Thursday, June 10, 2021

Good riddance to the Tasman Mill

Last night Norske Skog announced it will close the Tasman Mill at the end of the month, with the loss of 160 jobs. Good. This mill is a major source of emissions, and in 2019 we subsidised it to the tune of 238342 tons - meaning it was about 0.3% of 2019 national emissions. Which were being produced by 0.006% of our workforce. In other words, a disproportionately dirty facility whose emissions outweigh its benefits, and which we are well rid of.

But what about those workers? Well, at today's prices that emissions subsidy is worth $9.6 million a year. The government could spend say, five years worth of it on creating new, low-emissions employment in Kawerau to give them something better to do, or just devolve it to them (at ~$60,000 a year or as a lump sum) to help them retrain and move. That's what a just transition for these high-polluting industries would look like, and it would leave everyone better off. Not least because the government has put itself on the hook to subsidise these polluters for the next 40 years, so paying to shut them down is a massive fiscal saving.

(Other policy implications: the government should immediately rip 1 million tons from the Climate Commission's 2022-25 emissions budget, and 1.25 million tons from future budgets, to lock in this saving and ensure no-one else emits in their place. Because they were being subsidised for 90% of their emissions, there's less of a need to cut the ETS auction amount - just shutting off the flow of free credits has the same effect on the system. Though if Norske Skog has a significant amount of credits banked, there should be an adjustment to make sure they sell them).

So what major emitters does that leave? Marsden Point is shutting down and turning into a tank farm. Motunui is going to run out of gas pretty quickly. Tiwai Point says it will leave in 2024 (but who knows), and the Huntly power station will go if Tiwai goes (or if we build a bunch of wind and solar farms, so get on it). Which leaves the Glenbrook steel mill, which we subsidise by 2.1 million tons of carbon (~$85 million) a year. The quicker we kill it, the better.