Prices rise as New Zealand passes emissions trading schemeBy Paul Chapman
Jul. 01, 2010
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Petrol and power prices have risen sharply in New Zealand after the government introduced a controversial emissions trading scheme.
The government has pressed ahead with plans to slash the nation’s carbon output, despite widespread opposition and New Zealand’s larger neighbour Australia shelving its own scheme.
Motorists were hit by a 3c (1.4p) rise in the price of a litre of petrol overnight, while householders face a 5 per cent increase in gas and electricity prices.
It was the first step in a complex scheme, universally referred to as "the ETS", to slash carbon emissions back to 1990 levels.
Some disgruntled consumers marked the launch by wearing T-shirts with the meaning of the letters changed to read "Extra Tax Sucks".
Businesses facing cost increases have warned they will be forced to raise prices of everyday items, such as the bread on supermarket shelves.
Under the scheme, to be fully phased in over several years, companies trade carbon credits known as New Zealand Units (NZUs).
Industries that are net creators of carbon must buy the units from the government or from sellers whose businesses absorb carbon, such as those that plant trees.
The units can be traded internationally with other countries implementing a similar scheme under the Kyoto Protocol.
Nick Smith, the Climate Change Minister, who has championed the scheme, says it is the first to be introduced outside Europe.
That claim has opponents asking why New Zealand is not waiting for bigger countries such as Australia and the United States to move first.
Dr Smith said New Zealand had to act because its greenhouse gas emissions have increased by 25 per cent over the past 20 years.
"It's actually about New Zealand starting the path, starting the change to a less carbon intensive economy.
"The hard truth around climate change is there is no free lunch." he said.
"If you want to make change, if you want to reduce emissions, then there is going to be a cost."
Critics argue that the gesture is largely symbolic because New Zealand, with a population of only four million and very little heavy industry, contributes only 0.2 per cent of total global emissions.