Thursday, March 20, 2008

Climate change: fuel switching

This morning's Herald notes that Genesis Energy has significantly reduced its greenhouse gas emissions by running its new gas-powered e3p turbine in preference to the old coal-fired Huntly. Of course it has - gas is a far more carbon efficient fuel than coal, and the higher efficiency of the newer turbine also makes a significant difference. How much of a difference? According to a Ministry for the Environment report into electricity emissions factors [PDF], Huntly emits 930 tCO2 per GWh, while a modern closed cycle gas turbine emits only 370. Which sugests that we could make a major reduction in our electricity-sector emissions by swapping out Huntly for a new gas turbine. In the UK, this fuel switching from old coal to new gas has been the major reason for their significant decline in CO2 emissions.

Unfortunately, a complete swap would be expensive - working on the price of e3p, it would come to approximately NZ$1.3 billion, assuming no economies of scale. Fortunately, there's a cheaper option. Huntly burns coal now because of gas supply worries, and because Genesis roped itself into a long-term supply contract with no accountign for externalities. But the station originally ran on gas, and the supply worries have now eased somewhat (so much that Methanex thinks it can go back to turning natural gas into fertiliser). Huntly's steam turbines are grossly inefficient - only 38% - but even so switching to gas would lower its emissions to around 530 tCO2 per GWh - a reduction of over 40% at no additional capital cost. Whether it is economic remains to be seen, but one of the aims of the government's ETS is to make such switching economic, and hopefully it will be enough to push Genesis in the right direction.