Closing in on Kyoto’s Carbon Credits

Deadlines to begin work on the Kyoto Protocol are approaching quickly, and the New Zealand Government has awarded its first round of carbon credits. The proposed Rotokawa geothermal project near Taupo has received the second largest award at 790,923 emission units, if the project planning goes through.

Mighty River Power and the Tauhara North No. 2 Trust plans to build the geothermal power plant to produce electricity for supply to the national grid. Mighty River Power is a partner with the Tauhara North No.2 Trust in the existing 32MW Rotokawa geothermal facility. The project is scheduled to come on-stream in 2006 and have an expected production life of around 25 years. “This project offers the double benefit of reducing greenhouse gas emissions and enhancing electricity supply security,” said the Convenor of the Ministerial Group on Climate Change, Pete Hodgson. “The plant would provide new electricity generation capacity of about 39 megawatts (when completed). By avoiding the need for extra generation from fossil fuels such as coal or gas, it has the potential to reduce greenhouse gas emissions equal to 968,996 tons of carbon dioxide from when it comes on stream until the end of 2012.” Carbon credits are issued under the Government’s Projects to Reduce Emissions program. A carbon credit, or emission unit, is equivalent to one ton of carbon dioxide or other greenhouse gas that might have been emitted into the atmosphere under a fossil fuel, power generation project. Emission units are effectively tradable allowances for greenhouse gas emissions. Under the Kyoto Protocol, each country with targets must hold sufficient emissions units to match its emissions during the first commitment period of the Protocol, which begins in February 2005. International markets for carbon trading are developing and project owners will be able to sell their units on this market. The international market sets the price for emission units. A number of New Zealand firms have entered negotiations to forward sell emission units awarded under the Projects to Reduce Emissions program to European buyers. The current price on the international market is around NZ 15 a unit. On 30 August, the second Projects to Reduce Emissions tender round opened. Six million emission units are available in this round. The program is a key part of the Government’s climate change policy package. Projects eligible for carbon credits must achieve quantifiable reductions in greenhouse gas emissions that would not otherwise occur. Greenhouse gas reductions must also be additional to “business as usual”. For example, the project owner must prove that without the award of emission units the project would not otherwise proceed. Other businesses chosen for the Projects to Reduce Emissions program are; – Fire-Logs New Zealand, to produce wood pellets from waste sawdust for domestic and industrial use. – Genesis Energy, for the enhancement of an existing hydro generation scheme at Tongaririo – TrustPower, a proposal to produce electricity from landfill gas – Watercare Services Limited, a proposal for staged installation of hydro energy turbines at three water supply dams in the Hunua Ranges and a bypass channel in the Waitakere Ranges – New Zealand Refining Company, a proposal for an electricity and steam co-generation plant at the Marsden Point refinery – Southern Paprika, a proposal for a bio-energy plant to heat glasshouses – TrustPower, a proposal to enhance an existing hydro generation scheme at Waipouri – TrustPower, a proposal to enhance an existing hydro generation scheme in Taranaki – New Zealand Windfarms, a proposal for a 50 MW wind farm in Manawatu – Esk Hydro Power, a proposal for mini-hydro scheme on the Pask family’s Toronui station in northern Hawkes Bay – Palmerston North City Council, a proposal for generating electricity from landfill gas – Wainui Hill Wind Farm, a proposal for a wind farm of up to 30 MW on Wellington’s Wainui hills – Genesis Energy, a proposal for a five MW extension of an existing wind farm – Genesis Energy, a proposal for a wind farm of 19 MW on the Awhitu peninsula
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