By Sarah Crichton of NZPA
Wellington, March 23 – Government policy limiting carbon dioxide emissions appeared in tatters tonight and the prospect of a carbon tax on industry has edged closer after the go-ahead was given for the Stratford power station.
Environment Minister Simon Upton today released his decision to approve an air discharge permit for ECNZ’s proposed gas fired combined cycle power station at Stratford in Taranaki. The station will use natural gas to run gas turbines to produce electricity.
The decision — made under the Resource Management Act, which gives the Environment Minister alone the legal power to make the ruling — conflicts with the Government’s own policy on CO2 emissions.
A board of inquiry which held hearings into the issue heard evidence that the net result of the proposed plant was likely to lead to an overall reduction in CO2 emissions by ECNZ in the short term.
However, emissions would be likely to increase at some future point when electricity demand increased and other forms of thermal generation were brought back on line.
If allowed to go ahead without conditions attached, the new power station would have led to a potential 5 percent increase in the country’s current CO2 emissions level, the board heard.
Mr Upton broadly followed the approach taken by a board of inquiry, which recommended an air discharge permit be granted subject to the creation of carbon sinks through tree planting to soak up emissions from the Stratford plant.
But he went a step further, to give ECNZ more flexibility in the way it makes up for the effect of the CO2 emissions. As well as planting forests, the corporation will also be able to make CO2 reductions outside the power generating system.
Last year the Government stopped short of imposing a carbon tax when it introduced its policy on emissions in July last year as part of its obligations under the international Framework Convention on Climate Change.
Mr Upton was widely held to have supported the idea, but cabinet ruled instead to urge industry to take up voluntary agreements to keep emissions within set levels.
However, the minister’s decision sets a precedent by showing that consent authorities can impose obligations on companies under law.
Mr Upton said it would force a rethink of the policy and time would be spent over the next few months considering how to incorporate the decision into the Government’s overall policy.
One solution would be to introduce a carbon tax or create a tradeable emissions permit system put in place for industry.
His decision is still open to appeal to the Planning Tribunal by ECNZ and other interested parties, such as environmental groups.
ECNZ has welcomed Mr Upton’s decision.
Chief executive Dave Frow said it set the basis for the Government to consider a practical national policy on CO2 emissions for all industry, not just the electricity sector.
It was important other new thermal power stations be bound by the same requirements as Stratford, he said in a statement.
Who is to build and operate the Stratford plant has yet to be finalised and ECNZ was negotiating with several interested parties, he said.
The corporation plans selling land, a tranche of Maui gas and the resource consents for the power station as a package. The sale would help competition and help develop a wholesale electricity market.
Mr Frow said the impact of Mr Upton’s ruling was being assessed by potential purchasers because it would have an effect on the value of the sale package.
Labour’s environment spokesman Pete Hodgson said Labour welcomed the decision, but the party was adamant the use of tree planting to offset new CO2 emissions was of limited and temporary value.
"However, we acknowledge the board’s findings are a monumental first step towards a sustainable energy future and are delighted the Resource Management Act has been able to achieve real progress in the face of cabinet inaction and duck-shoving."
Labour’s New Plymouth MP Harry Duynhoven, however, was not as pleased. He said there was no demonstrated need for the new power station.
ROC leader Ross Meurant told NZPA he was astounded Mr Upton had taken "a sneaky back-door method to advance his own hobby-horse of a carbon tax".
He said Mr Upton’s linking of the resource consent to "either growing trees as carbon sink or putting filters on a chimney" amounted to a carbon tax. He opposed the tax idea because of the costs it imposed on industry.
"That argument was rejected by cabinet when it tossed out the carbon tax idea last year.
"New Zealand already meets its obligations under international conventions at the moment. This sets an unnecessarily low benchmark which affects our competitiveness against other countries, all because Mr Upton wants to run his own hobby-horse," he said.
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