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Fitzsimons: Keep the Coal in the Hole

22 April 2008

Speech Notes: Please note - embargoed until 6pm April 22

Keep the Coal in the Hole

Speech for Earth Day, Christchurch, 22 April 2008


Jeanette Fitzsimons Green Party Co-leader

Today is Earth Day. It began in the USA in 1970 and is often seen as the start of the modern environmental movement. In 1990 it mobilised 200 million people in 141 countries and gave impetus to the 1992 Rio Earth Summit.

The Earth is the source of everything we use. It grows our food, as long as we look after the soil. It supplements that with fish, as long as we catch them sustainably and look after the oceans. It provides our fresh water, as long as we do not overuse it, and as long as we keep it clean. It provides building materials from renewable resources like timber and non- renewable ones like limestone to make cement and iron ore to make steel. It provides a wide range of minerals we use for electronics, energy generation and vast numbers of industrial activities.

And it is seriously at risk because the way we use, and overuse, those resources is changing the climate, depleting resources, degrading the soil and polluting the oceans.

Perhaps the real problem is that we see Earth Day as one day a year. The other 364 days are Abuse The Earth days.

Today I want to talk about one of those minerals which has the potential to make climate change irreversible and accelerating, very soon. It's sometimes called NZ's black gold. We also call it coal.

There is a growing international movement with the slogan "Leave the Oil in the Soil". It seems to have been begun by US Green presidential candidate Cynthia McKinney. But important as oil is, it's not the biggest climate change risk. That's because it has passed or is close to its peak rate of extraction. From now on production will decline because oil fields around the world are depleting and since the sixties we have been finding less each year than we have been consuming. We do have to reduce our use of oil, but this will happen whether we plan it or not as its availability declines and its price rises astronomically. We have already seen world oil prices quadruple in the last five years.

The big problem is what we - and I mean the whole world here, not just New Zealand - choose to replace it with.

It won't be natural gas, or at least not for long, because this cleaner fuel is also limited and will peak, just a little later than oil. The faster we try to switch to gas, the faster that peak will come and internationally, at least, its price will be linked to the oil price.

The only sensible replacements if we wish to protect the climate are renewable energy sources. We have abundant geothermal, wind, solar and waste wood resources now; we have excellent tidal and wave resources which could be contributing in a decade or so.

But there are some who spurn renewables because they have to be managed at their rate of flow rather than mined unsustainably and there is a strong movement internationally, and a growing movement in New Zealand, to turn to coal. There were good reasons why the world moved away from coal, the main energy resource in the eighteenth and nineteenth centuries, to oil and gas which are easier to transport and use, much more flexible and cleaner. You can't pump coal through a pipeline, mining it makes an appalling mess and for every unit of energy produced it releases half as much again carbon dioxide as oil, and nearly twice as much as natural gas. You can see from that, that even if our economy and our industry remained static, our greenhouse emissions would rise substantially if we moved from liquid and gas fuels to coal.

In 2004 coal made up just over a quarter of the world's energy consumption, but 39% of its energy-related carbon dioxide emissions. In just two more years it is predicted to be the world's largest source of emissions and the International Energy Outlook predicts coal consumption will grow by 74% by 2030, mostly in developing countries. Obviously, if that happens with any currently available technology we can kiss the climate goodbye.

Not all coal is created equal. The most valuable is hard, bituminous, coking coal which can be used to smelt steel. There are no easy substitutes for steel making, which needs the carbon not as a fuel but as a material input. Internationally, about 12% of coal is used by the steel industry and demand for this is growing fast as China and India grow their steel making to support an increasingly industrial economy.

Thermal, or sub-bituminous coal is used in power stations and as a fuel in industrial plants to fuel boilers. Two thirds of international coal production is used to generate electricity and this is where we could make change fastest. There are lots of other ways to generate electricity, as well as lots of ways to reduce demand by using it more efficiently.

Lignite is the poorest quality coal, not much removed from the peat it came from, and contains a lot of water. It is only 17% of the world resource, but 80% of New Zealand's coal resources, still largely untouched and capable of doubling our carbon dioxide emissions quite fast if we developed it on any scale.

NZ has very large coal resources. They will of course, eventually peak and decline as oil is doing and as any finite resource will, but we cannot rely on peak coal to help in any way to reduce our climate change emissions. It is estimated that so far we have mined only 3% of our total stock of 10 billion tonnes. The Worldwatch Institute estimated some years ago that there was enough recoverable coal in the world to raise the carbon dioxide level in the atmosphere ten times if it were all burned. Ten times - and the IPCC is warning of dire effects if we even double it. Clearly we cannot burn coal just because it is there.

About 5m tonnes of coal is mined each year in New Zealand, most of it by State owned Solid Energy. Many people wonder why we export roughly half of that and yet import more than a million tonnes from Indonesia. Isn't that crazy - importing and exporting at the same time? Well, there is a logic to it - 71% of our export coal is high quality coking coal which goes to Japan and India and some other countries for steel making. It is worth much more than the thermal coal we import from Indonesia to run the Huntly power station.

We are deeply linked into the world trade in coal and that is likely to grow unless we decide to do something about it.

So how do we use coal in New Zealand?

The biggest user is the Huntly power station which burns 44% of the coal used in NZ. About half of it is imported from Indonesia and the rest comes from the Waikato coal fields. It's an old, inefficient station which runs at about 33% efficiency, which means two thirds of all the energy from the coal heats up the Waikato river or the air above. So it's a big carbon dioxide producer - more than half of our electricity emissions and around 6% of our total emissions in 2006. For many years Huntly ran on natural gas but then the Maui gas field peaked and it is now in decline with production falling each year. Shifting from gas to coal almost doubled the carbon dioxide emissions for the same amount of electricity.

In the last year Huntly has run less because Genesis has built a new gas fired plant on the same site which is more modern and much more efficient. This might seem like a good idea to reduce emissions but of course the coal plant is still there and if demand grows will increase its production again, so we will be burning fuel at two plants instead of one.

Then there's NZ Steel which uses about 31% of domestic coal, about 60% of the production of Solid Energy's Rotowaro mine in the Waikato; several dairy factories which burn coal to dry milk ; some other big industries like cement and aluminium; and a few small users.

Even schools burn coal in their boilers to keep the classrooms warm. One of the things I'm proud of in the new Energy Efficiency and Conservation Strategy is a pilot programme to convert 30 coal fired school boilers to wood pellets or wood chips, made from waste wood. This takes the greenhouse gas emissions effectively to zero, cleans up the air the children breathe, is much less work for the school caretaker and creates ash that, instead of needing disposal at a toxic landfill can be used around the trees in the grounds as a useful fertliser.

Two of those schools are here in Christchurch - Cashmere High School and Mairehau High School which I'm visiting tomorrow. The conversion will be completed within a month.

Households are already phasing out their use of coal for home heating as Solid Energy, to its credit, has decided it doesn't want to be responsible for selling coal for applications which cannot adopt any kind of pollution control technology, and has gone into the wood pellet industry to fill that gap.

Under the Kyoto protocol developed countries are responsible for the carbon emissions from the coal they burn. That means NZ will face a cost for emissions from Huntly, NZ Steel, dairy factories, cement plants and smaller users such as schools. Under the Emissions Trading Scheme the coal miner or importer will pay for enough carbon credits to cover the emissions from all the fuel they sell. They will pass this price on to their customers so burning coal will become more expensive.

The coal we export doesn't carry a cost for us - the countries who burn it are responsible, just as we are responsible for emissions from the oil we import, rather than Saudi Arabia. So the coal we sell to Japan is in the Japanese inventory and they have to pay for credits to cover it. However India, Chile, China and other countries we sell to are not developed countries and so have no cap on their emissions and no price on carbon.

But it's not just carbon dioxide that results from coal mining. When underground seams are disturbed they give off methane, twenty-one times worse than carbon dioxide in its global warming potential. That methane is counted under the Kyoto system - it is in our inventory and we have to hold credits to balance it at the end of the Kyoto period. But a weird anomaly in our Emissions Trading System is that coal seam methane, or "fugitive emissions" as they are called, are the ONLY greenhouse gas that the Government proposes will NEVER be included in the carbon trading scheme.

Even agriculture, which is being given a huge free ride, will have to be responsible for a tiny part of its emissions in five years' time. But coal seam methane is planned to be a permanent subsidy to the coal industry from the taxpayer.

But wait, it gets worse. The responsible thing to do with that methane leaking out from the mine tunnels is to capture as much of it as possible and burn it for energy to run the mine, releasing carbon dioxide instead, which is much less harmful. So you would expect an incentive in the programme to encourage the coal industry to do that.

Instead we find quite the opposite. If they use the methane for energy generation they will be responsible for the carbon dioxide emissions; if they just let the methane escape the taxpayer is responsible not the mine.

We now have the crazy situation where Solid Energy is actively prospecting for coal seam methane it can capture from its Waikato mines to sell for energy but will just let it leak out from its other underground mines. This is one element of the Emissions Trading Scheme that just HAS to change. It is not large - you and I will be subsidising the coal industry by a couple of million dollars a year when new mines come on stream - but it sends entirely the wrong message and is unfair to others who are controlling their emissions or paying for them.

So coal miners are being encouraged by this government to expand their activities. They are excused their methane emissions and as long as the coal is exported they don't face a price for that either. All our coal exports except the 37% that goes to Japan are outside the Kyoto system and add to climate change with no carbon price and no offsets. Just by way of comparison, to offset the emissions from all our exported coal would require planting 4,800 ha of new pinus radiata every year.

The Government argues that if we weren't selling coal to rapidly developing countries someone else would be so we shouldn't worry. They say the same about their SOE Landcorp clearing forests and converting the land to dairying.

It doesn't stack up. If we really want to be the first truly sustainable nation in the world - and we are very far from that at present - our actions have to back up our words. It's time for some real sustainability, not just greenwash and spin.

"Keep the Coal in the Earth" doesn't have the alliterative ring of "Keep the Oil in the Soil" but it's even more important. Perhaps we should call it "Keep the Coal in the Hole". The Green Party says it's time we started practising what we preach and phased out coal mining.

That can happen at quite a gentle pace as long as we take the important step now and say No New Mines. Then we can plan a gradual transition that takes care of the people who work in the coal industry, and its downstream customers.

The first target should be the Huntly power station. It is old and inefficient - which means it emits a lot of carbon dioxide for each unit of electricity it generates - and it has no pollution control. It is owned by a State Owned Enterprise. About half of its fuel is imported from Indonesia. There are many alternatives for generating electricity from renewable resources with no carbon emissions. The Greens strongly support the target in the Energy Strategy, which I contributed to developing, that 90% of our electricity should come from renewable sources by 2025. This means that Huntly must eventually close and not be replaced by another coal station.

This would be popular with New Zealanders. A March this year survey shows that only 8% of New Zealanders prefer coal to fuel our power stations compared with 84% who prefer wind. Overall it is the least preferred energy source. People have got the message about climate change and they want the Government to act.

If the Government can legislate a moratorium on new thermal power stations, with some exemptions, it can legislate one on new coal mines. The exemptions I would propose are for specialty coals in small quantities for local uses such as carbon fibre and activated carbon, and for enough local coal of a sufficient quality to keep NZ Steel supplied. We will always need some carbon as a material; we do not need to keep using it for energy.

Steel making cannot expand indefinitely either. For climate reasons we need to minimise our use of steel and concrete by clever construction technologies, including pre-stressed wood where appropriate. We need to design and build structures to last and recycle all the steel we throw away. New coal mines such as Happy Valley on the West Coast, a spectacular untouched valley of rare red tussock and wetland ecosystem with endangered powelliphanta giant snails and kiwi must not proceed. It is desecration on two fronts - destroying local ecosystems when it is mined and destroying the climate when it is burned.

It is simply outrageous that Solid Energy's private investigators have described the people who are campaigning to save Happy Valley and its endangered ecosystem as extremist, dangerous, criminal, and belonging to terrorist organizations, and that use they these statements to justify spying on them.

There will be enough coal in existing mines, which we are not proposing should shut down, to keep market contracts supplied and the workforce employed. The new Pike River mine, privately owned, is due to start production of coking coal by September. Tunneling has been going on for some time and, much as we deplore the development of a mine on the edge of a national park and requiring access through DOC land, we do not think those contracts can now be interfered with.

On the West Coast some 850 jobs depend on the coal industry. But both Solid Energy and Pike River are bringing skilled workers from overseas to carry out their proposed expansions because of a local shortage of workers. The extension to the Huntly East mine in the Waikato will keep production and the workforce at current levels for 15 years but we must avoid increasing this.

So a clear directive that no new mines will be permitted would allow the existing workforce to gradually phase out through natural attrition as people retire or move away. The average age of coalminers in NZ is 43, so clearly some will leave the workforce over the next decade. As that happens, employment in the renewable energy fields will increase.

Then there is the economic impact of phasing out an extremely lucrative industry. Prices for high quality steel making coal have just risen to $300/tonne. This is ten times what it was a few years ago. Thermal coal has risen six times. Who gets that economic benefit?

In the case of private mines like the large new Pike River underground mine, it is private profit, much of it owned overseas. In the case of Solid Energy, the shareholder is the Government which received a dividend of $20 million in 2006. It's useful income, but hardly bank breaking stuff.

We estimate domestic coal sales provide a further $40M in GST and Solid Energy appears to have paid about $50M in company tax in 2007. So say $110 million to government coffers each year.

Compare that to the carbon cost of our coal under Kyoto each year which at $30 a tonne CO2 is $204M for the total, or $108M just for the growth we are obliged to pay for under Kyoto.

So the carbon cost alone is more than the tax take of the Government from the coal mining operations of Solid Energy! Add the damage to our 'clean green image', the environmental cost of lost landscapes and ecology, the toxic rivers, and one wonders if there is any 'profit' to NZ in a broader sense. Add in Climate Change, and we are seriously running in the red!

Our export receipts from coal exports are actually not all that large - a little more than a quarter of what we earn from exporting fruit, for example. So phasing out coal mining is hardly going to devastate the economy.

The environmental benefits would be substantial. Quite apart from climate change Solid Energy lists its environmental liabilities at $139m, and that's only the cost of the clean ups they actually propose to do. Open cast mines leach acid and highly toxic chemicals into waterways. The Ngakawau River which drains the Bullet plateau where the Stockton mine is, runs black and lifeless. Coal dust particles are dangerous for the health of miners and anyone else working with it. And the surface under which they mine is often a unique ecosystem.

I can hear you asking, at this stage of the evening, "What about clean coal"?

This is a highly misleading slogan that the coal industry likes to use, suggesting that there are ways of burning coal without doing any environmental damage.

There are not.

Expensive pollution control equipment is able to remove the sulphur and soot from air emissions and reduce the health damage from breathing highly polluted air. This is old technology which new plants these days would generally be required to have. (Though it's worth noting that Huntly power station doesn't.)

There is currently no way of burning coal or other fossil fuels without releasing the carbon dioxide into the atmosphere. The amount of CO2 is fixed by the carbon in the fuel - about two tonnes of carbon dioxide for every tonne of coal.

Billions of dollars have been poured into trying to capture the carbon dioxide from the waste stream, liquefy it, and pump it deep into the ground in the hope that it will stay there. That might one day be possible and it is true that the various stages of the process have all been achieved on a small scale but there is no functioning commercial scale coal plant that captures and stores its carbon and not likely to be very soon.

If it succeeds, it will be very expensive, require even more energy to run, and the CO2 may not stay where we put it. We really need to monitor for many decades if we are to store it in geological structures and be sure it will not leak out. At this stage it is a hugely expensive red herring designed to persuade people that coal can be clean which is diverting research funds and attention from the truly sustainable resources, renewables.

The coal industry needs to persuade us that CCS is just around the corner if it wants to expand. That's why they come up with misleading terms like "clean coal". And the industry certainly does want to expand.

Solid Energy wants to base power stations, chemicals manufacture and conversion to liquid transport fuels on its vast lignite resources in Southland and Otago. We know you can make petrol and diesel from coal - Germany did it during the war and South Africa did it under the apartheid embargo. But before we get swept away with euphoria at the promise of carbon capture and storage, let's look at what it can't do.

At most, it claims to be able to capture 85% of the carbon emissions. To do that, it has to burn more fuel. It can only be fitted to a large stationary plant like a power station or the plant that would convert coal to petroleum. You can't fit it to a vehicle so all the vehicle emissions from the petroleum made from the coal would still reach the atmosphere. You can't fit it to most existing plants, only to new ones.

So even if it works perfectly and is affordable is has very limited use in New Zealand. We don't need coal fired electricity as we have so many renewables. The most it might achieve for us is to reduce the emissions from the Steel mill and the cement plants, and possibly a very large dairy factory.

So, in summary, a nation that aims to be carbon neutral and the first truly sustainable nation cannot allow its own State Owned Enterprise to carry on expanding coal production, either for domestic consumption or for export. The Greens would place a moratorium on new coal mines except for specialist purpose coals for local use, and would phase out existing ones as they run out of resource, to allow the workforce time to adapt.

It is a high priority to reduce the Huntly power station to just occasional stand by running in a dry winter or when another plant goes down. We can do this by investing in energy efficiency wherever it is cheaper than new supply - currently a government policy, but not being funded; and by building new renewable electricity systems.

We should phase out production of thermal coal for export first, as there are alternatives for our markets to use for power generation. Those are mainly mines in the Waikato with some smaller ones on the Coast.

Those who are promising great things for carbon capture and storage should be the first to agree that we should keep the coal in the earth in the hope that one day our children will be able to burn it cleanly and safely.

And finally, what of the coal companies? They have options too. Solid Energy has recently invested in a large wood pellet and high efficiency wood stove business; a solar water heating business; and is producing biodiesel from rape seed. There is a huge future for it to become a renewable energy company building especially on its expertise in waste wood. But for that future to be realised they have to leave their coal in its hole.

So, a six point plan to reduce emissions from coal:

1: No consents for new mines unless they are to fill a specialist non-energy niche in NZ.

2: Close the Huntly power station one unit at a time, leaving some part of it available for security of supply in an exceptionally dry winter or when another station is down. Replace it with greater energy efficiency and more renewable electricity.

3: Phase out the export of thermal coal first; our markets need to develop renewable electricity too.

4: Issue an instruction to the SOE Solid Energy that it is to stop pouring our money into investigating lignite to liquid fuels and instead invest more in its renewable enterprises.

5. Amend the Emissions Trading Bill to ensure that coal seam methane is included in the climate change obligations of coal mining companies. I will be moving an amendment to this effect when the Bill comes back to the House.

6. If carbon capture and storage ever becomes feasible, secure and economic, use it to capture the emissions from our steel and cement plants and larger dairy factories.

The Earth is one of those things that are bigger than politics and if we are to protect it we need to rise above the petty scrapping that often passes for political debate.

I look forward to a future Earth Day when we can celebrate New Zealand's leading role in seriously reducing emissions from dirty fuels like coal. I look forward to a day when kiwi and wetlands are valued more than the export dollars underneath them, and when we can flick on a light and know that energy came from renewable and non-polluting sources.

ENDS

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