New Zealand passes climate change law

Wellington - The New Zealand Parliament on Thursday passed a law designed to combat global warming that was expected to raise the cost of just about everything and nobody knows by how much. The law establishing a trading scheme that puts a price on emissions of greenhouse gases is bitterly opposed by most of New Zealand's business sectors, especially farmers, whose methane-belching animals are responsible for nearly half the country's emissions.

Along with New Zealand's small but significant steel and aluminium producers, the farmers said the cost of the law would put them at a disadvantage against their international competitors, whose governments are not in so much of a hurry to fight climate change.

But Prime Minister Helen Clark - who sees the emissions-trading scheme as the defining act of her 9-year-old Labour Party-led administration, which opinion polls indicated is doomed to defeat at the election she must call by mid-November - was defiant to the last.

Whatever the price, the alternative of doing nothing would cost New Zealand more in the long run, she argued.

Despite being a small country of just more than 4 million people, New Zealand is one of the world's biggest exporters of dairy products, meat and kiwi fruit and a prime tourist destination.

Clark said if it did not take a lead in dealing with climate change, it risked being boycotted as a "dirty producer" by world consumers and tourists who are increasingly environmentally conscious.

She said New Zealand was already being targeted by environmentalists in Britain who were urging consumers not to buy New Zealand products or fly to the country for vacations because of the carbon footprint they would leave.

The legislation was passed in a 63-57 vote in the House of Representatives with the main opposition conservative National Party vowing to change it radically inside nine months if it wins the election.

The National Party supported the legislation when it was first introduced early this year but backed off as opposition from farmers and businesses mounted with warnings of soaring energy costs that could force big industry to relocate overseas and massive job losses.

Environmentalists said the law did not go far enough and was unfair to poor New Zealanders. The Green Party only supported it after negotiating a 1-billion-New Zealand-dollar (about 670-million-US-dollar) compensation package, including subsidies to insulate homes and help pay increased power costs.

The emissions-trading scheme sets limits on the amount of greenhouse gases all sectors of the economy can emit, with those breaching their limits having to buy credits from those below their maximum levels.

It is being introduced gradually with the giant forestry sector accounting for its emissions this year, energy joining up in 2010, transport a year later and the critical agricultural industry being given breathing space until 2013.

Climate Change Minister David Parker told Parliament the scheme was fair and effective and would save the country hundreds of millions of dollars by penalizing polluters and rewarding those who cut emissions.