First wind farm for Wellington wins carbon credits

First wind farm for Wellington wins carbon credits

Plans for Wellington's first wind farm have won "carbon credits" from the government for cutting greenhouse gas emissions and helping to make New Zealand's electricity supply more secure, Hutt South MP Trevor Mallard announced.

Trevor Mallard visited Wainui Hills Wind Farm today and said they could start generating electricity as early as next year.

"Not only will this project directly benefit the New Zealand environment by reducing emissions of greenhouse gases, it will also help to make our electricity supply more secure and contribute to the government's target for renewable energy. That's a win for Wainui Hills Wind Farm, the energy sector and New Zealand as a whole," Trevor Mallard said.

Generating electricity from renewable sources of energy, such as wind and water, reduces emissions by removing the need to generate more electricity using fossil fuels such as coal or gas.

"This wind farm has the potential to reduce emissions of greenhouse gases equal to almost 600,000 tonnes of carbon dioxide between next year and the end of the first commitment period of the Kyoto Protocol in 2012. In return, it will receive up to 378,000 carbon credits, or Kyoto emission units."

Chief Executive of Wainui Hills Wind Farm Graeme Neilson said the planned wind farm of up to 30 megawatts will have between 10 and 17 turbines and produce enough electricity to power up to 10,500 homes, or a city the size of Masterton.

"The Government's award of emission units has brought a wind farm for Wainuiomata and Wellington a step closer to reality. The likely value of the units means that we now hope to be in a position to start public consultation on our plans and seek the necessary resource consents within the next three to six months," Graeme Neilson said.

"If we can achieve the average price for these units that the Dutch Government has paid in its latest tender round for emission units, the contract we're being awarded today will be worth around $4 million to the project."

Trevor Mallard said the wind farm and the reduction in emissions it would achieve would not be financially viable without the award of emission units.

"This demonstrates the value of the Projects to Reduce Emissions programme in stimulating projects that would not otherwise be carried out."

The wind farm is one of 15 projects awarded emission units last December in the first tender round of the Projects to Reduce Emissions programme and is the fourth planned wind farm to be awarded emission units from the government.

Graeme Neilson said the site for the wind farm had been chosen to balance the maximum wind resource with the least impact on the environment.

"We plan to hold an information session for the public before we finalise the design of the wind farm. That session will form part of our public consultation for the resource consent process and we'll advertise the dates and times locally. In the meantime, people can visit our website www.wainuihillswindfarm.co.nz to register their interest and read the background information," he said.

The Government received a total of 46 bids for the four million emission units offered in the Projects to Reduce Emissions tender. All 46 tenders were assessed by an independent panel, while the final decisions were taken by the Chief Executive of the Ministry for the Environment, Barry Carbon.

Details of other projects awarded emission units will be announced as agreements are signed by the project owners and the government.

Questions and Answers

What is the Projects to Reduce Emissions programme? The Government has developed the Projects to Reduce Emissions programme to support initiatives that will reduce emissions of greenhouse gases. The programme is a key plank in the Government's climate change policy package. This Projects tender round was the first to be run and offered a pool of four million emissions units or "carbon credits". Businesses, organisations and individuals were invited to submit proposals for projects to reduce emissions of greenhouse gases in return for a share of the pool of emission units.

What are Projects? Projects are a mechanism established in the Kyoto Protocol. 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", ie the project owner must prove that without the award of emission units the project would not otherwise proceed.

What is an emission unit or "carbon credit"? An emission unit is equivalent to one tonne of carbon dioxide (or its equivalent in other greenhouse gases) that would otherwise have been emitted into the atmosphere. International markets for carbon trading are developing even though the Kyoto Protocol has yet to come into force and project owners are able to sell their units on this market as they wish. 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. Significantly, the Netherlands will pay regardless of whether the Kyoto Protocol enters into force. Once the Kyoto Protocol comes into force many countries will need to buy extra units to meet their agreed emission targets.

How much is an emission unit worth? The international market sets the price for emission units. The average price for the tender round in which Meridian Energy agreed to sell its units to the Netherlands Government (see above) was NZ$10.50 a unit. This is a good indication of the current worth of emission units. Details of the volume and value of the Meridian Energy credits traded are confidential.

What other projects have been awarded emission units in the Projects to Reduce Emissions programme? Three other successful projects have been announced. They are: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. Details of the other 11 projects awarded emission units will be announced as agreements are signed by the project owners and the Government.

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.

There has been a series of conflicting messages from Russian officials and ministers about whether Russia will ratify. However, there are no definitive or unanimous signals as to whether Russia will do so or not.

In the meantime it is worth noting that:Russia stands to gain significantly from the Kyoto Protocol as it has large numbers of carbon credits to sell.In New Zealand, businesses and other organisations have submitted more than 40 projects in this tender round because they want some of the benefits the Kyoto Protocol offers.International markets for carbon trading are developing even though the Kyoto Protocol has yet to enter into force.

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.