New Zealand likely to have 'record high imports' of coal in 2021 - officials

By Jordan Bond for RNZ 

New Zealand is likely to import more coal this year than it has in any other year, in the midst of a government-declared climate emergency.

Last year the country's main coal users imported more than they had in 14 years, and this year government officials expect even more to come in. Most of this coal is burned to power our homes and businesses.

The government expects an additional 150,000 tonnes of coal will arrive here, a 14 percent increase on last year's total which was already over 1 million tonnes.

Forest and Bird chief executive Kevin Hague said this was unacceptable.

"What we're seeing is the result of years of failure to put in place alternative arrangements. And in consequence, we're faced with this disaster," said Hague, a former Green Party MP.

Coal accounted for more than 10 percent of the country's electricity in the first three months of this year.

Five years ago it was 2 percent; the proportion has steadily increased since. Coal is the most carbon intensive fossil fuel in the world, around twice as much as natural gas.

Two main problems have caused the immediate issue.

Lower than normal rainfall in recent years has hampered hydropower generation, which is by far the country's largest source of renewable electricity. In 2019 hydro contributed 58 percent of the country's total electricity supply, and the first quarter of this year was down to 52.5 percent.

The hydro storage lakes are relatively shallow, and need regular inflows of water to produce electricity at capacity.

The second problem is unexpectedly low natural gas supply, which has dropped from 13 percent of the total supply in 2019 to 11 percent in the first quarter of this year.

RNZ has reported a greater use of coal over the last few years.

Officials from Ministry of Business, Innovation and Employment advised Minister of Energy and Resources Megan Woods in June that this was projected to get worse.

"It is likely 2021 will have record high imports of coal," MBIE officials wrote.

"Coal imported during 2020 was approximately one million tonnes, with approximately 800,000 tonnes used to generate electricity in 2020.

"Coal imports for the first quarter of 2021 were 299,300 tonnes, with 427,000 tonnes consumed for electricity generation."

So more than half of the coal used in 2020 for electricity - already the most in 14 years - was used in the first three months of 2021.

Climate Change Research Institute director professor Dave Frame said the unexpected increase in the use of coal meant the country would have to cut back future emissions even more than projected if New Zealand was to meet its climate targets.

"It just builds up in the system, creating more and more warming every year. So the longer we delay on this problem, the worse it gets. And when you finally get around to stopping emitting carbon dioxide from these fossil sources, we'll have caused a certain amount of warming, and that warming will persist for thousands of years."

The Climate Change Commission recommends this: "the Government must take action to ensure that coal is phased out as soon as possible."

ACT Party MP Simon Court said the gas shortage was the result of the government banning offshore gas exploration in 2018. The government rejects this.

Court said the companies that own the gas fields were not bringing their drill rigs here to refresh the currently producing fields - an expensive task - because they could not look for new gas sources on the same trip.

"There's been a great reluctance to bring any of that gear, because the people that own the gas fields, and who might want to develop new ones, don't see a future for gas - that's because the government's told them there's no future for gas," Court said.

The share of renewably-sourced electricity is high in New Zealand, at about 80 percent. It has been around that level since the mid-1970s. No big dams have been built since the Clyde in 1993.

Wind and geothermal generation have increased from 7 percent to 23 percent of the country's total electricity generation in the last two decades, but the overall share of renewably-sourced electricity has not increased in decades.

Professor Frame said climate change policy had been overly politicised to the detriment of a clear long term plan.

"We have had a pretty good electricity sector from a carbon emissions perspective for a very long time. And it probably has contributed to us taking our eye off the ball a little bit.

"What I was hoping for with the Climate [Change] Commission and recent attention given to climate change policy would be that we'd treat it more like... inflation, and do it away from the political arena, and not make it quite so political. If you could get broad, multi-partisan agreement on how to phase out coal, then you would head off these sorts of problems occurring as they will every few years probably," Frame said.

About a third of the coal we import is used at the Glenbrook Steel Mill south of Auckland, and at Golden Bay Cement in Whangārei.

The rest is burned at the Huntly Power Station for electricity. There is also domestically produced coal which is used in a variety of small and larger scale operations, but most of it is not a suitable grade or quality for Huntly to use, so it imports.

There has been a reduction in domestic coal production over the last 20 years, but production has been stable over the last five years, during a time imports have skyrocketed.

Forest and Bird's Kevin Hague said regardless of the justification, there just cannot continue to be this level of carbon put into the atmosphere with accessible, clean alternatives available.

"The need to stop mining and burning coal is not a subject for negotiation - you can't negotiate with physics and chemistry. Climate change is happening now because we've left it so late to do anything at all. We have shut off all the gradual change options," Hague said.

The industry says this coal is needed to keep the lights on, and is a last resort. Genesis Energy, which runs the Huntly Power Station, declined to comment for this story but has previously had said it will stop using coal "under normal hydrological conditions" by 2025, with the "intention" to phase coal out completely by 2030.

The company said it was in late stage negotiations for a number of new renewable projects, and a large wind farm, Waipipi in South Taranaki, started operating earlier this year, generating enough clean electricity for 65,000 homes a year.

Hague said companies must also build more renewables, but that takes time.

In the interim, Hague said consumers need to cut back electricity use, to reduce the amount of coal burned, and the government somehow incentivise demand-side reductions in electricity use.

Hague also wanted the government to more strictly regulate the energy companies.

"It is not okay for government to say 'we don't like interfering with markets' and therefore stand back. The moral imperative here... is for the government to act to protect New Zealanders from the effects of climate change, and that trumps everything else."

Energy and Resources Minister Megan Woods would not be interviewed for this story, but a spokesperson from her office sent through a statement.

She said the use of this much coal was not acceptable, and was exactly why the government was investigating alternatives, including a large, pumped hydro scheme at Lake Onslow in the South Island.

If the government chose to go with the scheme, it would be finished by 2030 at the earliest. A feasibility study is due back next year and, if chosen, construction would only start in 2024, and take four to five years. It would take another two years to fill the upper reservoir with water before it could operate.

Dr Woods said it was "unfortunate" that fossil fuels played such a role in our electricity security.

However she said the energy sector had committed more than $1 billion to renewable projects just this year, including geothermal and wind sources.

One of each has already opened this year, and the country's biggest solar farm in Taranaki - Kapuni - is also now operating.