Kyoto cost: millions every year says Genesis

By Rob Hosking

Thursday 8th April 2004

State-owned electricity generator Genesis Energy has warned ministers the impending carbon tax will cost it millions and has lobbied ministers for an exemption.

Genesis owns the coal-fired Huntly Power Station. The role of coal in electricity generation has been thrown into even sharper relief with the demise of Project Aqua two weeks ago.

State-owned Enterprises Minister Mark Burton was told last year the carbon tax would cost Genesis $85 million a year at current settings.

The increased coal burn at Huntly to ensure sufficient electricity reserves following the recent power shortages means the carbon tax, imposed as part of New Zealand's contribution to the Kyoto Protocol, could render Genesis unprofitable, Genesis chairman Brian Corban warned Mr Burton in August.

The suggested carbon tax levy is $25 a tonne of emitted CO2.

"Indicative modelling shows at this stage it may not be possible to pass this tax through to our customer base and remain competitive," he warned Mr Burton in a letter.

"Without an exemption to the carbon tax there is a significantly increased risk to our business."

Mr Burton told the state-owned company to apply to the Climate Change Office for a negotiated greenhouse agreement if it wanted relief from the tax but that he would not make Genesis a special case.

Genesis this week announced it is looking at another coal-fired electricity station a move that was welcomed by business groups.

"In spite of the government's desire to burden our economy with the carbon tax costs of Kyoto, coal may still represent the best way forward to meet our ambitions for growing the economy," Northern Employers and Manufacturers Association chief executive Alasdair Thompson said.

"New Zealand has sufficient coal to last 1000 years."

Genesis is no longer trying to get an exemption from the carbon tax, Mr Jackson said this week. However, the company still opposes the tax.

"Why penalise customers with another tax? We are simply going to have to pass it through to consumers. The incentive has to be to remove the carbon dioxide from the emitted gases from coal-fired generators."

Genesis had sought an exemption from the carbon tax through to 2013, which is when the resource consents the company operates under are due for renewal, he said. The company intended to use that time to work on ways to remove the emissions, and has, with a number of other companies such as Shell and BHP, invested heavily in an Australian-based research centre studying that issue.

"A tax in the short term is pretty severe, when the whole industry is only at the laboratory stage of developing CO2 extraction technologies."

Comments from our readers

No comments yet