New Zealand

New Zealand

Credit buy boosts viability prospects -- Government acts ahead of trial

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Dire warnings about rapidly depleting domestic gas fields have apparently pushed the New Zealand government into implementing a carbon credit system for two major wind farm proposals ahead of a planned mechanism to be given a trial run later this year. Wind energy proponents greeted the announcement with enthusiasm, seeing it as likely to have a significant effect on the viability of wind development in the country.

"It's an absolutely positive step," says Deion Campbell of TrustPower Northern Generation, who is in charge of the company's 32 MW Tararua wind farm. Plans for a 36 MW expansion have been in the pipeline for some time, but the recognition of the plant's carbon credits will provide a big boost. TrustPower is still negotiating the exact number of credits that will be recognised during the first period and reworking its financial modelling, but sees the development as a "major bonus."

In making the announcement, energy minister Pete Hodgson says the recognition of Tararua's carbon credits -- and the credits that will be associated with a 40-80 MW wind farm to be developed by Meridian Energy -- will help ensure the developments are financially viable. Wind has been in competition with New Zealand's dominant power source, hydro, for the right to sell credits to meet the government's emission reduction targets.

"This is a way for the government to support the development of renewable energy by making use of the opportunities created by the Kyoto Protocol," says Hodgson. "Electricity from these wind farms would avoid some gas or coal-fired generation, with its associated greenhouse gas emissions. That is clearly in New Zealand's interests, but the initial costs mean that the wind farms would probably not proceed without the credits the government is offering. Providing the credits therefore helps us meet both our climate change and our energy security objectives."

boosting wind

Wind energy proponents have long pointed to the difficulty of making headway in a country where hydro-sourced power has been reasonably plentiful and cheap. Recent concerns about the loss of the Maui gas fields, as well as political pressure to respond to climate change, has helped boost wind prospects.

Campbell is looking to have the Tararua extension online before winter 2004. The addition of the Meridian wind farm would come close to tripling the country's wind generation capacity -- the projections for 2008-2012 suggest a related emissions reduction of up to one million tonnes of carbon dioxide. The current Tararua operations claim to be saving over 83,000 tonnes a year of carbon dioxide emissions that would be created by comparable gas generation.

The move hasn't been without its critics. While helpful to the wind energy industry as a whole, the underlying logic is flawed, according to one industry analyst, shifting focus from the polluter-pays principle.

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