Government launches $ 70 million fund to help companies decarbonize

Kiwi companies are being encouraged to use a new $ 70 million fund to switch from coal and gas to clean energy for heat processing.

Process heat accounts for a quarter of New Zealand’s energy-related emissions, and the new fund, formally launched by Prime Minister Jacinda Ardern in Taranaki this morning, will target the country’s largest energy users.

Managed by the Energy Efficiency and Conservation Authority (EECA), the fund will be available to companies that can demonstrate that they are committed to decarbonization and where the funds will help them do so.

“Successful applicants will likely already have a plan to decarbonize their process heat and will be able to demonstrate cost-effectiveness as well as their contribution to economic recovery by boosting economic activity and providing local employment,” said Energy Minister Megan Woods. .

“We are asking New Zealand companies to implement these projects quickly, not only to reap the benefits of lower greenhouse gas emissions and increased economic activity, but to demonstrate to New Zealand industry that there are proven viable solutions for their clean energy needs. “

A minimum of $ 15 million is available in the first round, which begins today with a December 14 deadline for proposals.

Ardern said that drastically reducing greenhouse gas emissions from process heat was a “win-win” for New Zealand’s climate efforts and its recovery from Covid-19.

“It provides much-needed financial support to businesses to help with the often costly transition from plant and equipment to clean energy sources.

“The Interim Commission on Climate Change recommended focusing on reducing emissions from process heat as a priority to decarbonize our economy.”

Professor Dave Frame, Director of the New Zealand Climate Change Research Institute at the University of Victoria, said that jointly investing with business to move away from fossil fuels was a “great idea.”

“It is good to see that the government focuses on the heat of the process; it is a major contributor to emissions from the energy sector and it is an area where alternatives are often available.

“There is a good case for the government to step in as well: we and future generations of New Zealanders benefit from reduced CO2 emissions, so it is quite reasonable that we and future generations of New Zealanders contribute to helping businesses. to make this important but sometimes expensive changes. “

Massey University climate and energy expert Professor Emeritus Ralph Sims said the fund was “long overdue” as today’s industrial heating systems have become technically mature and largely inexpensive.

Many countries such as Austria, Denmark, Sweden, Finland, the United Kingdom and the United States have been successfully using woody biomass residues from forests and crops to provide industrial heat for decades, he said.

“Since it is waste, it is carbon neutral, as any CO2 emitted during its combustion will actually be reabsorbed by replanting forests or planting more crops.

“As long as biomass is not the result of deforestation activities or growing crops to obtain biomass that can offset food costs, it is an acceptable source of energy, which can also be stored.”

Thermoelectric technologies, such as high-temperature heat pumps, were also well proven and were already being used or planned in New Zealand, such as Synlait for drying milk in one of their plants.

“Since our electricity is largely renewable generation, the carbon emissions are very low,” Sims said.

“The heat from biomass is also evident here with, for example, several heated schools and greenhouses on the South Island, where there is no supply of natural gas, which are recently being converted from coal to biomass.”

Sims said the key was to ensure that a reliable supply of biomass fuel could be contracted over the medium term to provide security of supply.

“Government support through EECA will overcome some reluctance recently expressed by the horticulture industry, among other things, about moving too fast and the costs involved.

“We, like all other countries, simply have to find alternatives to burning coal now.”

The new fund is separate from the $ 200 million State Sector Decarbonization Program launched in January, which supports decarbonization programs within the public service.

To date, nearly $ 80 million in funding has been committed, with expected annual emission reductions of 26,000 tons once these projects are completed.

Today’s announcement comes after Labor pledged to decarbonize the public transport bus fleet by 2035 and replace coal-fired boilers with electric alternatives ahead of the election.

Ardern also pledged to increase funding for agricultural greenhouse gas programs by $ 6 million a year.

Separately, Labor planned to introduce a vehicle fuel efficiency standard for new and used light vehicles entering the fleet, and extend the current road user charge for heavy electric vehicles after 2025 and extend other low-emission energy sources, such as hydrogen.

Commenters welcomed those new emissions standards, but noted that they will not apply to the vast majority of vehicles in what was the oldest OECD car fleet.

The Labor Party has also signaled that it wants to transition to clean energy through 100% renewable electricity by 2030, a goal that some experts have doubted is possible.

The Government has already approved a ban on new offshore oil and gas exploration, a series of adjustments to the Emissions Trading Scheme (ETS) and introduced the Zero Carbon Law focused on 2050.

But while Ardern has hailed climate change as this generation’s “nuclear-weapon-free moment,” environmental groups have been highly critical of failing to achieve meaningful action.

That included failing to introduce repeatedly recommended “feebate” schemes, although its Clean Cars Standard would achieve some of the same impact when it arrives in 2025, and there is no indication of any future ban on fossil fuel vehicles in general.

In addition to moving away from a previous commitment to electrify the government fleet by 2025, the government has scoffed at opting not to bring agriculture, our largest emitter sector, to the ETS, in favor of an industry-government partnership.

And if agriculture is finally forced into the ETS, that won’t happen until 2025, when it will receive the same 95 percent discount that has been given to “carbon-intensive” industries like steel.

It already seems unlikely that New Zealand’s climate promises under the Paris Agreement will be strong enough to meet the UN’s aspiration to limit warming to below 1.5 ° C.