New Zealand Creates Cap-And-Trade System

New Zealand pased a climate change bill yesterday that will set up the
first nationwide emissions trading scheme outside of Europe, according
to a Reuters report.

The cap-and-trade scheme will begin trading carbon credits in 2009,
ahead of Australia’s recently-created system, which will begin in
2010. 

The New Zealand system will cover all segments of the nation’s
economy, beginning with forestry from 2008, transport by 2009,
stationary power plants by 2010 and agricultural waste by 2013.

According to Reuters, about 60% of the nation’s power currently
comes from hydro-electricity, and emissiosn from
agricultural–particularly methane from livestock–are responsible for
half of the country’s greenhouse gas emission.

The carbon trading scheme was created to help New Zealand reach
its emissions goals under the Kyoto Protocol, and to put it on course
for a goal of carbon-neutrality in the energy sector by 2040.

The bill passed in the New Zealand parliament by a vote of
63-57, a slim margin that took months of negotiating among the
minority-led government, the Greens and the New Zealand First parties.

Critics of the plan, have echoed the same arguments made in
countries around the world: it is expensive to be a first-adopter; the
country’s industries will lose competitiveness and the incentive for
economic growth; and the price of carbon is too high and volatile.