When National came to power in 2023, one of its first acts was to repeal all useful climate change policy. When they finally released their amended emissions reduction plan, it relied on a single project using a fantasy technology for the bulk of its reductions. And now, that project has fallen over:
Fully a third of the carbon savings needed to meet the government's legal obligations to cut emissions from 2025-2030 was supposed to come from carbon dioxide being stashed permanently under the ground of Taranaki, at the Kapuni gas field.This was entirely predictable. As I pointed out when National first floated its CCS fantasy, carbon capture requires very high carbon prices. The perfect use-case - switching geothermal stations to closed- rather than open-cycle - did not happen when Aotearoa's carbon price was at $85 a ton with a credible pathway to keep rising. And since then, we've elected a climate-denier government, whose market-fuckery and lack of credibility on future emissions reduction policy has destroyed credibility in the ETS and crashed the carbon price to below $50 a ton (it has since recovered marginally to $55). So its entirely unsurprising that Todd Energy doesn't want to take the risk of investing in carbon capture when they won't get any financial return from it, and when National's ETS/forestry policy seems guaranteed to ensure they lose money.Kapuni's owner Todd Energy says the project's future is uncertain unless it gets some kind of extra incentive or subsidy from the government - something the government currently shows no signs of offering.
Of course, Todd Energy is sticking their hand out for a subsidy. There are cases where that is justified - for example, when it would be offset by reduced pollution subsidies, or cause structural changes which would reduce emissions elsewhere (for example, by helping to destroy the future financial viability of the gas industry), or just when the cost of buying those reductions is substantially cheaper than the government would expect to pay. Glenbrook, the poster-child for the GIDI policy, did all three. But none of that is the case here. Instead, this particular CCS project would increase emissions, because Todd Energy would be using the "stored" CO2 to push out more gas, both creating additional direct emissions and extending the lifetime of an industry we need to eliminate. And according to MBIE's highly optimistic Climate Implications of Policy Assessment, that would offset a huge chunk of any savings. But for National, subsidies aren't about economics, but about corruption and cronyism, and I expect they'll be more than willing to throw away hundreds of millions of dollars rather than publicly admit failure.
Even so, we are going to have a huge hole in our carbon budget. National won't want to do anything about it, because they clearly don't plan to be in government then to be held accountable for their failure. But the opposition needs to be planning now for how they're going to plug that hole, and drawing up policies to quickly reduce emissions by the required amount. And the ideal one, with some excellent knock-on effects for both reduced subsidies and destroying the gas industry, is to shut down Methanex permanently...