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More carbon credits on offer

Tuesday, 18 May 2004 Media Statement

More carbon credits on offer for climate-friendly projects

The government is offering more carbon credits to support projects that will reduce New Zealand's greenhouse gas emissions.

The Convenor of the Ministerial Group on Climate Change, Pete Hodgson, says Budget 2004 will make another six million credits available through a tender process later this year.

"The first offer of four million carbon credits, last year, attracted an excellent response," Mr Hodgson said. "It has resulted in awards of credits to 15 emission-reducing projects, including wind farms, hydro-electricity, bioenergy and landfill gas schemes, and cogeneration plants.

"Last year's call for proposals attracted 46 bids seeking a total of more than 15 million credits. This suggests New Zealand businesses can see the opportunity to bring forward innovative, cleaner energy developments with the help of this programme."

Mr Hodgson announced the second Projects to Reduce Emissions tender round today at the official opening of TrustPower's Tararua Windfarm extension in the Manawatu – a development assisted by carbon credits.

Credits, or emission units, are internationally tradeable and add to the financial value of a project that will reduce greenhouse gas emissions. They are available for projects that are additional to business-as-usual, which means they help bring forward projects that would not otherwise be economic.

The Projects tender is open to investment from any company here or overseas, provided that they reduce emissions in New Zealand. These can be Joint Implementation projects under the provisions of the Kyoto Protocol.

"This programme offers tangible rewards for developments that take us further towards a sustainable energy future, Mr Hodgson said. "It shows how we can take advantage of the opportunities created by the new climate-conscious global energy environment."

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What is the Projects to Reduce Emissions programme?

The Projects to Reduce Emissions programme supports initiatives that will reduce emissions of greenhouse gases. Businesses, organisations and individuals are invited to submit proposals for projects to reduce emissions of greenhouse gases, in return for a share of New Zealand's allocation of emission units under the Kyoto Protocol.

What are Projects?

For an initiative to qualify as a project it must achieve quantifiable reductions in greenhouse gas emissions that would not otherwise occur. It must also be additional to “business as usual”, which means the project owner must prove that without the award of emission units the project would not otherwise proceed.

Who can bid for credits through the Projects programme?

The Projects tender is open to investment from any company here or overseas, provided that they reduce emissions in New Zealand. Eligible proposals could include Joint Implementation projects under the provisions of the Kyoto Protocol, which are joint emission reduction ventures between two developed countries that are parties to the Protocol. Essentially, this involves the transfer of emissions reduction credits from the host country to the other participating nation.

What is an emission unit or “carbon credit”?

Emission units are effectively permits to emit greenhouse gases. One unit equates to one tonne of carbon dioxide, or its equivalent in other greenhouse gases. Each country with an emissions target under the Kyoto Protocol must hold sufficient emissions units to match its emissions during the first commitment period of the Protocol (2008-12). Units are tradeable internationally and a global market for carbon credits is developing, even though the Kyoto Protocol has yet to come into force. Project owners are able to sell their units on this market.

How much is an emission unit worth?

The international market sets the price for emission units. Last December, Meridian Energy’s Te Apiti wind farm, one of two early projects the Government supported, was offered a contract to sell its emission units to the Netherlands Government. This involved the first sale of New Zealand’s Kyoto credits. The average price for the tender round in which Meridian Energy agreed to sell its units to the Netherlands Government was NZ$10.50 a unit. This is a good indication of the current worth of emission units.

more.. What projects have been awarded emission units in the Projects to Reduce Emissions programme?

Ten successful projects have been announced. They are: A proposed electricity and steam co-generation plant at the NZ Refining Company's Marsden Point refinery. Southern Paprika’s proposed bio-energy plant to heat glasshouses. TrustPower’s proposed enhancement of an existing hydro generation scheme at Waipori. TrustPower’s proposed enhancement of an existing hydro generation in Taranaki. Te Rere Hau Windfarm, New Zealand Windfarms – a proposed 50 megawatt wind farm in Manawatu. Toronui Mini-Hydro Power Scheme, Esk Hydro Power – a proposed mini-hydro scheme on the Pask family’s Toronui station in northern Hawkes Bay. Awapuni Landfill, Palmerston North City Council – a proposed scheme for generating electricity from landfill gas. Wainui Hill Wind Farm – a proposed wind farm of up to 30 megawatts on Wellington’s Wainui hills. Genesis Hau Nui Wind Farm, Wairarapa – a proposed five megawatt extension of the existing wind farm. Genesis Awhitu Wind Farm, South Auckland – a proposed wind farm of 19 megawatts on the Awhitu peninsula.

Details of the remaining projects awarded emission units will be announced in due course, by arrangement with their owners.

What is the status of the Kyoto Protocol?

More than 100 countries have ratified the Kyoto Protocol including the member states of the European Union, Canada, Japan, Norway, Iceland and a number of Eastern European countries. The Kyoto Protocol will enter into force if 55 countries (including developed countries that were responsible for 55 per cent of developed-country carbon dioxide emissions in 1990) ratify the Protocol. This requires Russia to ratify.

What happens if the Kyoto Protocol does not enter into force?

If the Kyoto Protocol does not enter into force the Government’s agreements with project owners will automatically be terminated.

ENDS

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