The National Party is promising major reforms should it become the government, its climate change spokesman Nick Smith saying the Emissions Trading Bill, passed by Parliament last week, is riddled with errors because the policy was rushed.
Parliament last week passed 785 amendments in one day and a supporter of the policy, the Business Council for Sustainable Development, also agreed there would be further changes.
Its chief executive, Peter Neilson, likened it to GST or tax legislation.
"Like GST legislation, it is anomalies and exceptions which have caused the problems. The basic ideas are simple."
Commentators agree that exporters, and agriculture in particular, will be financially hard hit by the ETS, but Mr Neilson said as agriculture made up 50% of New Zealand's emissions, it had to be included.
If farmers were expanding production and increasing emissions it was right they met the environmental cost.
Mr Neilson said for some marginally viable sheep and beef farmers it could be more profitable to switch from farming animals to farming trees.
"Just because they have been meat and wool farmers, if the market place says the returns aren't there, they might be better off growing trees."
The ETS is a market-based scheme which establishes a cap on the amount of greenhouse emissions industry can emit. Those sectors which exceed their limit have to buy New Zealand units - with one unit equivalent to one tonne of carbon dioxide - from those industries which have reduced their emissions.
It was widely acknowledged consumers would end up paying more for energy, transport and food.
Lincoln University farm management lecturer Guy Trafford has calculated, at a carbon price of $25 a tonne, the cost of ETS from 2013 on a 4000-stock unit sheep and beef farm to be $36,000 a year and on a 350-dairy cow farm $41,000.
It appears the ETS is here to stay.
A National-led government would continue with its implementation, but Mr Smith said the Bill needed major work, with one error expected to cost Fonterra $13.5 million a year.
Export-exposed industries have been given an allocation of credits equivalent to 90% of their 2005 emissions, but Mr Smith said in Fonterra's case the allocations did not take account of emissions from co-generated electricity.
Mr Smith said the difference between the two parties was that National accepted New Zealand had to do its fair share towards climate change, whereas the Government had a goal of carbon neutrality "regardless of the cost".
Carbon neutrality was a huge hurdle given New Zealand's emissions growth ranked it 38th out of 42 countries, he said.
"One international observer likened it to New Zealand debating whether it was going to win a gold medal or silver when it had come last in the heats."
National has a goal of halving greenhouse gas emissions by 2050 and, if elected to government, planned to start with electricity on January 1, 2010.
Mr Smith admitted agriculture needed more work to get it included by 2013. National would still try despite questions about the accuracy of measuring methane and making farmers the point of obligation, not processors, as was the case now.
"It will be a tight timetable getting agriculture in 2013. There are plenty of issues to work through and our amendment will not change that timetable."
Mr Smith said National would balance environmental and economic interests, return any financial windfall from selling credits back to consumers, align the ETS with Australia, treat small and medium-sized businesses the same as big businesses and phase out industry support in line with competitors.
Mr Smith said the situation of the Holcim Cement company was an example of problems with the legislation.
The company operates 251 plants around the world. It says the ETS would cost its one moderately sized New Zealand plant more than emissions schemes cost the 23 plants it operates in Europe.
New technology, with its proposed $500 million plant near Oamaru, would reduce emissions by 50% per tonne of concrete compared with its existing Westport plant.
But its carbon credit allocations were based on emissions from the smaller Westport plant.
New Zealand imports concrete but the new plant would reduce that reliance.
Mr Smith said the carbon credit allocation challenged the project's viability and, ironically, could mean an overall increase in emissions as New Zealand's concrete needs were met by imports from countries which were not committed to reducing greenhouse gas emissions.
