New Zealand

New Zealand

No more carbon credits

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The allocation of carbon emission credits to wind projects in New Zealand has come to a grinding halt following a climate change policy review by government at the end of 2005. As a result, several projects are on hold since their financial viability was based on sales of emission credits as well as electricity.

The review raised concerns that under the Projects to Reduce Emissions (PRE) program, actual reductions from wind plant were greater than the number of credits being awarded. The 13 wind projects selected from two calls for tenders under PRE in 2003 and 2004 were awarded 5.16 million emission reduction units against a forecast emissions abatement of 5.95 million. The discrepancy and other political changes led to more reviews and reports into alternative cross-sector incentive schemes and an announcement that there would be no third stage of PRE.

The government has recently released a "transitional measure" paper looking at ways to price carbon to ensure that different energy technologies are competing on the same footing. The paper looks at a range of specific renewable energy support mechanisms: obligations for purchase of green power; fixed power purchase prices; and auctions for power purchase contracts. At last month's national wind conference (main story), energy minister David Parker said they all have points for and against them and called for wind proponents to have their say.

The seemingly endless stream of reviews and reports is frustrating the wind industry. As Allco Wind Energy's Bernherd Voll remarked somewhat exasperatedly at the conference: "In New Zealand, there is no [government] support at all for the wind industry, just reports." He added: "There are no incentives or financial support for new entrants....We need the support desperately."

Of the wind projects allocated credits, only some are proceeding. NZ Windfarms gained 519,000 credits to support its Te Rere Hau development of locally made Windflow turbines, now under construction, but Genesis Power shelved its Awhitu project, though it was selected for 279,864 credits. Some have traded their credits internationally. In October, Meridian Energy sold its White Hill carbon credits to the Swiss Climate Cent Foundation for over NZ$9 million after the deal was approved under the Kyoto Protocol's Joint Implementation mechanism. Similar deals have also been done with the Netherlands (Windpower Monthly, January 2004).

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