ETS scheme cheaper in long run - Nats

The Government says amendments to the emissions trading scheme (ETS) will make it more expensive in the medium term, but cheaper to run from 2013.

The Government will bring its controversial ETS bill to Parliament on Thursday and today was questioned over its cost.

Labour leader Phil Goff said in Parliament that more generous subsidies to polluting industries would cost billions of dollars in the coming years.

Finance Minister Bill English disputed this, saying Treasury advice was that over the next three years the costs would increase by $415 million.

This was mainly from the Government not passing on larger increases to petrol and electricity prices.

"However, Treasury's mid-range estimate is that the revised scheme will actually save $493m during the period 2013 to 2018, so over the next nine years it will cost taxpayers less then the existing scheme," Mr English said.

During an exchange on the issue, Climate Change Minister Nick Smith tabled an Environment Ministry analysis which said the changes to petrol and electricity would cost $588m before 2013, but this was offset as polluting subsidies to industry would be $177m less.

From 2013 to 2017, the ministry estimated the cost of the amended scheme would be between $67m and $919m less than the current one.

Mr English said it was difficult to estimate costs after 2013 as the international rules had not been finalised.

An ETS was passed by the previous government just before the election but National put it on hold and revised it.

In its new form, the ETS gives industries an easier ride and farmers more time before they come under its provisions.

The Maori Party has only guaranteed its support on the bill's first reading, so it can be sent to a select committee for public submissions.

Labour accused the Government of bad faith when the agreement was announced, although it was still prepared to talk to National about the ETS.

Mr Goff said Labour would oppose the bill on its first reading unless a compromise was reached.

Mr English said in Parliament that it would not be too difficult to get agreement about the costs of the ETS and National remained willing to have further discussions on areas of concern.

He would not put a cost on the deal with the Maori Party saying it still had to be finalised.

Dr Smith said National's scheme was cheaper because it began phasing out industry support earlier.

An ETS puts limits on the amount of greenhouse gases different sectors of the economy can emit.

Those that exceed their limit have to buy carbon credits from those under their cap, or from those who plant trees.

The Government will put Parliament into urgency on Thursday to make sure there is time for the bill to pass its first reading.

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