The government’s greenhouse gas emissions reduction target of between 10% and 20% below 1990 levels by 2020, has received a mixed response from business and environmentalists.

The target, announced yesterday, will be part of New Zealand's negotiating position at an international climate change conference later this year and the final target would depend on how those talks went.

Prime Minister John Key said the targets were credible and the cuts of 40% called for by Greenpeace would cause too much economic damage.

Climate Change Minister Nick Smith said the target balanced economic opportunities with environmental responsibilities.

"It is an ambitious but achievable goal," he said in a statement.

Dr Smith said the target was going to be "a big ask" for New Zealand because gross emissions were already 24% above 1990 levels.

"On top of this, half our emissions come from agriculture, which is unique amongst developed countries, and we already have one of the highest proportions of renewable electricity," he said.

Wellington Regional Chamber of Commerce head Charles Finny said the 10-20% target was a bold step.

“It is pleasing that the government has resisted pressure from certain groups to impose a totally unrealistic target for New Zealand but the 10-20% target by 2020 is still an ambitious one which will impose significant costs on businesses and households,” Mr Finny said.

“Even though the target will impose substantial costs upon the economy, the Chamber supports action to reduce emissions of greenhouse gases. New Zealand must play its part in resolving this global problem."

It was important that New Zealand did its bit to reduce emissions, but was essential not to jeopardise the economy by moving ahead of our major trading partners, Mr Finny said.

However, Greenpeace says it will not give up on its campaign for a more ambitious greenhouse gas emissions target after the Government announced it would be seeking a reduction target of between 10% and 20% below 1990 levels by 2020.

Greenpeace senior climate campaigner Simon Boxer said the target was too low and it was wrong that it was conditional on other countries doing more.

"We have a long long way to go before New Zealand is a constructive player at the United Nation's climate negotiations in Copenhagen in December," Mr Boxer said.

"Ten to 20% does not even put us at the lower rung of what the science says is required. They have fired a dart and the dart hasn't even hit the dartboard."

The Green Party also said the Government must be forced to raise its targets through a public campaign in the run up to Copenhagen.

Mr Key said a 10% to 20% reduction was close to Australia and other countries and well above the United States.

The target would be met by reducing domestic emissions, storing carbon in forests through more tree planting and purchasing emission reductions from other countries.

Dr Smith said Cabinet had also decided that an emissions trading scheme covering all sectors would be implemented and would be aiming to finalise details of this before the Copenhagen meeting.

It was difficult to estimate how much it would raise costs for households as this depended on the price of carbon and how people changed their behaviour.

One study has estimated that a 15% reduction would result in a drop in disposable income from $49,000 a year to $47,650 in 2020.

Petrol prices could rise by between 3.7 cents a litre and 12.3 cents percent a litre dependent on the price of carbon.

Dr Smith said the target balanced economic opportunities with environmental responsibilities.

National was still committed to a 50% reduction by 2050.