Responding to Bernie

Coal Action Network Aotearoa was recently approached by the editor of the insider mining magazine  “Inside Resources,” Bernie Napp, who had read our submission to MBIE/EECA on process heat and wanted to create a he-said, she-said article for his publication.

We didn’t really feel like spelling out all of this to a magazine that is a mouthpiece for industry, and that has spent a lot of words and time trashing CANA and our policies. 

The questions amounted to an a,b,c of mining industry spin around coal and minerals.  Inside Resources is owned by Freeman Media, organisers of the Minerals Forum held in Dunedin. This industry rag cannot really characterise itself as objective media, as it has proven over and over again. Bernie, after a short sojourn at MBIE, used to be the main media guy at Straterra, the co-organiser of the forum.  

These are the questions from Inside Resources. Instead of replying to Bernie Napp, we decided to publish this as a Q&A on our website, as it provides a useful resource for campaigners.  This way, our words will stand for themselves. And it won’t be behind the Inside Resources paywall.  

Inside Resources: You say:

“Most important of all is to stop any new investment in fossil fuel plant. All new plant should be renewably fuelled, or this whole exercise is a waste of time.”

Are you aware that coal consumption is only five per cent of New Zealand’s greenhouse gas emissions?

Would it not make more sense for you to be Transport Action Network Aotearoa, or Agriculture Action Network Aotearoa?

CANA: Of course we are aware of the relative contribution  of coal to climate change. That’s our job. If we want to solve climate change, we have to address all emissions in New Zealand.

The same argument could be discussed through tax: a single person’s contribution is very small, so why should they bother paying? It all adds up. Just as New Zealand’s emissions are small compared with, say, those of India, but together, all the smaller emitters make up 30% of global emissions.

We chose to work on coal because globally it is the biggest source of CO2 emissions, it has the highest greenhouse gas emissions per unit of useful energy,  it is still expanding, and there are good alternatives now for almost every use.

Coal emissions are also a major problem for health, with a significant contribution to respiratory and heart disease and stroke. We have all worked on transport and agriculture at various times, but there is no other group dedicated to working on coal so sorry, we are not going away.

And – NZ could easily be the leader, the inspiration for the world – coal free Aotearoa!

Inside Resources: You say: “A mandatory carbon price of at least $50/tonne, raised at regular and pre-announced intervals to reach $100 within a couple of years, is needed to drive the urgent and significant emissions reductions that must be made.”

You have undertaken an analysis to underpin this view? Have you interviewed people in the business of drying milk, making steel, cement, burnt and hydrated lime?

With the benefit of hindsight, do the submissions by Fonterra, NZ Steel, Golden Bay Cement, and Graymont lead you to revise your views?

CANA:  Our starting point here is that we are in a climate emergency. We should have acted 20 years ago, when the transition could have been more gradual, but this was blocked by the lobbying of vested interests.

Provided there is a technically feasible alternative, it’s frankly not our job to work out whether a particular industry will still be profitable. If replacing coal with renewables is inconvenient and costly, the market will sort out who survives and who doesn’t. You do believe in the market, right?

A thesis at Otago uni a few years ago found that a carbon price of $50/tonne would lead to most heat plant replacing coal with wood waste. Technology has improved since then.

CANA: You mention steel making, and we acknowledge that steel is the hardest place to replace coal, and will probably be the last to go. But there are some answers already.

A lot more steel could be recycled, using electric arc furnaces to melt it rather than blast furnaces. Many uses of steel could be replaced by low carbon materials – for example, laminated pre-hardened wood beams could replace steel in medium rise buildings. This is NZ developed technology. We could grow an export industry around it.

There is also pioneering “green coke” made from wood which could replace coal in blast furnaces. This needs more R&D but could be ready in time to meet our carbon targets. A company in Sweden is already making steel from hydrogen using renewable electricity.

Inside Resources : Do you accept the contention that without coal it is challenging to reach the high temperatures necessary for many industrial processes?

CANA: We are not engineers but we do talk with them, and we note that there are very large wood waste fired boilers in Europe reaching these high temperatures and burning very cleanly. The key seems to be quality, purpose-built boilers rather than taking the cheapest option or converting a coal boiler, or worse still, co-firing wood and coal.

Inside Resources : Do you agree with Fonterra that it needs cheap electricity, to be able to convert affordably to electricity at its processing sites? If not, why not?

CANA: We have never particularly advocated electricity for process heat. Where it is available without destabilising the grid, it is a good option. If Tiwai Point aluminium smelter closes, there will be a substantial amount of hydro available for other purposes. Indeed Fonterra itself has stated that it doesn’t really consider electricity a good source.

Inside Resources : How would enough woody biomass be made available within the next two years for sites to transition? Have you done an analysis on where the material would come from, its quality, and its cost?

CANA: this is a very good question, one we have been trying to answer for several years, with the industry being spectacularly unhelpful.

We have talked to the wood industry who tell us there is a lot of wood just left to rot in the forest, eg on skid sites, because there is no market. The easy wood, eg offcuts from sawmills, is mostly already used. How much is available depends on:

• where it is in relation to the user; wood is more expensive to transport than coal  (the reason fossil fuels were developed is that they are a more concentrated energy source then renewables – but their time is over.) A generally accepted rule is that transport distances of 100km or less are workable.
• what consumers are willing to pay for it. That can only  be established by calling for proposals and a proper tender process.

Fonterra stated categorically to the Studholme hearing (into Fonterra’s application to build two coal-fired boilers at its dairy factory just outside Waimate) that only enough wood was available to fire 20% of their proposed milk plant.

We asked to see the question they had asked wood suppliers, and their answers, we asked Fonterra directly, we asked them at the hearing, and we wrote to the Chair of the Fonterra Shareholders’ Council but no information was forthcoming. Nor have they provided it since.

We strongly suspect there was no proper Request For Proposal conducted, or that they only asked for a price to supply the 20% they wanted to use. We found it curious that even after Fonterra, during the consent hearing, halved the size of the proposed plant from two to one coal boiler, there was still only enough wood available for 20% of that (when there had been 20% available for two boilers earlier).

There was similar secrecy around the fueling of Fonterra’s Darfield plant but we happen to know there was enough wood available for that within an economic distance but Fonterra chose to stick with what they were used to. Climate change just doesn’t figure in their thinking, and that’s why we need a price on carbon.  If coal is more expensive, they will look for alternatives.

Inside Resources:  You say: “The largest barrier to the use of biomass for process heat is one that is not listed in this section of the discussion paper: the lack of a carbon price that means that companies pay the true cost of their greenhouse gas emissions. With such a price in place, companies that currently emphasise the barriers listed in this section may well find that these barriers were less substantial than they currently claim.”

You make a fair point. Have you considered the fact that less than 20 percent of global emissions are covered by any sort of carbon price, and that sectoral coverage in overseas jurisdictions is generally narrower than in New Zealand?

CANA: Of course we want to see all countries and firms subject to a carbon price but we have to start somewhere. If everyone waits for everyone else, no-one will do anything. Increasing numbers of countries are introducing a carbon price across sectors. India is one. If India can do it, why can’t New Zealand?

Inside Resources: What do you think about the lack of a level playing field internationally on carbon pricing? What should NZ do in this situation? Do you think it is fair that NZ pays a carbon price, and most of the rest of the world does not?

Do you think it is fair on Golden Bay Cement that cement made in Japan has a modest carbon charge on only one-quarter of its emissions, that of fossil fuel consumption?

If yes, then that is good for Holcim which no longer makes cement in New Zealand and imports it from Japan.

If no, then should Holcim pay a carbon surcharge on imported cement?

CANA:  There is a lot of discussion about this internationally. The usual remedy is border adjustments – imports from countries with no carbon price carry a levy; this is used to help industries who are paying a carbon price here and competing overseas with those that don’t.

These should be transitional until other countries change. No-one should get an economic advantage, as we have been doing, from ignoring climate change. We already have provision in the ETS for assistance to industries regarded as  “competitiveness at risk” internationally.

Inside Resources: You say “Phase out coal mining and coal usage by 2027, initially by opposing new and expanded coal mines.”

CANA: Yes, we chose that date a few years ago – and argued over it at the time – because most of the consents for big mines expire in that year or earlier. We have never advocated closing an operating mine, but waiting for them to deplete and their workforce to retire.

However as climate change accelerates, that date might have to come forward; and with new mines still being opened they face the prospect of having to close soon after opening.

Experts say that the OECD needs to get out of coal by 2030, and the developing world 2040.

Inside Resources: You will be aware that NZ imports around 450,000 tonnes of coal a year because domestic production cannot keep up with domestic demand, including for back-up electricity generation. Do you support NZ importing coal?

CANA: Quite frankly, this is rubbish. It is not New Zealand’s decision to import coal, but a commercial one, mainly by Genesis to run the Huntly power station. They import coal from Indonesia because it is cheaper. Everything is driven by price.

When it is hit with a $50/tonne climate price industry will move to the next cheapest fuel, or in the case of Huntly, close the plant and build some of the already consented wind and geothermal plants sitting waiting because it i so cheap to import coal. Domestic demand is driven by the availability f cheap coal. There are many other alternatives for electricity back up without Huntly which was supposed to have closed years ago.

Inside Resources :  what analysis have you done to show that coal users can remain in business after 2027?  If they can’t remain in business, how will NZ earn the shortfall in economic activity that would occur?

CANA:  As you don’t seem to have grasped yet, this is a climate emergency. If a firm can’t stay in business and meet our zero carbon goals then it should be replaced by a business that can. Necessity is the mother of invention and coal belongs in the 20th century.

If we allow climate change to proceed unabated, most NZ firms will go out of business because of the impacts from climate change.

We should all be on the same side here.  Coal users had better start doing their analysis. Not our job.

We’d like to finish with this short message from Bill Nye The Science Guy.  He puts it into the kind of perspective we should all be adopting.