The Maori Party has withdrawn its support for a bill that changes the emissions trading scheme (ETS), cutting the Government's majority to a single vote.
The Climate Change Response (Emissions Trading and Other Matters) Amendment Bill weakens legislation introduced in 2009 to make industry sectors pay for pollution under an ETS.
The Government says it has had to take account of the international recession and ease the burden on households that would have had to meet the costs.
Agriculture is being given an indefinite reprieve and transitional arrangements for other sectors have been pushed out.
The Maori Party voted for the bill on its first reading in August, and it passed by 63 votes to 57.
It says that since then a flood of cheap carbon credits from overseas has distorted the local market and the ETS isn't strong enough to shift the behaviour of the big polluters.
United Future leader Peter Dunne has confirmed he will continue to support the bill, which gives the Government 61 votes against 60 from all the opposition parties.
The bill is due for its second reading next month.
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