At a media conference yesterday afternoon, Minister for Energy and for Climate Change David Parker said there would be no broad carbon tax until after 2012, but a “narrower option” – a tax on gas and coal-fired power plants, and big industry – could be introduced in the next 18 months or so.

If such a tax was introduced, renewables such as wind and hydro would become more economic, as they do not produce greenhouse gases.

A long-term objective might be to have nearly all electricity generation from renewables or “carbon-neutral” sources where emissions were captured and stored, Parker said.

A Cabinet paper on climate change policy released yesterday says the most effective future policy mix is likely to include mechanisms that introduce a cost (to be paid) for greenhouse gas emissions.

It says the sooner such signals are sent to possible affected parties, the better, to minimise the risk of “stranded assets” with long investment lives (such as gas-fired power stations).

Last year, the government scrapped its proposed carbon tax of $NZ25 per tonne of emissions from next April, after a Ministry for the Environment report concluded the proposed charge would be unfair, inefficient and unlikely to substantially cut greenhouse gas emissions.

That broad-based carbon tax had been expected to collect revenue of up to $NZ360 million ($A295 million) annually.