In December 2021, then-Climate Change Minister James Shaw finally ended Tiwai Point's excessive pollution subsidies, cutting their "Electricity Allocation Factor" (basically compensation for the cost of carbon in their electricity price) to zero on the basis that their sweetheart deal meant they weren't paying it. In the process, he effectively cut emissions by a million tons a year. But now of course National is reversing it and restoring Tiwai's subsidy:
The Tiwai Point aluminium smelter will receive carbon credits worth an extra $37 million a year to help it pay its power bills, after Cabinet ignored official advice to boost the subsidy by a lower amount.So, we get a huge amount of public money being used to subsidise a profitable, foreign owned company to raise power prices for the rest of the country, and a huge increase in pollution to go with it. And its even worse because He Pou a Rangi has repeatedly advised the government that it needs to cut industrial allocations to avoid overallocation and long-term costs - most recently in their advice to a select committee. Unfortunately, the government seems to be completely ignoring it, preferring to undermine the ETS by subsidising twilight industries to continue polluting. Which means this is just going to be another problem the next government is going to have to fix. And the longer National continues to subsidise pollution, the more drastic that fix is going to have to be.[...]
When the smelter signed new electricity contracts with higher prices last year, it triggered a process to reevaluate how much the carbon price affects the smelter’s power costs. Officials recommended raising the free allocation by around 340,000 credits a year – worth $22 million on a $64 carbon price – based on independent modelling commissioned by the environment ministry. The smelter asked for a much more significant uplift worth $56 million, based on its own commissioned modelling.
In the end, ministers split the difference, plugging the assumptions from the smelter’s modelling into the officials’ preferred modelling approach and arriving at 581,000 extra credits worth $37 million a year.
