The future of coal in New Zealand

The future of coal and proposed lignite developments in Southland, and their role in feeding growing energy needs here and abroad was the focus of a symposium in Wellington today.

The event, organised by Victoria University of Wellington’s Institute for Policy Studies, featured visiting NASA climate scientist Dr James Hansen, and canvassed the views of a number of experts, covering everything from lignite conversion and carbon capture and storage technologies, to climate consequences of fossil fuels and New Zealand’s economic potential as an exporter of coal-based fuels in the coming decades.

The SMC gathered the quotes below from the scientists and speakers on the symposium panels.

Audio recordings from the event are available here

Dr Mike Isaac, geologist at GNS Science, said:

“Large-scale mining of lignites in New Zealand would be a significant departure from what we currently do. … It’s technically quite simple to make diesel from lignite, so as the price of oil increases the world will be under increasing pressure to make transport fuels from brown coal.

“As New Zealand goes ahead, to my way of thinking, there are only three alternatives:

“We can decide not to mine lignite — for briquettes or for fertiliser or for synthetic fuel plants — that’s one alternative.

“The second alternative is to proceed with large-scale lignite mining, particularly for transport fuels, and accept that you have to carry the costs in carbon offsets or in carbon capture and storage and sequestration of the carbon dioxide.

“The third alternative is that we give up on the Kyoto protocol and its expectations. We accept that in 2020 emissions from fossil fuels will actually be higher than they were, not lower as we said they would be.

“So these are three stark alternatives we face as a country.

“As long as there is a world trade in liquid fuels, you can ask whether NZ can mine and process liquid fuels from lignite as cheaply as it could be done in Victoria, where the lignite deposits are vast.

“But that’s a bit of a secondary consideration. What we really need to decide is whether we go down the path or not.”

Dr Geoff Bertram, VUW Institute of Policy Studies, said:

“Coal is a dirty fuel when used cheaply, and an expensive fuel when used cleanly” …

“The economics of Southland lignite hinge very crucially on the emission cost consequences for the economics of the project. By giving it free NZUs [credits for emissions under the ETS] you essentially remove the crucial element from the economics of the projects.

“I think at the point where Southland lignite is proposed to go ahead with free NZU allocations, my answer is, ‘That’s it — stop’. And there’s a full stop after that. You’ve moved away from economics and into just juggernaut development thinking.

“This business of taking account of the emissions cost of the lignite development is fundamental to the economics of considering those developments.”

Dr James Hansen, Columbia University, NASA Goddard Institute for Space Studies, said:

“I think if you have a gradually increasing carbon tax, it will be economically beneficial and stimulate economies, moving us towards clean energies.

“And it will help us leave coal in the ground. Or to use coal — it’s okay to use coal as long as we capture the CO2 and put it back in the ground. If we put that price on, it will force us to do one of those two things.”

Dr Don Elder, Chief Executive of Solid Energy, said:

“Some in New Zealand would say — ‘Leave the coal in the ground.’

“[And other speakers here today have said] that if you come to the conclusion that you can’t manage the impacts of coal, then you only have one option left, which is to leave it in the ground.

“I don’t actually quite agree with that. Were it that simple, life would be a lot easier.” …

“Here is an opportunity. We have lignite that can be converted to urea [fertiliser]. … All other things being equal, there is only one possibility in the world today: a tonne of urea produced here replaces a tonne of urea produced from the same coal in China. The transport emissions between China and here are displaced, and the global emissions go down, not up.

“The same sort of argument applies for transport fuels. … A barrel of diesel produced here will displace a barrel of fuel produced in China, and will also avoid the emissions that result from the transport of that fuel here.”

Jan Wright, Parliamentary Commissioner for the Environment, said:

“The oil price shocks of the 70s led to self-sufficiency energy policies in many countries, and New Zealand was no exception.

“The [Liquid Fuels Trust Board – charged with finding ways for NZ to be self-sufficient in transport fuels] spent a lot of money on research characterising the lignite reserves in Southland and Otago. It’s that expenditure of public money in the 80s, that has provided critical information for large-scale development of lignite now.” …

“The plans for using lignite on a large scale were hatched during a time when only a few scientists were concerned about climate change. Over the time that I’ve been interested in climate change, I’ve seen two trends: first, the predictions have become increasingly gloomy; second, the consensus has become stronger and stronger.” …

“I have in my mind the picture of a lignite ‘train’ that started running, when only a few scientists were concerned about climate change, and it continues to run as if this still were the case. There is no sign of it being derailed.”

“I’ve seen claims in the media that producing diesel and urea from lignite will mean lower prices for New Zealanders — cheaper diesel and cheaper fertiliser. I find this odd.

“Diesel, urea and briquettes are all commodities that are traded internationally, and that means trading at world prices.

“Of course, things produced here might be a little cheaper because transport costs are lower, but I said, ‘might be.’ We produce huge amounts of cheese here, but it’s not cheap.”

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