Climate change no longer has its own vote in the government’s Budget, but has been merged with Vote Environment. Budget documents show that the total appropriation for climate change policies have been cut from $9 billion this year to $7.8 billion next year.

The Budget sets aside $570 million for the allocation of NZUs to the New Zealand economy and of NZ AAUs to Permanent Forest Sink Initiative participants. It also allocates $15 million over two years for the development of a national carbon accounting system.

Meanwhile the Emissions Trading Scheme has turned from a cash cow into a financial liability says Carbon News.

In December, the government said it expected the scheme to create a fiscal surplus of around $300 million a year, but that estimate was based on a carbon price of $17.61 a tonne – a price not achieved since July last year.

Now the government is saying that the ETS will cost the country money until at least 2016. Budget papers released yesterday show that the scheme will run at a deficit of $200 million this year, $600 million in each of 2013 and 2014, $400 million in 2015 and $200 million in 2016.

The change is due the fact that Treasury is now basing its forecast on a carbon price of 6.50 euros, which, it says, at an exchange rate of 0.61, creates a price of NZ$10.60.

Even that, however, is optimistic, points out Carbon News. Spot NZUs were trading at $6.20 last week. They have been in single figures all year, and haven’t been in the $10 range since December.

Source: Carbon News