New Zealand runs the risk of losing its green technologies to Australia if the Emissions Trading Scheme is not toughened up, the Green Party says.
Climate Change Minister Nick Smith has sent the Government's Emissions Trading Review back to be reconsidered following Australia's announcement of a carbon tax.
Dr Smith says he wants changes made in Australia taken into account and hopes to make an announcement about the future shape of the ETS in the next month or so.
The review will include recommendations on whether the scheme should continue with a capped carbon price, currently set at $NZ12.50 per tonne.
Green Party co-leader Russel Norman says Australia is heading towards a price of about $NZ29 per tonne.
Dr Norman says New Zealand must have a decent price on carbon or it risks clean technologies being drawn to Australia and New Zealand left with polluting technologies.
New Zealand's Emissions Trading Scheme came into effect in 2008. The statutory review was completed in June this year and presented to Dr Smith.
Australia's announcement of a carbon tax came just a few weeks later and will become an Emissions Trading Scheme in 2015.
Dr Smith says the Government has always been clear that New Zealand's efforts on climate change need to be carefully calibrated with trading partners.
The minister issued the first annual report of the ETS on Monday, which he says shows it is working as intended and New Zealand is now on target to meet its Kyoto protocol obligations.