TDB today: Smelt a rat

In my column for The Daily Blog this week, I dig into the tangled relationship between New Zealand’s electricity system, a multinational mining company, and the New Zealand government, and argue that radical reform of the electricity market would be beneficial for the country:

If Rio Tinto Alcan pull the plug on Tiwai Point, a future government will have the perfect excuse to simplify the electricity system, cut electricity prices and deliver a low-emissions future for us all. High time our politicians faced up to the fact that market-based business as usual is no recipe for our electricity future (or any other, for that matter).

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.

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

  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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Nick Smith fails the smelter spin test

What does The Hon Dr Nick Smith, Minister for Climate Change Issues, say when the Greens accuse him of subsidising greenhouse gas polluters. Well it seems he denies it and he produces instructive soundbites of spin. I am informed that at Wellington’s Oxfam election and climate change debate he said that the NZ Aluminium Smelter Ltd’s operation at Tiwai Point is the only aluminium smelter in the world exposed to a carbon price.

He has used this soundbite a few times. For example, in Parliament on 29 September 2011:

“..the aluminium smelter in Bluff is the only aluminium smelter in the world to face any price at all for its greenhouse gas emissions”.

TV One’s ‘Q and A’ programme:

“the New Zealand Aluminium Smelter in Bluff, it is the only one in the world that pays any face at all for carbon pricing”1

Parliament on September 2009:

“…the Bluff smelter, on 1 July next year, will be the very first to face a carbon price for its pollution. The European scheme excludes aluminium smelters until 2013…”

Does Nick’s soundbite stand up to scrutiny? Not very well…

Continue reading “Nick Smith fails the smelter spin test”

  1. NB By ‘pay any face’ I think he means ‘face any price’ []

120% Pure Subsidy

Nick SmithLast week, (29 September 2011 to be precise), Green MP Kennedy Graham was questioning Climate Change Issues Minister Nick Smith over his apparent lack of consistency on subsidies for fossil fuel industries. Graham was wondering why Nick Smith and Climate Change and Trade Negotiations Minister Tim Groser were happy on the one hand to oppose billion dollar subsidies to fossil fuel industries on the international stage, while on the other hand have the New Zealand Emissions Trading Scheme include subsidies in the form of generous free allocation of emissions units to big industrial emitters of GHGs.

Nick Smith replied:

“…this Government is not providing subsidies to greenhouse gas polluters. I remind the member that we are the only country outside the EU to have an emissions trading scheme. Our aluminium smelter in Bluff is the only aluminium smelter in the world to face any price at all for its greenhouse gas emissions”.

Lets examine this assertion in two parts; that the Tiwai Point Aluminum Smelter, receives no subsidies from Government and it faces a carbon/GHG price.

Continue reading “120% Pure Subsidy”