Thursday, July 30, 2020

Close Motunui too

Low methanol prices and unclear gas supply are threatening the future of foreign nultinational polluter Methanex's Traranki methanol production facilities:

A long term “softening” in methanol demand could have a considerable impact on Taranaki if it contributed to methanol producer Methanex quitting the region, New Plymouth MP Jonathan Young has warned.

Methanex has recently cut production at its Taranaki plants because of a weakening in methanol prices and a tightening supply of natural gas, industry news service Business Desk has reported.

Production at the plants is understood to be at 85 per cent, or 1.9m tonnes annually for 2020.

Cue the local National MP whining about jobs and exports. But as with Tiwai Point, its worth asking: is Methanex actually worth anything to New Zealand? And as with Tiwai Point, the answer is "no".

According to this article from last year, Methanex directly employs "270 staff through four sites - Motonui [sic], Waitara Valley, and Port Taranaki - and a small team in Auckland". These are high-paying jobs, with base salaries of $100,000. In addition, it indirectly supports 700 jobs for maintance contractors. So, call it a thousand jobs all up for a nice round number.

What do these jobs cost us? As noted above, Methanex is currently producing 1.9 million tons of methanol a year. As a highly-emissions intensive industrial activity, it is entitled to a carbon subsidy on 90% of its production, of 0.7854 tons of carbon per ton of methanol. In addition, because export of methanol is considered a "removal activity", it gets another 1.375 tons of carbon for each ton of methanol it exports. That gives a total carbon subsidy of 2.01 tons of carbon per ton of production, or 3.825 million tons. And plugging in the current carbon price of $33.60, it turns out we're subsidising them by $128.5 million a year. For a thousand jobs, that works out to $128,500 each, every year (and that amount is only going to go up, as carbon prices increase).

As with Tiwai Point, it appears the economic "benefit" of having Methanex in Taranaki actually boils down to "carbon subsidies". And as with Tiwai Point, it seems we'd be better off if we just let it die, and instead invested those subsidies for a decade in retraining and the creation of clean replacement industries which would provide good jobs without destroying the planet.