A big phasedown of ironsand-based steel production is on the cards at New Zealand Steel.
The company will also incur a sharp reduction in its use of free carbon credits that the Government gives to trade-exposed industries to deter them from relocating to less environmentally aware countries.
This is the result of a conditional three-way environmental agreement between NZ Steel, the Government and Contact Energy.
At the heart of the deal is a plan to replace much of NZ Steel's coal use with electricity to provide heat for melting scrap steel for manufacture into a new, recycled product.
To make this happen, the Government will pay up to $140 million dollars of capital cost to build an electric arc furnace at its steelworks at Glenbrook, south of Auckland. An extra $160 million will be paid by NZ Steel.
The capital costs are only part of the real costs of this sort of transformation. Operating costs are also higher, since energy from electricity costs more than energy from coal. This cost is being offset by a special deal to use off-peak electricity from Contact Energy.
NZ Steel's Chief Executive Robin Davies says this agreement will reduce Glenbrook’s carbon emissions by 800,000 tonnes of carbon, or 45%, which is 1% of New Zealand's total emissions.
"These reductions will come from replacing Glenbrook’s existing oxygen steelmaking furnace and two of its four coal-fuelled kilns," Davies says.
“An electric arc furnace makes sense when there’s enough affordable renewable energy and scrap steel available, a way to get that scrap steel to site, and the right policy settings," he says.
"We’ll firm up the details of the different aspects of the project over the coming months but crucially, New Zealand has all these essential enablers in place."
The scheme was announced at Glenbrook on Sunday by a range of business and political leaders including Prime Minister Chris Hipkins.
The money is coming from the $650 million Government Investment for Decarbonising Industry (GIDI) fund. The Government says this scheme will do more to reduce emissions than the existing 66 GIDI contributions combined.
Davies says this move is a necessary step to securing steelmaking in New Zealand for many years to come.
And he says the deal will increase steel recycling.
"Currently it's around 20% (of steel production). With the introduction of the electric arc furnace it will move to 50% and beyond.....within three years we will be hopefully transitioning from what we do today to 50% scrap and 50% ironsand."
The deal will also see NZ Steel slipping down the rankings of companies whose carbon costs are met by the Government. This scheme is aimed at companies which are emission-intensive and trade-exposed, or EITE. This plan is intended to deter trans-national companies from quitting New Zealand for less rigorous countries and emitting CO2 into the same atmosphere from a different location.
"(Our current allocation under EITE) is 90% on a declining basis, "Davies says.
"We are working with the Government to understand what our new allocation profile will look like in the new world.
"But clearly there is a significant reduction in industrial allocations required (under the new system)."
Davies was reluctant to put a precise figure on this, but said it would correspond to the 800,000 tonnes of carbon emissions that would be saved by replacing coal furnaces with the Electric Arc Furnace.
This development would also shield the Government from costs, since it faces the final liability under the EITE system.
NZ Steel is calling the deal a "win for all parties."
NZ Steel makes several common products in NZ including Colorsteel and Axxis steel framing.
127 Comments
Agriculture is not a part of the cap and trade scheme, so farmers do not pay for their carbon emissions.
https://www.mpi.govt.nz/funding-rural-support/environment-and-natural-r…
This helps farmers.
New Zealand needs to cut its emissions - its going to happen - its best if the industries that can cut their emissions through technology and capital do so. That way industries that can’t - ie farmers - can keep emitting.
Farmers should stop moaning and support EVs and this project because they are in their interests.
Why should farmers support EV's? The are an eye wateringly expensive way of changing the climate back to the Little Ice Age. Farmers perhaps would be keener to see us back to the much greater/warmer kumara growing range of of forefathers pre 1300AD.
"Ultimately, the reason electric cars are championed is their promised emission reductions. Yet, the IEA estimates that even if the world achieves its ambitious stated electric vehicle targets by 2030, the additional saved CO2 emissions over this decade will be 235 million tons. The standard climate model used by the Intergovernmental Panel on Climate Change suggests this will reduce global temperatures by only 0.0001°C by 2100."
https://iea.blob.core.windows.net/assets/ed5f4484-f556-4110-8c5c-4ede8b…
PS the CEO of Toyota states hydrogen powered vehicles turned from petrol to hydrogen consumption is the only way to de carbon motor vehicles not electric. Trust him way more than this incompetent govt of ours. Least he puts his own money were his mouth is. And considering Toyota is the largest vehicle company in the world worth listening to. Toyota will never go full electric now
We do produce a small amount of crude oil; and we could refine it. We could actually do a lot of noth of these things, the scale of the untapped oil reserve in this country is immense. It's just not politically kosher to talk about it. https://www.mbie.govt.nz/assets/77e0694e33/oil-an-introduction-for-new-…
NZ share of global CO2 emissions is less than 0.17% of global emissions. Borrow billions to buy some EV's to drop the temperature by 0.17% of 0.0001°C by 2100. There are far, far cheaper ways to cut CO2 emissions than EV virtue signalling or sacrificing kiwi cows to have them replaced by Chinese ones.
You do know grass consumes carbon. You do know about QE2 farmland planted into native bush that if combined thruout NZ farmland would amount to our second largest national park. QE2 farmland is gifted and can never be farmed ever. Yet the farmer still pays rates on it and mortgages. Also NZ is already net zero as only trees planted after 1989 are counted so that means all our national parks which is 30 percent of NZ landmass (no other western country has that amount) are included in ETS.
We were never rated on the land that QEII Trust owned. So yes they did go down. Did it mean that rates never went up due to a general rate increase across the province, no, but we still didn't pay rates on the x/ha that was owned by QEII Trust. We put our QEII covenant on because we wanted the category one areas to be forever protected, not because we wanted recognition for it. Our community appreciated what we did - never expected politicians to, and were never disappointed in that regard.
Edit: If your QEII is not fully mature chat to someone about putting it in to the ETS. QEII allows farmers who have covented the land to claim any carbon credits. I'm not up with the latest regulations on that anymore, but there are plenty of places you can go for advice.
I'm with you on that. All quite logical directions to be heading in - we def need to retain a local steel-making industry; we def need to wind back those subsidies; we def need to rely more heavily on renewable energy for industrial applications in the future;. and we def need to build-in materials re-use in all of our manufacturing processes.
The big question of course is, how are we supposed to decarbonise into more renewables when the cost of, and emissions created by, setting up new generation is very high. How long until the net benefit is achieved e.g if you build a new dam with umpteen swathes of concrete and cement, wrought iron, or put in new wind turbines with the cost of the steel, electrics and all the emissions that come with these, when would we generate enough power to have claimed to have offset the emissions used to create the generation method?
"NuScale Power has signed a memorandum of understanding (MoU) with North American steel manufacturer Nucor Corporation to explore the deployment of NuScale's VOYGR small modular nuclear reactor (SMR) power plants at Nucor's scrap-based Electric Arc Furnace (EAF) steel mills."
"South Korea's Doosan Enerbility has begun the forging production process for the first module that will be deployed as part of a NuScale VOYGR-6 small modular reactor (SMR) power plant for the Carbon Free Power Project (CFPP) in the USA."
https://world-nuclear-news.org/Articles/Doosan-starts-forging-component…
https://world-nuclear-news.org/Articles/Steel-maker-considers-use-of-Nu…
"A recent Infrastructure Commission technical paper concluded that the proposed Lake Onslow pumped hydro scheme can’t provide New Zealand with a cost advantage until 2037.
It also found that any advantage it does provide won’t be long-lasting “unless the cost to build it is substantially below $10 billion”.
That was before Energy and Resources Minister Megan Woods announced via a Cabinet paper that the P50 cost estimate – a mid-range probability – for Onslow would be $15.9 billion.
She concedes that neither Onslow nor the New Zealand Battery Project’s alternative portfolio option meet standard value-for-money criteria."
http://offsettingbehaviour.blogspot.com/2023/04/onslow-cost.html
That's my point - 2037 is a drop in the bucket where the future is concerned. Hence, we should think that if we get a cost advantage by then, that's a completely sensible investment. Children born today will only be in their teens by then - and I imagine you think that they deserve to live to a ripe old age and have families of their own someday too.
This is a serious issue - that being that generally we fail to think inter-generationally. And the world, where energy is concerned - well, she is a changing.
As for price - well, as pdk reminds us - they are all tokens anyway. Value-for-money ... pffft. Sure, targeted it where today's operational matters are concerned, but we only need to look at what our percentage of NZs GDP was spent on infrastructure works generations ago to know that our current generation isn't pulling its weight. Hence, the massive infrastructure deficit.
Perhaps current generations need to do less overseas travel; consume less plastic crap coming outta China; buy more used clothes, etc. etc. We need to lower our personal expectations for the betterment of NZ society as a whole in the future (or there won't be much of a future here).
Another serious problem - a government is not a manager of a business - that's why the words governor and manager have different roots historically. Managers think short-term because their shareholders want a return within their own lifetime. This is not the way to run a country/nation.
I understand that you are an academic (Massey?) & am not clear whether you've ever been a manager or director, as I have, of any substantial private sector enterprise in NZ &/or international (2 of these in business for over a century) however I have been all of these for decades & consider your proposition a typical copout excuse for any NZ Govt. Since Douglas/Lange.
Have you been to Singapore in the last few decades ? One of the most successful countries with the most business oriented Govt in the world.
I don't know what your definition of substantial is, but yes, I've been a self-employed/co-director of a company that employed 10 staff - I sold my shares to my partner and she has since sold the business outright to one of our international competitors; and I managed a division of another company - my division turning over $40m pa - before moving into a senior role in government where we collected $14m pa in fees and up to $150m pa in auction revenues.
And yeah, now I'm an academic.
And yeah, I've been to Singapore - lot's of times - on business. Had a very expensive Cuban cigar and a Singapore Sling at Raffles. Very enjoyable and oh so yuppie.
But what does any of that have to do with anything, I said? NZ is not Singapore, never will be and should not aspire to be.
So, what exactly was the cop-out/excuse you refer to?
Did you not read the report?
Onslow would not be in operation until 2037. It is budgeted to cost $3,000,000,000 per TWh stored.
In reality, that budget will be an underestimate.
There is an expectation alternative technologies would exist by then to make Onslow obsolete within 10 years of commissioning, possibly on day 0.
$16,000,000,000 could be better invested in other projects that are much more beneficial.
Read the report concerning Onslow linked earlier in the thread we are replying to, which identifies them.
The ones that report identifies are at the upper end of the expense scale too. There are much more cost effective grid scale storage solutions already available not considered by that report.
Not to mention, a need for 5 TWh storage capacity could be eliminated by improving energy efficiency to reduce demand, or building other renewable generation.
It can also be provided by alternative technologies to provide generation->storage->generation infrastructure for equivalent storage capacity.
And all three of those approaches could be combined for $15 billion.
And we already don't generate enough electricity for actual end use renewably, so any electricity used to pump water up a hill there is electricity that will have to be generated elsewhere from coal, gas or oil. And that's today, in 15years when its actually built and we have half a million EVs and a ton of other users switched from fossil fuels to electricity their will be even more of a shortfall unless we build lots of renewable, and get smart about time shifting it using existing hydro storage lakes.
Onslow is going to turn out to be a massive white elephant, by the time its built we'll already have smartened up the grid and maximized the existing hydro storage, or we will have rolling blackouts due to incompetence.
I thank you for her reassurance on your management & director experience however I had primarily disagreed with your proposition that such is not a suitable background for running a country & gave a very successful example. That debate has certainly not been adequately addressed by your simplistic retort that "NZ is not Singapore, never will be and should not aspire to be." That's just unsupported conscious bias, another example of the copout I was referring to.
Don't worry - if we run out of electricity we just import some dirty, open cast, Orang Utan habitat Indonesian jungle coal. It's easy being green. It is rinse and repeat of Labour's ban of selective Rimu heli logging and replace with Indonesia clearfell merbau/kwila.
Yeah.. ummm, lol..
TOTAL Fantasy unless you want to produce really low quality steel.
So more money printing to import quality steel, made using coal, for use in bridges here in NZ.
This is also a figurative bolt-gun to the head of NZ's steel export industry. They'll soon realize China (and others) have the low-quality-steel-market cornered!
WATCH:
- steel prices increase
- power bills increase
- more imported coal for power generation
If the 50% target is achieved, check for a subsidy blowout and an overall reduction in NZ steel production.
So, money down the drain, a finger to opportunity cost and instead of directly using coal (for steel production), coal energy is transmitted to produce steel - with all the ensuing transmission loss.
It's bonkers and is compounded by the importation [million+ tonnes annually?] of especially dirty Indonesian coal.. when we could extract cleaner coal here and not pay for shipping!
I'd imagine that Contact are looking around for hedges with other power companies right now! eg Genesis Huntly.....!!!!
Although to be fair, they have mentioned that this or some of this power would be interruptible load. But still, you cannot shut things down at the drop of a hat. It's like at Tiwai, where if the metal cools and goes sold.... $$$$$
Yes, solar is correct. arc furnaces use scrap to get the melt started. I did my engineering training at NZ Steel back in the early 80's. They only had arc furnaces then and they were dirty. They used scrap to start a melt and then reduced iron sand was fed in slowly to build the rest of the melt. Coal was used in kilns with limestone to reduce iron sand off the west coast beaches to a form that can be melted to produce steel.
Part of Muldoon's think big was a huge re development of NZ Steel, then taxpayer owned. That was when they built the direct oxygen furnaces.
I left as soon as I finished my training as I couldn't stand the union environment. I don't know for sure but I imagine the site is still highly unionised. This deal is as much about ensuring Labour hold that union vote at the coming election as saving emissions! 4000 employees work there. This deal sucks for the taxpayer despite all the weasel words from Shaw & co.
I would imagine the toxic emissions coming off a full scrap melt would be worse than the carbon emissions from the current iron sand feed stock. There is no free lunch!
Pacific Steel in Otahuhu had a big arc furnace that ran on scrap and produced the rebar steel. The scrap came yards around the country (Pacific Scrap). They used to back the furnace off at night to reduce load in Auckland. It was shut down as they couldn't compete with steel imports and the scrap went to China The government is claiming credit for turning back the clock 40 years.
New Zealand has always had an advantge using the Waikato iron sands. The Japanese used the same process to produce swords. I agree with you, to lift from 20% to 50% low quality recycled steel away from the 20\80 balance seems utterly incomprensible. Weakening our advantage is not good business.
Bit rusty (no pun Intended!) on this now but when I worked at NZ Steel the steel produced was of a very high quality, particularly Vanadium steels. This was because the feed stock iron produced from the kiln reduction process was of a very consistent quality. The problem with scrap is the quality of it is highly variable and it is difficult to remove the impurities and produce melt after melt of the same physical standard and quality.
Also NZ Steels output is tiny on a world scale. Their point of difference was being able to produce small tonnage runs of very high quality steel. That was their ONLY competitive advantage. I presume their marketing will hinge around low emissions in the future rather than quality! Whatever, I don't want to pay for it!!!!
As we still generate about 20% of our power from non renewable sources, there is clearly no surplus renewable energy. (And if there is the first priority is to use it to replace existing non renewable generation.) As there should be no surplus renewably generated electricity, this extra electricity demand must be generated by non renewable fossil fuels (coal) at an efficiency of about 35% (less when you subtract transmission losses) So what has been achieved? To answer that we have to know how efficient the existing process is at utilizing the coal energy directly. If it is like a lot of other process heat combustion processes then it will be in the range of 75% to 85% efficient. (it is more complicated than this so I may be over simplefying) if it is in this order then we may well be spending $140 M to generate twice as much CO2.
I have recently observed in detail other industrial process heat situations where users have removed 85% efficient gas fired heaters providing heat at up to 180 C and at the encouragement of the government replaced this with direct resistive electric heating. Through the same reasoning as above the net effect will be a 100 -150% increase in CO2 emissions. Pure green-washing for political advantages that is significantly increasing our CO2 emissions.
We really need to sit down and look at our whole energy systems and their emissions and come up with a staged plan with priorities instead of these siloed thinking knee jerk outbursts.
Some questions.
Will the modified process use coal to reduce the iron oxides to steel and still produce CO2 (granted that without something pretty clever this is unavoidable)
Will the government pay any resulting co2 emission levies for NZ Steel.
and the reason for that is market forces, just about every power company has RMA approval and plans for new carbon free generation ie wind farms or geothermal Our projects | Contact Energy but these will not be built until needed and the conditions are in the advantage of the power companies, bring them on too soon and excess supply will drive pricing down making them less affordable and the rate of return on the asset to low.
the biggest problem we have in NZ is not generation but moving it around and until any government invests heavily in transpower we will have future problems and need huntly and otahuhu to fire up when needed
I am a great believer in free market forces. (they do not exist in NZ) That aside I believe that for something like power generation, particularly in a small country like NZ, we were far better served by a central control system. If we had this now this changes would just be a matter of coming up with a well thought out plan and implementing it. As you have pointed out the so called free market does not allow this. The citizens initiated referendum in 2013 revealed that about 70% of the population were opposed to the sale of the power system. It was notable that even many otherwise right wing groups were opposed. Since the sale it has been nothing but a disaster with runaway prices, monopolistic behavior and a system that is frequently on the verge of collapse. What beats me is that when the government changed, they did nothing to reverse the situation. With such strong public support via the referendum they would have been fully justified and I think that there would have been little backlash except from a handful of greedies who never vote to the left. But they didn't and now we face this uncontrolable mess.
The market cap of the 50% owned gentailers is about $26 billion, Contact is another $6 billion and Manawa another $1.5 billion, so it would cost something north of $20 billion to buy up and centralise (maybe less if we could split them into generation and retail, and spin out the retail components?) If the idea is to reduce power prices the associated income of the purchased shares as well as the existing shares owned by the government would presumably reduce significantly, leading to an on-going cost.
Not saying it's a terrible idea to own them centrally, but it's getting expensive to reverse.
You would only have to refund them what the share holders paid for the shares. Unreasonable , unheard of I imagine you think. Well consider this. A bunch of German cities took possession of a whole bunch of private rental properties and paid the owners what they initially purchased the properties for. In some cases many decades earlier. Alternatively they could simply force a Chorus/Telecom split and devalue the market value of the shares then buy them. Easy. (for the same very valid reasons that applied for Telecom, they desperately need to do this anyway.)
The investors can hardly complain. They saw the results of the referendum. They heard the widespread opposition, They heard Winston Peters say that any government that he was part of would repossess them. The government is not there to under write investors risks. Especially such obvious ones.
So selling 49% of four generation SOE's and giving the money back to the taxpayers, and increased dividend flow, was worse than Stalin?! By 2015 we were getting just almost as much dividends with 51% ownership as we were with 100% government ownership.
New Zealand set for asset sales after crushing election win
https://www.reuters.com/article/us-newzealand-election-idUSTRE7AQ01D201…
"The Crown will receive total dividends of $440 million from the three electricity generators for the year to June, when they are all 51 per cent owned by the Government, compared with $485.8 million two years ago when they were all 100 per cent taxpayer-owned.
Thus the Crown has received $4308 million from the partial sale of these companies yet its dividend income has fallen by only $45.8 million. This is a remarkably positive outcome for taxpayers."
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3%7C%7Ctaxopr…
We get 50% of the profit back and 50% goes to the shareholders, but what you are forgetting is that all that profit came out of our pockets by way of massive price increases.
The public were very strongly unwilling sellers of the power system as indicated by the referendum results. The government sold these assets against the will of the public. The public who they are elected to serve were a very unwilling seller. In my books that pretty much adds up to a form of theft. So if we are making comparisons to Stalin this is really right up there and reversing the transaction is really only restorative justice.
National got the partial asset sale mandate from their 2011 win - see Reuters article. The asset sale referendum was a political stunt. If the public was so passionate about asset sales they would have voted differently in 2011.
You can see from the massive increase in dividends the money is going back in to our pockets. How much money is in our pockets from 100% government owned Solid Energy going broke?
And (if I recall correctly) one of the contributing factors to Solid Energy going broke was that the Key Government decided it would buy the assets of Pike River;
It was also the Key Government who decided not to prosecute any of the directors of said company.
It's called socialising the losses and Key was pretty darn good at it.
A lot more went into peoples decision to vote National than asset sales. The referendum was totally definitive. A stunt, really. I am sure that Starlin had far more convincing and justified reasons for his actions than that lame excuse. A lot of people went out of their way to express their wishes, a fairly large percentage of the population, not just a few nutters. Call that a stunt and you may as well call democratic voting a stunt. But then I suppose that is all democracy means to National.
Grab yourself a Tui Praggers and drop the ad homs. Pro tip - it makes you position look weak. Is John Armstong a dickhead too? Were the Greens dickheads to ignore the smacking referendum? The only referendum I can think of when the government of the day followed the outcome was the cringe flag one. They are hardly definitive. Don't go Trump on me - just accept the outcome of the 2011 election - and perhaps harangue Labour for not buying back the partial share.
"Anyone questioning that recommendation should look no further than some of the self-serving behaviour following last Monday's official authorisation of such a plebiscite on National's partial privatisation programme.
The will of the people – David Lange once observed – was a fickle beast. It could be an awful tyrant; it could be a terrible slave.
Someone should have told the Greens. They are happy to accept the will of the people when it comes to the results of the forthcoming referendum on asset sales. But not so when it came to the 2009 referendum on smacking. That is hypocrisy, pure and simple. If you accept the will of the people once, you have to accept it for good. And that is not a recipe for good government."
https://www.nzherald.co.nz/politics/news/article.cfm?c_id=280%7C%7Ctaxo…
lol, Referendums are definitive of the opinion of the populace at the time on the subject being addressed, no gaurantee the populace is right, but thats what the populace thinks (at least when the referendum question is clearly stated).
You're right, i shouldn't bother with the ad homs, you're a paid shill and not even worth the time. I still stand by my opinion that you are in fact a $%$khead. :)
Do those tax payers have power bills? The sale of electricity in NZ is a form of taxation. Cullen used the taxation to build the super fund. National sold the right to tax New Zealanders in perpetuity to private investors. The investors took the deal of the century with both hands. They knew nothing would change if the government of what ever ilk was going to still keep 51% of the haul. They should have sold 100% of the gentailers and legislated to force them to compete on price. Or leave them all in 100% government ownership.
Whats better than owning a monopoly? Owning 49% of a monopoly when a money hungry government owns the other 51%.
My brother, a head geologist for one of Exxon's coal mines in Wyoming, left that work to move to NZ in the mid 80s. He was then really impressed with our development of a market for natural gas to power vehicles. Yet, of course, that technology/innovation has gone backwards since.
CO2 emissions are of course part of the issue/equation but in NZs case, I think self-sufficiency ought to also play a big part in decision-making - as no amount of emissions reductions from NZ are going to change the trajectory we are on with respect to climate change. I'm not saying that is a reason to not bother at all with mitigation concerns, but I do wish we'd make decisions that also consider the long-term viability of these remote islands, in the depths of the South Pacific.
Yes Kate, we have high quality irons sands and more wood than we can use. If only there was a way of making zero carbon steel to keep the climate cry babies happy... and not impoverish the rest of us. Alternatively, the chicken little types could import their zero carbon steel from Brazil and spare the rest of all the subsides - and the hanger on bureaucrats.
"The 600,000 mt/year mill, based in Brazil's northern Maranhão state, has relied on renewable power and invested in circular use of raw materials, along with its hot metal production based on eucalyptus charcoal, replacing traditional coking coal.
The company has 50,000 hectares of planted eucalyptus for sustainable charcoal and captive pig iron production.
In 2020, AVB reached negative 0.04 mt of CO2 per ton of steel. The world average emission is 1.88 tons, "therefore, AVB became the first carbon neutral steel producer," the company said.
https://www.spglobal.com/commodityinsights/en/market-insights/latest-ne…
All very interesting, but what would our landed cost per ton be, in comparison to what we currently pay for Colour Steel? And, how many tons of roofing iron and steel framing do we consume presently?
These are all the types of questions you have to ask in order to determine whether imports from Brazil are the way to go.
Oh, and nothing wrong with leaving the iron sands and coal reserves for future generations - they'll have needs too, of course.
I have been cringing reading your comments.
My son, a chemistry and mechanical engineer resides in Antwerp. He has been in charge of installations in Ghent at the steel plant there. He did a massive project for China prior to the job in Ghent.
I doubt that this govt even understands the talent the world gets from New Zealand. He said some time ago it is unlikely he will never return to New Zealand.
50,000 hectares is a little larger than the Nelson region, and it is in Brazil, which is tropical. It's a good thought, but scouring beaches is not enough carbon.
@Kate: synthfuel is a good concept, but it was desperation after fuel shocks of 1970s. The economic case has not made sense since about 1980.
Even if it did, observe how Greenpeace today are vehemently opposing a power to gas project in Taranaki.
Like many engineering problems, society won't support the solutions science can provide.
Plenty of carbon for charcoal in NZ. NZ harvests about 34 million m3 per annum from plantations. Around 12% of this is low value pulp logs (+ sawmill woodchip + sawdust). 50,000ha in Brazil would be doing about 2,000,000 m3 per annum so our 12% low value exported logs alone would more than cover the 600,000 mt/year AVB mill capacity.
The thing just because green virtue signallers say they want something doesn't mean they will buy it. Hence only 0.7% of AirNZ seats have the carbon offset purchased. Being green is about spending other peoples money - not yours.
Thanks. Yes, I realise it was in response to an oil shock - which then subsided. But if we think of it from a NZ perspective, even though int'l crude prices came down - we had to import that and that impacts on our current account'
https://www.interest.co.nz/charts/economy/balance-payments
As well as the related global transport emissions cost and supply chain disruptions.
Of course we would have needed more Maui's had our entire fleet been retrofitted.
I don't know whether my thinking is right, but I always favour initiatives that move us more toward self-sufficiency even though an initiative might not pass muster on a purely CBA metric.
The way I view it,it is a bit like marginal economics. The question I have is it better to use new renewable generation to replace the coal used in NZ Steel at an efficiency of say 75% or use it to replace existing fossil fuel generation that uses fossil fuels at an efficiency of at most 35% in the customers hands. to me it is obvious that it is better to leave the relatively efficient use of coal at NZ Steel and concentrate on the least efficient and therefore highest polluter first.
To illustrate (Assuming that power generation is 33 1/3% efficient for easy maths.)
assume currently
8000 units of renewable power generation
2000 units of non renewable power generation @ 33 1/3% efficiency discharging 6000 unit of CO2
NZ steel end use energy 100 unit from coal at 75% efficient, discharging 133 units of CO2
Total CO2 discharge 6133 units
Option 1 Add 100 renewable generation to supply NZ Steel
8100 units renewable generation
2000 units non renewable generation => 6000 units CO2
NZ Steel uses electricity => 0 CO2 discharge
Total CO2 discharge 6000 units
CO2 reduction 133 units
Option 2 Add 100 units of Renewable generation to replace non renewable generation
8100 units of renewable generation
1900 units of non renewable => 5700 units of CO2
NZ steel remains as it was originally emitting 133 units of CO2
Total CO2 discharges 5833 units
CO2 reduction 300 units
So in other words by displacing fossil fueled generation we achieve a 300 % greater CO2 reduction than displacing fossil fueled process heat end use
PS don't get hung up on my mixing of units of energy and units of CO2 emitted. The conversion constants are consistent and it all comes out in the wash.
Not sure I am comfortable with Hipkins linking the recent stream of tropical lows spinning down to us with $140m being needed and well spent on an Australian owned steel plant. East Coast of Australia had one of the best summers in a decade so using his logic they need do nothing towards CC as all good.
$140m could have been put towards removing GST from food staples, but hey there is always a gig at the WEF for our leaders in the future.
OK, so we are going back to the same situation we had where Fletches had an arc furnace steel plant in Otahuhu which used shredded car bodies as feed. Which produced reinforcing rod and fencing wire etc.
The govt was happy for Fletchers to close this steel plant down at the time.
A very similar situation to the oil refinery where the govt is happy to stand back and watch the closure happen.
What I am saying is that this just takes things back to what it was in the steel industry.
I see a few climate alarmists in full swing here. NZ urinating against the wind. A govt feel good project. What is hidden from view is probably a tacit threat by NZ Steel departing if no form of subsidy is obtained to subsidise them in some form against ETS costs. This is quite a smart way to do it, hiding behind CC. If NZ steel departs it would be a case of importing steel made in China using belching CO2 means to make.
It'll also be interesting to see how these electric blast furnaces cope with either a shutdown off peak or keep warm on peak. Don't know enough about it but maybe a huge keep warm blanket.
Small suggested correction: Blast furnace at Glenbrook vs Electric Arc furnace.
Depends how much notice you'd get of the need to shut down. With minimal notice you would stop production for a while (after you'd emptied the ladle) and have maybe 50 people (guess) sitting twiddling their thumbs.
Another factor to be considered here is the govts reluctance to apply tarrifs on dumped Chinese steel.
And the general oversupply of steel making plants worldwide.
Bluescope has bravely hung on in there by its fingernails...
But scrap steel is still being shredded here. Currently being sent overseas, so to be able to process it here like it used to be will be great.
Curious? Where is the electricity to run the ARC furnaces going to come from? Contact does deal for "off peak power". Contact recently raised my power by 10%. Does this mean burning more coal at Huntly to meet winter cold night demand?
Now we will have the aluminium and steel smelters getting government and power company subsidies. The Bluff smelter produces aluminium for aircraft not something we even use here. Recycle steel great! Are we doing that now?
But this still comes back to electric production. Are we actually building enough wind farms and solar panel farms to facilitate the growth of electric production for a growing population. We seem obsessed with trying to show the world how wonderful we are that we have reduced emissions. However the world doesn't care what we do, we are too small and too remote to make any difference. Meanwhile we import more goods from China who builds a new coal fired plant every two weeks.
Just think this is just one of the profitable think big projects that Muldoon did. Remeber NZ was in so much debt and we need to sell these highly profitable assets off shore so we become a better economy. How much debt do we have now? How many profitable assets does NZ tax payers have now? Remeber we got told sell our hydro energy projects and we will have cheaper power (how's that going). When NZ had the highest standard of living and we were earning a decent wage against other countries we owned out assets. Yes there were problems but look at our country now. The blue print for govt owning major/critical infrastructure business in NZ is how Air New Zealand is owned and operated.
My main takeaway from this whole thing is that the world is fucked.
The government has said that this single project is bigger than the other 66 projects in the pipeline combined. This project by itself accounts for 5% of our emissions reduction goal for 2025-2030.
We need 20x more than this. And that is just to 2030. Then we have to do even more to meet the 2030-2035 targets, let alone all the way out to 2050.
This is merely the low-hanging fruit - good price, all the elements are in place for it to happen etc.
Things are going to get very much more difficult by 2030+ and those choices are going to result in lower standards of living. Repeat that calculus world-wide and do you honestly expect humanity to reach net-0 by 2050? Turkey's don't vote for Christmas and humans don't vote for lower living standards. Just look at the riots in France over a suggestion they delay their retirement age by a couple of years.
Absent revolutionary breakthroughs in technology - and I'm talking about a 1000x improvement in cost effectiveness for CO2 sequestration technology that hasn't been invented yet - we aren't going to make it, because human nature (greed, entitlement) is not going to change.
Calm down Lanth. Our forefathers, pre 1300AD, lived in a warmer New Zealand and the world didn't end. Relax and bask in global greening. Perhaps we will see the Southward retreat of the kumara growing range of yesteryear.
"Climate change seems a plausible explanation for the retreat of gardening, if not necessarily the only one. Kumara will not produce in soil temperatures of less than 15 C for five consecutive months, conditions barely met in central New Zealand even today. A northward retreat of 150 km on temperature grounds implies a decline in mean annual temperature at sea level of about 1 C. Looking at evidence of changing temperatures over the last millennium, it is apparent that an early period, estimated as 0.3-0.5 C warmer on average than the twentieth century, was followed by a cold period of similar deviation below the twentieth century average. This is recorded in various sources."
To make this happen, the Government will pay up to $140 million dollars of capital cost to build an electric arc furnace at its steelworks at Glenbrook, south of Auckland. An extra $160 million will be paid by NZ Steel.
Umm - no the Government won't be paying nor taxpayers.
The money will be coming from the Climate Emergency Response Fund. So, indirectly, consumers will be, via the ETS and the products of carbon polluters.
Edit: I see the govt. did kick start the fund with $4.5b so perhaps we are but this will be offset by contributions from the ETS - I see it is now at $3.6b
https://www.treasury.govt.nz/information-and-services/nz-economy/climat…
Another on this list should be Ballance Agri-nutrients' Kapuni gas-to-fertilizer plant. It was built under 'sink-big' many, many years ago using old technology that consumes roughly four times more gas than than a modern plant would for the same output (excluding the benefits of heat recovery!).
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.