Extinction Rebellion’s latest protest involved blocking rail lines used to transport coal in the South Island. Despite 19 arrests, it has promised that this is only the start of a campaign against coal.
This stance against coal is fair enough. Coal is the dirtiest of all fuels in terms of environmental impact for the amount of energy generated. And that energy includes carbon dioxide – which contributes to climate change – and other pollutants that are harmful to humans, like PM10.
While many motorists currently don’t have any choice but to drive their cars and use petrol, most coal users do have an alternative. With the exception of Glenbrook Steel Mill, coal burnt for heat can be fairly simply replaced by biomass or electricity.
The only reason that coal continues to be used for heat is because it is cheap. Thankfully, we have a way to make it more expensive: the Emissions Trading Scheme (ETS).
What Price Will Kill Coal?
The answer to this question varies depending on where you are in the country. The biggest coal users other than Glenbrook are Fonterra (for its milk driers) and Huntly Power Station (which also uses gas).
Fonterra’s milk factories are dotted all over the landscape. Some are close to electricity lines, so coal could be fairly easily replaced. It also appears that the electricity grid could cope with the change relatively easily, since the factories operate mostly in spring and summer, whereas electricity demand peaks in winter.
The factories that are further away from electricity would require biomass (plant stuff) for fuel. Again, location matters. Some have forests nearby and could burn waste wood. Others would need biomass grown specifically for burning.
A carbon price of between $50 and $75 per tonne would probably get rid of most coal use in New Zealand. This would remove the need for Huntly to use coal, except perhaps in dry years. It would also convince most Fonterra factories to switch to electricity or biomass.
How Do We Get There?
This is the difficult bit, although a carbon price that high is not unheard of. The price under the European ETS currently hovers around NZ$50 per tonne. The “true” cost of carbon (if we accounted for all of the costs of emitting carbon dioxide) has also been calculated as within the $50–75 range – and rising.
As I’ve discussed in previous blogs, several key reforms of the ETS are needed to achieve this price rise:
- Remove the price cap right now. This is a no-brainer.
- Limit or remove forestry from the ETS. No other country in the world has unlimited forestry offsets for fossil fuel emissions. The Parliamentary Commissioner for the Environment has suggested using forestry as an offset for agriculture only. This would enable the price for fossil fuel emissions to rise.
- To deal with the equity impacts, we should give the money raised through the increased carbon price back to people in the form of tax cuts or a carbon dividend – effectively a UBI (unconditional basic income).
These changes would see the price of carbon rise markedly, at least for fossil fuel use. Coal would be goneburgers, and rightly so.
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