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Treasury: Ban on thermal generation will cost

Treasury suggest Ban on thermal generation will unnecessarily increase costs

“The proposed ban on new thermal power stations is fast becoming an albatross around this Governments neck,” said Ralph Matthes, Executive Director of the Major Electricity Users’ Group (MEUG).

He was commenting on the release today by The New Zealand Business Roundtable of a Treasury Report dated 15 February 2008 discovered under the Official Information Act. The Treasury report primarily discusses macro-economic modelling analysis of climate change policies.

The report also comments on interventions over and above that needed with a market mechanism like an Emissions Trading Scheme (ETS). Treasury’s comments on interventions such as the proposed ban on new thermal power stations and the bio-fuels obligation were:

“Layering duplicative regulatory measures on top of the economy wide price measure increases costs” and

“The majority of sector-specific measures are rendered redundant by the adoption of the ETS.”

“The dry and calm conditions of this summer and start of autumn and resulting high spot prices and at least one security of supply scare have been ample evidence that relying on renewables only for new generation capacity is a high risk strategy. Now we know for sure officials also viewed the ban as a redundant and a wasteful intervention. The time for re-thinking the ban is over; it simply must be withdrawn now” concluded Mr Matthes.


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