Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

State Coal to Mine New State Subsidies

State Coal to Mine New State Subsidies

Sustainability Council
Media Statement
28 September 2009

The state owned coal miner, Solid Energy, would be entitled to a subsidy on the cost of emissions from its proposed lignite to urea plant worth tens of millions of dollars a year.

Planned changes to the Emissions Trading Scheme (ETS) expand the subsidy regime to now include emissions from new carbon intensive operations. The ETS would no longer protect just existing smokestack industries - it would also underwrite major new polluters.

If the proposed plant to manufacture urea fertiliser from coal goes ahead, it would become the nation’s biggest single industrial emitter of greenhouse gases after the coal-fired Huntly power station - far exceeding the Glenbrook steel mill and the Bluff aluminium smelter.

Solid Energy would qualify for subsidies that could be worth between about $500 million and $1 billion in nominal terms over the first twenty years of the plant’s life if it processed the full two million tonnes of lignite a year that the company’s plans allow for. The value of the subsidy would depend on what level of assistance the plant qualified for, the price of carbon, and the specific design of the plant. Although the rate of subsidy falls at 1.3% a year from its starting point, the total annual cost could easily rise over time if carbon prices rise, and the subsidies continue over an 80-year fade out period.

This is just the subsidy to the plant: the subsidy on urea, from all sources, will also be tens of millions of dollars a year - but this will go to farmers. The fertiliser releases nitrous oxide - a greenhouse gas with over 300 times the power of carbon dioxide as a global warming agent. As the fertiliser is an agricultural emission, there would be no charge under the ETS until 2015. Even then, close to 90% of the emissions would be exempt - a rate that similarly falls at 1.3% a year.

A further environmental impact is from nitrates produced by urea that run off the land and into fresh water systems, fouling these and causing eutrophication of lakes as a result of weed growth. Regulation of this pollution is equally ineffectual and taxpayers are increasingly being called on to fund cleanups. The Government has already promised to fund the bulk of an $82 million plan to reduce damage to the Waikato catchment, and to meet about half the estimated $144 million cost of a Rotorua lakes cleanup.

A third important environmental impact is on the ozone layer. While global efforts to cut the use of CFC’s (chlorofluorocarbons) have been quite successful, nitrous oxide emissions have risen such that it is now the most important ozone-depleting gas. Scientists are concerned that these rising emissions could prevent recovery of the ozone layer.

For all this environmental damage, urea is no more than a discretionary farming input. There are other means of boosting nitrogen levels that do not harm the environment. This is evidenced by organic dairy farmers who use no urea and receive $1/kg more in their milkfat payout from Fonterra.

As a result of recent intensification of dairy production, about 70% of urea sales now go to dairy farms. Additional urea boosts farmer profits but communities end up paying the costs that go with this - through financial subsidies and degradation of the environment.

If the full costs of the environmental damage were met by those who make or use the fertiliser, much less of it would be applied and New Zealand could probably return to relying on the existing plant in Taranaki that supplied all the nation’s urea needs up until the early part of this decade.

Ushering in a new plant with a huge carbon footprint, to make a product that delivers a triple hit on the environment, would be a backwards step for the country in strategic terms. The future belongs to low-carbon farmers who will not be caught by moves afoot to tax the carbon content of goods as they cross foreign borders.

New Zealand’s potential is to become a producer of fully sustainable high value premium foods to the world. Pastoral farmers have the opportunity to use simple and cost-effective techniques to become the nation’s leading source of greenhouse gas abatement. At the same time, they could use this position to help secure a premium producer position that added value to their output.

New Zealand is already 22% above its Kyoto target and expanding the ETS to subsidise emissions from operations that do not yet exist simply digs a deeper hole for New Zealand to extract itself from when carbon budgets begin to bite.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Commerce Commission: Retail Fuel "Not As Competitive As It Could Be"

The Commission has outlined some options it considers could improve competition. There are two broad sets of options it thinks may have the potential to help create a competitive wholesale market. These are:

• Greater contractual freedom to make it easier for resellers to switch between suppliers; and
• Enabling wider participation in the majors’ joint infrastructure, notably the shared terminals and supporting logistics involved in their borrow-and-loan system.
Further options, including improving the transparency of premium petrol prices, are discussed in the draft report. More>>

 

Promises: Independent Election Policy Costing Unit A Step Closer

The creation of an entity to provide political parties with independent and non-partisan policy costings is a step closer today, according to Finance Minister Grant Robertson and Associate Finance Minister James Shaw. More>>

ALSO:

School's In: Primary And Intermediate Principals Accept New Offer

Primary and intermediate school principals have voted to accept a new settlement from the Ministry of Education, which includes entrenched pay parity with secondary principals. More>>

ALSO:

IPCA On 'Rawshark' Investigation: Multiple Police Failings In Hager Searches Confirmed

The Independent Police Conduct Authority has found that the Police's unlawful search of Nicky Hager's property in October 2014 resulted from an unwitting neglect of duty and did not amount to misconduct by any individual officer... More>>

ALSO:

Broadcasting Standards: Decisions On Coverage Of Mosque Attacks

The Authority upheld one of these complaints, finding that the use of extensive excerpts from the alleged attacker’s livestream video on Sky News New Zealand had the potential to cause significant distress to audiences in New Zealand, and particularly to the family and friends of victims, and the wider Muslim community. More>>

PM's Post-Cab: Bad Mail

Cabinet was updated on the process around prisoners sending mail, following the accused Christchurch gunman sending letters that "should have been stopped". All mail of "high concern prisoners" will now be checked by a specialist team and a changes to the legal criteria for witholding mail are expecting to go to a cabinet committee in this parliamentary session. More>>

Welfare: Ongoing Drug-Test Sanctions Contradicts Govt’s Rhetoric

Reports that two-thirds of beneficiaries who fail drug tests are still having their benefit sanctioned contradicts the Government’s so-called health approach to drugs. More>>

ALSO:

Welfare: More Measures To Help Those Facing Homelessness

Ministers have announced $54 million in Government funding for initiatives which will support at-risk individuals and whānau to stay in their existing tenancies. The funding will also provide additional wrap around services. More>>

ALSO:

Corrections: New Strategy On Māori Reoffending And imprisonment

Authentic co-design with Māori, incorporating a Te Ao Māori worldview, and greater connectedness with whānau are key elements of Hōkai Rangi, Corrections’ new departmental strategy designed to address the long-term challenge of Māori reoffending and imprisonment. More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels