Climate change: New Zealand burns most coal for electricity in nearly a decade

New Zealand burned more coal for electricity production in the first quarter of this year than any quarter in nearly a decade.

The revelation comes the day after a “transformational” climate change report that slated successive governments for its inaction on reducing greenhouse gas emissions that continue to rise.

The latest New Zealand Energy Quarterly for the period January-March 2021, released today, showed the amount of coal burned for electricity production had more than doubled from the previous quarter to nearly 430,000 tonnes.

This was the highest burned in a quarter since 2012, and helped bring the overall share of renewable energy down to 79 per cent, three percentage points lower than this time last year.

MBIE manager of markets, evidence and insights Daniel Griffiths said driving this shift was low hydro lake storage levels and less wind.

With below-normal rainfall, hydro generation was down 9 per cent on the back of lower hydro lake storage levels and generators preparing for a drier than usual winter.

This factor, coupled with a tight gas supply which saw an 18 per cent drop in the past year, saw higher coal imports to meet demand for electricity generation.

Importation of coal was 0.3 million tonnes this quarter (up 25 per cent since March 2020, but down 21 per cent since December 2020).

Coal imports for 2020 were 1.08 million tonnes, and 798,723 tonnes of that was used to generate electricity.

Meanwhile, industrial electricity costs rose sharply, increasing by 17 per cent since the year ended March 2020. Over the same period, residential electricity costs rose only 0.9 per cent.

“Coal-fired generation was used to help make up the shortfall from other sources with a third Rankine unit at Huntly brought online during the period which contributed to a near doubling of coal-fired generation for the quarter compared to the same period a year earlier,” Griffith said.

“The share of electricity generated by coal rose to just over 10 per cent.

“Nationally, demand for electricity fell 3 per cent on the same quarter in 2020 with a large decline in demand from the pulp, paper and printing sector.”

Act Party leader David Seymour said the figures “make a mockery” of the Climate Change Commission’s dream of a “painless transition” away from fossil fuels.

“In the real world, lake levels are low, gas production is down, the sun doesn’t shine at night, we are dependent on coal, and power prices are going up.

“Right now, Kiwi industry faces shutdown because of high power prices. When contracts are renewed those prices will filter through the retail market, and people will see how expensive the Climate Change Commission’s hot air really is.”

The Climate Change Commission’s report warned New Zealand was off track to meet its international obligations to reduce emissions, and laid out an ambitious path to reign them in and transition to a clean energy economy, including substantially increasing renewable sources.

At a select committee meeting on Thursday Energy Minister Megan Woods said in light of New Zealand’s climate change commitments burning coal at such levels was “unsustainable”.

The electricity system was designed to shift to fossil fuels as backup in times of low renewable sources, such as low hydro dams, she said.

Gas, which produced less emissions, was the priority. However, due to supply issues coal was currently being burned at higher rates.

“The system is doing exactly what it is set up to do but I don’t think that is acceptable.”

The gas deliverability situation was expected to improve over the next year or so, so there would be less reliance on coal if there were still a dry year situation, she said.

Woods said this situation highlighted the urgency to develop a backup energy battery using renewable energy, such as the proposed Lake Onslow pumped hydro storage dam.

The multi-billion dollar scheme, announced last year, would turn a South Island basin into a 5000 gigawatt rechargeable battery to power the country during periods of little rainfall or wind, ending its dependence on gas and coal generation.

Water would be pumped up into the dam during times of excess energy, such as when hydro dams need to be spilled.

Woods said planning work was continuing on this and an interim update was expected this year.

Good progress on feasibility, including conducting Lidar (3D laser) imaging of the site, and engagement with landowners and the local runanga, she said.

“It is moving at pace. If we are to decarbonise we need to find a solution.”

Woods said there were many in the industry who “openly resistant” to the change to using a renewable source of “dry year” storage, and who would have questions.

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