Rio Tinto Alcan NZ plays godfather: nice aluminium smelter you got, be a shame if something happened to it…

The Godfather Simon Johnson argues that Rio Tinto Alcan NZ (NZ Aluminium Smelters Ltd), the owner of the Tiwai Point aluminium smelter is “Godfathering” the smelter, its workforce, the Southland economy, the NZ electricity market, Meridan Energy and the poor critically endangered slow-breeding kakapo, as well as “Godfathering” the NZ emissions trading scheme to get excessive free allocations of emissions units.

Let me introduce a new term to climate change blogging. Godfathering. It’s a bit like Grandfathering, which is a recognised jargon term from emissions trading. But different. Grandfathering in an emissions trading scheme (an ETS), is giving the emission units for free to the existing emitters in the ETS on a historic pro-rata calculation. The number of units given represents the desired cap on emissions1.

Of course, our ETS is not so simple. If our ETS just applied simple “grandfathering” as outlined, then it would have a real cap, it would not allow importing of unlimited international units, and it would be impossible for any emitter to receive more units than their emissions.

That’s not the case under the NZETS, at least for some emitters. In 2010, NZ Aluminium Smelters Ltd, which is roughly New Zealand’s third largest point source of greenhouse gas emissions, was a net seller of units, not a net payer. Their free allocation of units was 135% more than the units they needed to surrender for their emissions.

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  1. Alternatively the units could be sold by auction to emitters which is logical if we treat the units as shares in a public commons owned by the Government on behalf of citizens. []

Helter smelter: NZ Aluminium Smelters wins the 2011 Roger Award

Simon Johnson reports that NZ Aluminium Smelters/Rio Tinto Alcan NZ have just won the 2011 Roger Award for Worst Transnational Corporation operating in Aotearoa/New Zealand, for milking the NZETS.

Every year the group Campaign Against Foreign Control of Aotearoa (CAFCA) awards a Roger Award for bad multinational corporate behaviour. Past winners have been Warner Brothers for the Hobbit film employment law change and British American Tobacco.

Readers may recall I wrote some posts about the excessive allocation of free emissions units from the NZ Emissions Trading Scheme to NZ Aluminium Smelters/Rio Tinto Alcan NZ.

I concluded that in 2010 the Rio Tinto Alcan NZ received 135% more emissions units than it needed for its greenhouse emissions, as an undisclosed amount of units were to compensate it for undisclosed ETS-related electricity costs. In other words, Rio Tinto Alcan NZ would pay a higher ‘carbon’ price if it was exempt from the NZ ETS, as they would at least be paying some ‘carbon’ price as a ‘downstream’ electricity user.

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120% Pure Subsidy: Part 2

I have had some very good comments on my recent post, 120% Pure Subsidy, about the quantity of free emissions units that NZ Aluminium Smelters Limited (NZAS) has received under the NZ ETS in 2010. Enough good comments that they justify a second post on the subject.

Simon Terry of the Sustainability Council points out that we shouldn’t be surprised at the high level of free allocation of units to big emitters. Simon Terry documented this in June 2008, in the report Corporate Welfare Under the ETS, which looked at free allocation of units to eight energy intensive companies under the proposed NZ ETS.

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