NZ govt to back wind farms with carbon credits
Country: NEW ZEALAND
The two wind farm projects - a 36 megawatt (MW) extension of TrustPower's (TPW.NZ) Tararua wind farm and a 40-80 MW project proposed by state-owned Meridian Energy - will be allocated Kyoto Protocol "carbon credits".
"Electricity from these wind farms would avoid some gas or coal-fired generation, with its associated greenhouse gas emissions," Energy Minister Pete Hodgson said.
"That is clearly in New Zealand's interests but the initial costs mean that the wind farms would probably not proceed without the credits the government is offering."
New Zealand ratified the Kyoto accord on global warming last December.
TrustPower said it had received consents to enlarge its wind farm more than two years ago but it had not been economically viable to begin the expansion.
"This will, I think, tip the balance between viability and the project stagnating," a spokesman said, adding that the project was expected to be completed within two years.
A Meridian spokesman said several North Island sites were being investigated for its proposed wind farm, expected to be commissioned in 2005.
He declined to comment on the value of the carbon credits, saying it was commercially sensitive.
New Zealand generates around 63 percent of its electricity needs from hydro power stations, with gas providing around 22 percent, geothermal around seven percent and coal about four percent.
Under the deal, promissory notes for Kyoto Protocol emission units will be allocated to the power companies depending on the final amount of generation from the wind farms.
Hodgson said the wind farms could deliver emission reductions of up to one million tonnes of carbon dioxide over the Protocol's first commitment period 2008-2012.
It has been previously estimated that the global price of carbon is between NZ$10 and NZ$20 per tonne.
The Kyoto pact aims to reduce greenhouse gas emissions from the developed world, which account for the overwhelming bulk of the gases, by 2012 to around five percent below 1990 levels.
Around 100 countries have ratified the controversial protocol but New Zealand's major trading partners Australia and the United States have remained outside the agreement.
The New Zealand government has announced plans for a carbon tax some time after 2007 which will raise energy prices between six and 19 percent.
New Zealand produces between 70 and 90 million tonnes of carbon dioxide a year but expects to earn as much as NZ$1.4 billion ($784 million) from carbon sink credits generated by its big commercial forests.