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New Zealand will introduce a carbon emissions trading system by mid-2008 that will have a "negligible" impact on economic growth, the government announced Tuesday.

A "cap and trade" system will cover all emissions and apply to all sectors of the economy - including key farming businesses, said David Parker, New Zealand's minister for climate change issues.

Under the plan, an acceptable level of greenhouse gas emissions will be allocated to each sector. Businesses can either reduce emissions or buy an allocation from a company with a surplus.

"What's the impact on growth ... on the country's wealth? The answer is negligible," Parker said.

Earlier this year Prime Minister Helen Clark pledged big emission cuts by the government and set compulsory targets for biofuel use as initial steps. Clark likened the threat of climate change to a nuclear holocaust during the Cold War, and said New Zealand must lead the way to combat it.

Parker said all New Zealand political parties now agree that action is needed to reverse the serious effects of climate change. The scheme is expected to get the go-ahead by Cabinet by September and come into effect by June 2008.

The government was doing "no work" on alternative systems, including carbon tax plans considered earlier, he said.

New Zealand's farming sector emits 47 percent of the country's greenhouse gases - mostly from cattle and sheep.

Parker said 15 large industrial emitters were responsible for more than 80 percent of the nation's industrial greenhouse gas output.

Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

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