Prime Minister-elect John Key today indicated National was willing to consider supporting a carbon tax.
That would be a U-turn for National which led a campaign against the Labour government's plans for such a tax on fuels and electricity. As part of its confidence and supply agreement with United Future the Labour government agreed to review its plans and in face of stiff opposition dropped the carbon tax idea in 2005.
Labour subsequently set up an Emissions Trading Scheme (ETS) under which all sectors of the economy would face limits on how much planet-warming greenhouse gas they emit or pay the cost if they breached these.
The scheme was to be fully phased in by 2025 with farmers having until 2013 - after the first Kyoto Protocol commitment period - before agriculture is included.
In a speech to Federated Farmers in Wellington Mr Key said a select committee, which is to review the ETS, would consider options from reforming the ETS to using a carbon tax.
"National and ACT and Federated Farmers were significantly opposed to a carbon tax, so if we reverse that position we've got to acknowledge that," Mr Key said.
"There's an argument that's put up that says it's (a carbon tax is) more predictable for a period of time until the ETS works and it might be a transitional mechanism or it might be that in the end industry having had a look at it decides it's a better idea."
He later told reporters the idea would be on the table.
"We'll look through it. Its relative merits will be considered against a reformed Emissions Trading Scheme and some sort of hybrid model. We'll see what comes out the other end of it ... If a strong argument can be put up on carbon tax then we will look at that."
This morning incoming Climate Change Issues Minister Nick Smith said a price on carbon was needed to incentivise alternatives.
Talking to reporters about National's decision to reverse a ban on new thermal generation, he said: "My view is having an ongoing price on carbon - that assures not just when a new station is built, but every hour of every day, there is a financial incentive for people to use renewable energy rather than thermals - is a far better answer than the crude arbitrary ban that's in the current law."
Mr Key said the review of the ETS would not be a big delay and he hoped it could be completed by September next year.
He hoped farmers would not use the time to deforest and there would be incentives to plant in future.
Federated Farmers president Don Nicolson said he had no immediate response to whether the organisation would support a carbon tax although he acknowledged its previous opposition.
"It may be the simplest, it may be the cheapest."
Greens co-leader Jeanette Fitzsimons said the party had always supported a carbon tax.
"Carbon tax is much less complicated, a number of people who totally opposed it when it was Green Party policy and then later when it became Labour government policy are now advocating it.
"You have to ask where were they when it was on the table?... Maybe it's coming back on the table."
She said methane emissions would need to be included.
