Monday, December 20, 2010

National: Raising our emissions through privatisation

Six years ago, the government opened a 155MW backup power station at Whirinaki. Running on diesel, the station was intended to be used as dry-year backup, to prevent any repeat of the previous year's drought-induced power shortages. Now, National is planning to sell it.

There are several aspects to this. Firstly, of course, the government is proposing to sell a significant public asset, with no mandate from the electorate, and despite having promised that they would not privatise anything "in their first term". They're breaking that promise. Which is why Gerry Brownlee dumped the news right before xmas, after the House had risen - to ensure it was buried in the holiday "silly season".

(And in case anyone suggests it, no, this is not a "surplus" asset. Gerry Brownlee's "reforms" - basically rearranging ownership among some SOEs - has not reduced our vulnerability to dry-year shortages. That's a question of the climate, not of regulatory structures or who owns what. So Brownlee isn't just selling a public asset - he's selling a vital one, the one which protects Auckland from going dark if we have a dry summer down south followed by a cold winter. Which BTW is a pattern expected to increase as climate change takes hold).

Secondly, there's the question of what this will do to our greenhouse gas emissions. Whirinaki is a dirty, inefficient generator, but in its dry-year backup role, it doesn't run that often, so its not so much of a problem. And its so expensive to run that a private buyer would not be able to use it as baseload generation in its current configuration. From their press release, the government thinks it is likely that the powerplant will be taken offshore, but there's another option: it could be converted to run on gas. This would significantly reduce running costs, and put it in the same league as any other gas-fired plant. Which would mean that it could be used as baseload. While the ETS has raised the price of using gas for electricity generation, it hasn't yet made it uneconomic (unlike coal) - so it won't deter this. The result will be that by privatising Whirinaki, National may be giving us another dirty baseload gas-fired power plant, which would both raise our emissions and crowd out investments in cleaner generation such as wind.

This is the wrong choice, both for our energy system and the environment. And if National gets its way, we'll all regret it later.

[Hat-tip: The Standard]