Friday, June 26, 2020

No future for Marsden Point

RNZ reports that Refining NZ is considering shutting down Marsden Point and effectively turning itself into a fuel distribution service. The problem they're immediately trying to address is that running a refinery is expensive, and it is cheaper just to import processed fuel. But there's a longer-term problem too: climate change. And that problem means there is basicly no future for Marsden Point.

Its simple: if we are to avoid making the Earth uninhabitable, we need to radically decarbonise our economy. And that means running cars, boats and planes on something other than dirty oil. And no oil means no need for dirty great refineries to process it. Which means that if you're running a refinery, you want to look at ways of getting out of that, or face being a giant, valueless stranded asset. For Marsden Point, shutting down the dirty part, and shifting to distributing imported fuel, is a way to manage that risk. If they don't do it now, they'll be doing it in five or ten years time, and the earlier they do it, the lower the risk to them.

(Refining NZ is also finally entering the ETS, after a 20-year exemption, so that's probably helped drive this. But even if they weren't facing finally having to pay for the pollution they cause, an expectation of declining demand for their product should be enough to push this).

The good news: if they shut down the refinery, that's a few hundred thousand tons of carbon we're no longer emitting. Yes, those emissions will now be happening offshore, on someone else's books (probably in a more modern, cleaner refinery). But it means it will be much easier to reduce emissions in future, because we won't have this hulking facility committed to spewing out carbon to maintain minimum throughput.

As for Northland, its in the same situation as Tarankai or the West Coast: they built their economy on an industry with no future, so they need to find something else to do. There's obvious scope for the government to step in here and try and find an alternative - can Northland do wind, or solar, to help power the electric cars and factories of the future? But fundamentally, the world has changed on them, and all they can do is try and cope with it.