Australia's progress on implementing an emissions trading scheme will be a factor in whether New Zealand's scheme will be fully implemented, says Climate Change Minister Nick Smith.
Dr Smith made the comment while releasing the terms of reference for a review of the emissions trading scheme.
The Government has signalled that agriculture is likely to be delayed from entering the scheme in 2015, but Dr Smith says the inclusion or otherwise of the synthetic gases and waste sectors in 2013 will also be contentious.
Synthetic greenhouse gases are imported for a range of industrial uses, including refrigeration and air-conditioning.
He says removal of a $25-a-tonne cap on carbon and the rule that emitters have to meet only half of their obligations will have to be weighed against the fact Australia does not have a scheme.
The review of the country's scheme will look at its effectiveness and whether sectors such as agriculture should join.
It will consider the international response to cutting emissions after 2012, what competitors are doing in their countries and what conditions should be met before new sectors enter the scheme.
Dr Smith says there will be consultation with Australia to ensure the countries have a close relationship on climate change policy.
The review is being led by former cabinet minister David Caygill and will be completed by June 2011.
