Our world-leading ETS actually hikes hydro
Richard Treadgold | May 2, 2012
The Bluff aluminium smelter has won an award from a xenophobe group for milking the ETS (Emissions Trading Scheme). That’s interesting by itself, however the award draws our attention for the unexpected proof it provides of a little-known, hidden effect of the ETS: instead of penalising carbon dioxide “polluters” at source while making wind and solar seem cheaper, it actually increases the cost of all generators by creating windfall profits for them.
It’s a testament to years of calculated deception of the electorate and a recipe for ruin.
The ETS was intended to apply a “carbon price” to thermal power generation (using coal, oil or gas) for what are thought to be its dangerous, polluting emissions of carbon dioxide. The ETS, or carbon tax, is also applied to geothermal generation because of the carbon dioxide it releases — despite the fact that most people consider geothermal just as renewable as wind or solar power (but not so the guardians of our national carbon footprint).
The stated intention of the ETS was to provide a financial incentive for operators of these “polluting” power plants to “save” the planet. But that was a smoke-screen, a mere gaseous concealment. The real purpose was fund-raising and along the way some of the worst examples of pork-barrel politics since the Wild West.
The Roger Award For The Worst Transnational Corporation operating in New Zealand has run annually since 1997. It is organised by CAFCA and GATT Watchdog, both Christchurch-based groups.
So says the web site of CAFCA (Campaign Against Foreign Control of Aotearoa), whom I’ve never heard of and who seem overly concerned, even obsessed, with being told what to do by people they don’t know. Perhaps if I read some of their material I’d form a different view, but who knows?
New Zealand Aluminium Smelters Ltd/Rio Tinto Alcan NZ Ltd (NZAS) (previously Comalco) had been nominated for this strange “Roger Award” for lobbying two governments over several years to secure excessive allocations of free emissions units under the NZ Emissions Trading Scheme (ETS).
CAFCA judged NZAS the winner, saying:
“Between July 1 and December 31, 2010, NZAS was allocated 210,421 free emissions units yet only had to surrender 156,147. This adds up to a new gain of 24,274 free emissions units worth $759,836. [The arithmetic here is faulty and the gain is actually 54,274 units; I don't know if this affects the value – RT] In this regard it appears that NZAS has already been secretly compensated for any electricity price increases associated with the emissions trading scheme. Since this was written, the nominator, at the request of the judges, used the Official Information Act, and has advised that NZAS were provisionally allocated 423,047 New Zealand Units for 2011.”
The judges report also said:
“New Zealand Aluminium Smelters Ltd (NZAS) has effectively undermined the purposes of the carbon emissions trading scheme… the New Zealand taxpayer is subsidising a transnational corporate rort of the emissions trading scheme. NZAS has, effectively, abrogated any responsibility to mitigate the incidence of anthropogenic global warming… a major transnational player within New Zealand materially benefits from its non-compliance with a strategy to reduce global climate change…”
But Rio Tinto draws all its electricity from hydro sources, mainly Manapouri. Why, then, did MfE expect the smelter to need compensation against “electricity price increases associated with the ETS” – when the ETS (everybody assumes) only taxes fuels which emit carbon dioxide?
CORRECTION Because, by the way the ETS distorts the spot-price auction system, Because the spot-price auction system lets the highest bid (usually from thermal generation) set the price of electricity. The ETS lifts expectations for all generators because they know it penalises carbon, so the prices of all forms of generation, including wind and hydro, increase. And all the power companies earn “windfall profits.”
[There's a good explanation of spot prices in this NZ government Climate Change document (pdf).]
Our world-leading ETS pushes up the price even of clean, “ethical” energy like wind and hydro, and thus average Kiwis provide generous compensation through their power bills to generators and their major corporate customers like Rio Tinto for saving the Earth.
Hurrah.
Of course the ETS pushes up the price of electricity to the private consumer – is that not one of it’s design parameters? It is an applied piece of lunacy, written by a committee with a completely warped view of the real world.
Absolutely right, sir. But it’s obvious our fellow citizens haven’t heard the unexpected fact that the ETS pushes up the price even of wind and hydro. Once the Green Party, Greenpeace and their many loyal environmentalists throughout the land get a whiff of the truth, then we’ll see a mighty people’s push to put the amazing unintended distortion to rights.
Or ordinary sensible people will learn of it and lobby the gummint for change.
I am not sure if you are being ironic here Richard. Persumably the Greens are more that happy for the public to be taxed more on everything. It is part of their political philosophy.
We need more tax to pay for otherwise unemployable eco-activists, like this one who appeared on the ABC recently
http://youtu.be/yGYW7IEIirk
I was being ironic in suggesting the greens might rush to change things, however it’s my understanding that they promote wind and hydro, especially, as being better for society both because they’re cheaper and for environmental reasons. Although I’ve just remembered I heard recently the greens oppose new hydro schemes, and they do drown valleys, so my view could be out of date.
I think the Greens are in general against Hydro. There are many instances where they have objected to hydro schemes, but they never object to wind projects.
Patrick Moore, in Greenpeace Dropout, describes Greenpeace’s anti-hydro stance
There are some hydro schemes that are undoubtedly sensitive, The proposed Mokinui scheme on the West Coast springs to mind. However, the backbone of NZ’s hydro electricity system, the Waitaki scheme, is a marvel of modern engineering, and the environmental impacts are relatively benign. (No doubt there are issues with the lack of water in the runoff rivers, but big valleys weren’t flooded to make these schemes.)
Wind seems to have taken on some kind of religious symbolism with the greens. Maybe the turbines represent an eco-crucifix, or perhaps the wanton desecration of iconic landscapes is some kind of eco-thuggery that appeals to the fascist nature of the followers of this cult.
As a matter of interest the Greens did oppose the Turitea wind farm.
http://turiteadocuments.files.wordpress.com/2012/04/479palmerstonnorthbranchgreenpartyaotearoanz.pdf
The scandalous saga of the Turitea wind farm is covered here.
http://nzwindfarms.wordpress.com/
ETS lunacy indeed.
Submissions on NZ govt changes to ETS close next week
http://www.climatechange.govt.nz/consultation/ets/
It is at least good to see the climate change activists suffering a rebuff here
http://www.odt.co.nz/news/business/207771/court-will-not-consider-climate-change
From the ODT article:
So Debs Martin – obviously a CAGW alarmist/activist/evangelist – wants to spend more tax dollars, wrung out of hardworking small businesses and wage earners, on appealing a judge’s very sane decision to stick to the immediate environmental impacts of the Bathurst operation rather than get bogged down on what effect if any burning coal in China may have on the West Coast forest and bird environment.
Slightly off topic, but the so called drought in the uk is causing some fun in the public eye. It has been raining for a month, yet the BBC told us last night it is the ” wrong kind of rain ”
Everyone knows, including the cleaner, that it is lack of investment in infrastructure that is the problem, and that thiere is a political agenda to control, ration, and charge for water.
A leading light in CAFCA is Murray Horton who has been protesting against anything capitalist since the 70s. This is only the latest of a long line of his re-incarnations.
Without debating the ETS per se, aluminium production produces a lot of CO2 from the carbon anodes. From memory, it is about 2 tonne for every ton of metal and Tiwai make quarter of a million tonnes of metal a year.
Anyway: if they succeed in closing Tiwai, the bauxite will just go to India or stay in Australia and be smelted by coal produced power. Together with the extra unemployment in Southland, this would seem a real own goal.
“protesting against anything capitalist” — yes, I noticed much of a socialist flavour at the CAFCA web site.
It’s a lot of CO2, but it will be processed somewhere. We should go harder on the power price, but not so hard we let the smelter go.
The expression CAFCAesque springs to mind
I remember hearing Laila Harre (now with the Greens) talking about this on the radio some years ago.
She was discussing with another commenter who was complaining that Tiwai would move to another country, so what’s the point?
Her response, in that irritating squeak of a voice of hers, was that we would be “fulfilling our obligations to the Kyoto Protocol”, which she repeated several times. I could almost hear the other guy pulling his hair out in exasperation.
The Greens are very good at wrecking things. From wiki ‘Environmental protests by the Save Manapouri Campaign, against the planned raising of lake levels to feed the station, galvanised New Zealanders and were one of the foundations of the New Zealand environmental movement.’ So only half a power station was built. So the foreign exchange earnings is also halved. The Greens and Labour favour a stronger ETS and are opposed to asset sales. This from Federated Farmers – Federated Farmers has used the Crafar Farm sale to highlight the loss of productive agricultural land in New Zealand.
President Bruce Wills says the sale causes a minimal threat to New Zealand agriculture, when compared with the expansion of forestry.
He says 13,000 hectares of dairy land have been sold to foreign buyers since 2002, but in the same period, 1.78 million hectares of forestry have been sold to overseas investors.
It is mostly only cutting rights that have been sold. The Overseas “owners” pay a land rental of 7 percent of the unimproved land value per annum and most of that money is in trust for treaty settlements.
Even in 1999 72% of forestry land was foreign owned (http://keithwoodford.wordpress.com/2010/04/17/foreign-ownership-of-land/#more-169). The ETS is really a transfer of money to the forestry sector. Also refer to NZCPR – a New Carbon Tax and the Great Green Wash.
It would be good to get some hard evidence of this Richard. Any chance of doing so?
My apologies, Huub (and everyone else), I slightly mis-stated this. I’ll apply a correction in the post.
This post has been picked up by the NZCPR.
On the Greens’ attitude to power prices: I agree they want them all to rise. They don’t care about making our lives more abundant. We’re a cancer on the earth, after all.
Hi Richard,
I noticed an article today in Energy News “New survey tests market on renewables, smart grid, Huntly retirement, Brownlee reforms”. I suggest you and your friends might like to take a look. Here’s the link, but I think you might need to register to see the article.
http://www.energynews.co.nz/news/renewables/8905/new-survey-tests-market-on-renewables-smart-grid-huntly-retirement-brownlee-ref
The thing that struck me is the retirement of Huntly. That is one large station. Without it NZ is more likely to have shortages and therefore the spot market could go very high. The winners on these occasions are the generators. It seems like market manipulation to me.