scheme on households with increases in fuel, electricity and other prices has been estimated at between $165 and $330, depending on who does the calculation.

That, combined with other moves announced in the Budget on Thursday - including an increase in GST to 15% and projected increases in home rentals because of property tax changes - have led some commentators to predict personal tax cuts, particularly on low income families, will be eaten up.

Dr Smith used the lower figure of $165 a year, but said simple energy efficiency implemented by householders could save them considerably more than that.

"We've got a big job ahead over the next two months in communicating to households not just the cost of the ETS, but the opportunities to make energy efficiencies and savings," he said.

For example, correcting tyre pressures on the average car could save up to $130 a year.

The Government was helping offset the ETS cost for households by providing an $1800 home insulation grant and a $100 grant for solar heating hot water systems.

"These could each save an average household $400 a year in energy costs, greatly exceeding the ETS cost of $165 a home," he said.

It was also inevitable that implementing the ETS on July 1 came with its share of contention.

Dr Smith said that, while the science, economics and international politics over climate change could be debated, New Zealand doing nothing about greenhouse gas emissions and climate change was "not an option".

The "very moderate ETS" was the sensible way to make progress.

He criticised the Labour and Green Parties claim National's ETS was too soft, too slow and two generous to business.

Act New Zealand also came under fire for its "intriguing take" on ETS.

Going ahead with National's ETS on July 1 made sense for New Zealand to avoid an international backlash over its "100% Pure" branding and clean, green image, Dr Smith said.

"We must be aware of the power of well-heeled consumers who are our most profitable customers," he said.

The world was set on a path to constraining emissions.

At some point New Zealand had to adapt to this, he said.

"The sooner New Zealand starts that process, the easier the transition will be. And the most efficient way to make that transition is through an ETS," Dr Smith said.