Friday, November 05, 2021

Climate Change: We need to actually act on coal

Yesterday at COP in Glasgow, Aotearoa joined an international alliance to phase out coal-powered electricity generation. Which is obviously a great headline, which is what the government was after, but raises the obvious question: are we actually going to act on it?

The Global Coal to Clean Power Transition Statement commits its parties to "transition away from unabated coal power generation in the 2030s (or as soon as possible thereafter)". Which is an easy, business-as-usual pledge as far as New Zealand is concerned, given that Genesis, owners of the only coal-fired power station in New Zealand, have said they plan to transition Huntly to dry-year backup from 2025 and shut it down by 2030. It also commits us to immediately cease issuing permits for new coal-fired power plants, which the government has been promising to do (but hasn't done yet) for four years already. So if the government is actually serious about this, we'll hopefully see thermal ban legislation reintroduced and passed rapidly.

But that still leaves the question of the speed of the phase out. 2030 is a long way away, and every year we let Huntly keep burning coal means another 2 - 4 million tons of carbon in the atmosphere. At which stage its worth highlighting the first, and most important, commitment: "to rapidly scale up our deployment of clean power generation and energy efficiency measures in our economies". If the government took this seriously, it would mean a crash program of building wind and solar generation to allow a quicker shutdown of Huntly and to displace other fossil generation from the market. Will they do it?

I think they'd be stupid not to. As I've argued here, the government's internal carbon price of $150/ton means it is cost-effective to build new generation to replace Huntly and other fossil generation on carbon grounds alone. There are also wider social benefits in the form of lower electricity prices for all, as fossil generation currently sets the electricity price, so displacing it out of the market will see that price set by cheaper renewables. And its not like we can rely on the market to solve this - a recent analysis from the Electricity Authority found that the big gentailers are refusing to build in order to "maximis[e] returns on their existing assets" - that is, keep prices high. This is an obvious market failure, and clear grounds for the government to step in build what the market won't. And if it hurts the existing dirty generators, then good.