Fri, 3 Dec 2004

Emission units for geothermal power project

Emissions units won by 39 MW Rotokawa geothermal project

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A planned project to generate more electricity from the Rotokawa geothermal field near Taupo has been awarded a share of emission units or carbon credits by the Government. The project has received the second largest award in the first tender round of the Climate Change Office's Projects to Reduce Emissions programme. If it proceeds as planned, the project will receive up to 790,923 emission units.

Mighty River Power, in conjunction with the Tauhara North No. 2 Trust, plans to build a geothermal power plant that would produce electricity for supply to the national grid. Mighty River Power is a partner with the Tauhara North No.2 Trust in the existing 32MW Rotokawa geothermal facility. The project is scheduled to come on-stream in 2006 and have an expected production life of around 25 years.

"This project offers the double benefit of reducing greenhouse gas emissions and enhancing electricity supply security," said the Convenor of the Ministerial Group on Climate Change, Pete Hodgson.

"The plant would provide new electricity generation capacity of about 39 megawatts. By avoiding the need for extra generation from fossil fuels such as coal or gas, it has the potential to reduce greenhouse gas emissions equal to 968,996 tonnes of carbon dioxide from when it comes on stream until the end of 2012."

"These projects and the reduction in emissions they will achieve are over and above what would happen in the normal course of business. The award of emission units gives these businesses the chance to take their projects forward, subject to the normal processes that business proposals must go through. Each project is subject to the approval processes required by the Resource Management Act."

On 30 August, the second Projects to Reduce Emissions tender round opened. Six million emission units are available in this round. An announcement about the outcome of the second tender round will be made next week.

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 part of the Government's climate change policy package. This Projects first tender round was run in 2003 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. A second tender round with six million emission units on offer opened on 30 August 2004. It closed on 15 October 2004 and an announcement about the outcome of the second tender round will be made in early December 2004.

What are Projects?

Projects are a domestic mechanism incentivised by Kyoto Protocol emissions units. 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", i.e. 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. Emission units are effectively tradable allowances for greenhouse gas emissions. Each country with targets under the Kyoto Protocol must hold sufficient emissions units to match its emissions during the first commitment period of the Protocol. International markets for carbon trading are developing and 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. A number of New Zealand firms have entered negotiations to forward sell emission units awarded under the Projects to Reduce Emissions programme to European buyers. The current price on the international market is around $NZ15 a unit. Emerging prices under the European Union Emissions Trading Scheme also provide indications of what emission units are currently worth.

What is the status of the Kyoto Protocol?

The Kyoto Protocol will enter into force in February 2005.

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

The other successful projects are:
· Fire-Logs New Zealand Limited's proposal to produce wood pellets from waste sawdust for domestic and industrial use. · Genesis Energy's proposed enhancement of an existing hydro generation scheme at Tongaririo.
· TrustPower's proposal to produce electricity from landfill gas.
· Watercare Services Limited's proposed staged installation of hydro energy turbines at three water supply dams in the Hunua Ranges and a bypass channel in the Waitakere Ranges.
· New Zealand Refining Company's proposed electricity and steam co-generation plant at the Marsden Point refinery
· Southern Paprika's proposed bio-energy plant to heat glasshouses.
· TrustPower's proposed enhancement of an existing hydro generation scheme at Waipouri.
· TrustPower's proposed enhancement of an existing hydro generation scheme 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 Energy's Hau Nui Wind Farm, Wairarapa - a proposed five megawatt extension of the existing wind farm. · Genesis Energy's Awhitu Wind Farm, South Auckland - a proposed wind farm of 19 megawatts on the Awhitu peninsula.

ENDS

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