New Zealand: Emissions trading scheme up for review under Act deal

The incoming National government will completely review the emissions trading scheme (ETS) - possibly including the science that says humans are to blame for climate change - as part of its support deal with Act.

But Prime Minister-elect John Key is still confident an amended ETS will be passed into law before the end of next year.

National campaigned on watering down the existing legislation within nine months to reduce what it said were barriers to economic growth.

But Act campaigned on scrapping the ETS and has questioned whether human-induced climate change actually exists.

Under Act's support agreement a "special select committee" will be set up to review the current ETS and any proposed amendments "in light of the current economic circumstances".

A draft terms of reference for the review attached to the agreement, includes hearing "competing views on the scientific aspects of climate change" and looking at the merits of a "mitigation or adaptation approach".

It also includes looking at the merits of an ETS, as opposed to a carbon tax, and the timing of any future climate change interventions.

The deal requires the National government to pass immediate legislation delaying the implementation of the ETS until the review is complete.

It also requires the lifting of a ban imposed this year on non-essential new fossil fuel-based power generation.