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New Zealand

New Zealand

Bumpy ride for proposed emissions bill

With the New Zealand government facing an election in a scenario of rising fuel costs, a housing market slump and spiralling food prices, its proposed Emissions (Trading and Renewable Preferences) Bill is facing a bumpy ride. Critics of emissions trading claim it would be an extra burden on an already stressed economy. The opposition National Party, currently polling over 20 points ahead of the Labour government, has pulled its support for the bill, leaving the government scrambling to try to find enough support among the minor players. Last month the government announced it would delay some aspects of the ETS, such as a regional petrol tax to pay for Auckland's transport infrastructure, and not bring it into force for the transport sector until 2011 when it is also to kick in for electricity. New Zealand offers no specific financial support for wind power, but its proposed Emissions Trading Scheme (ETS) will raise the cost of fossil fuel, making wind power a relatively attractive option. Assuming a price of carbon of around NZ$25/ton, emissions trading is expected to push fossil fuel electricity prices up by NZ$14/MWh, a 19% increase. Even without ETS, the cost of gas-fired generation is expected to increase by NZ$15-25/MWh. Whether the combined threat of rising fuel costs and climate change can drive significant investment in wind power until and if the ETS comes into force remains to be seen. The government is aiming for 90% of power from renewable energy by 2025, up from today's 65%, which is mainly provided by large hydro plant. New Zealand's wind power capacity, at 322 MW, supplies 2.5% of the renewables total. Another 165 MW is building and a further 1064 MW is in the consents process.

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