One of the central planks of the previous Labour-Green government's emissions reduction policy was GIDI (Government Investment in Decarbonising Industry). This was basically using ETS revenue to pay polluters to clean up production, reducing emissions while protecting jobs. Corporate welfare, but it got the job done, and was often a net saving to the government due to reduced pollution subsidies. The biggest success in that scheme was the May 2023 deal with NZ Steel, which saw them being paid $140 million to halve their emissions by 2030 - an effective carbon price for the reductions of $16.20 per ton. Originally this was meant to see reductions from 2027, but yesterday NZ Steel announced that the project would be brought forward to 2025, and it would reduce emissions even further:
Revised estimates from NZ Steel said its carbon emissions will drop by around a million tonnes a year from when the furnace comes online compared with 800,000 tonnes originally announced. That's over one percent of New Zealand's gross emissions.This is obviously good news, and shows the soundness of Shaw's scheme (though I'd still prefer the government to be taking an equity stake in exchange for its money). Which makes GIDI's cancellation by National look even worse. This was a hugely successful policy which is producing ongoing benefits, and its removal has left a huge hole in our carbon budget. Its almost as if National is just ideologically opposed to emissions reduction.NZ Steel also said the furnace will start operating sooner than announced, by the end of 2025.
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By his estimate, the government's savings on carbon credits would pay for the up to $140m taxpayer investment in the electric furnace in about three years, though it would depend on the carbon price from 2026 onwards.
