Turn off Meridian open letter to Mark Binns on why I am divesting from coal-pushing Meridian Energy

When is a renewable electricity generator not a renewable electricity generator? Or what do you do when the electricity generator who are claiming to supply your home with 100% renewable electricity enters into a commercial contract that keeps a coal-thermal power station emitting carbon dioxide for an additional four years?

Meridian Energy has recently signed a contract with Genesis Energy to keep the Huntly coal thermal power station open for four more years instead of closing in 2018.

New Zealand has made some predictions of future reductions in emissions that we have confidently sent off to the United Nations Framework Convention on Climate Change (UNFCCC). Unfortunately Meridian's action has had the effect of sending the emissions savings up in a puff of coal smoke.

So I decided to divest from Meridian Energy and move my account to electricity supplier to Ecotricity who own only 100% renewable generation capacity and who are certified as carbon neutral. I used the Consumer Power Switch website. There is also the Whats my number web site.

I thought I should let Meridian Energy know I was voting with my account so I sent this open letter to Meridian Energy two weeks ago on 16 June 2016. I have not yet received a reply.

Mark Binns
Chief Executive
Meridian Energy Limited
PO Box 2128
Christchurch 8140

16 June 2016

Re: Meridian Energy’s support for four more years of thermal coal electricity carbon dioxide emissions from Huntly Power Station

Dear Mr Binns,

I am a Meridian retail customer. My customer number is TrJ5I19vcteK2 My account number is 1.h@"]41Y6x#5-r.

I consider climate change to be a serious risk that we are all morally obliged to respond to. In 2012 I deliberately chose Meridian as my electricity retailer because of it's 100% renewable generation.

I am aware that to some extent the electricity I consume inevitably draws on some fossil-fueled capacity due to the networked nature of the grid. However, I was satisfied that choosing Meridian as my retailer was the best I could do in terms of reducing carbon dioxide emissions as I would not be contributing my money to any fossil-fueled thermal generation. In the past four years I have been very happy with that choice and with the service I have received from Meridian. Unfortunately, I did not know that Meridian had a contract with Genesis to keep the Huntly coal thermal power station operating to 2018.

On 28th April 2016, Meridian Energy announced that it had signed a new contract with Genesis Energy that would keep the Huntly coal thermal power station operating for an extra four years. This contract therefore postpones the expected closure from the planned 2018 date to 2022. I have read the statement on the Meridian website explaining the contract as a means of reducing the risk of low levels in the hydro lakes. The explanation fails to take climate change seriously.

The Fifth Assessment Report of the IPCC sets out very simply the carbon budget consistent with limiting global warming to less than two degrees Celsius. The global warming we will experience will be linearly proportional to the cumulative volume of carbon dioxide emissions emitted by humanity. To prevent further dangerous levels of warming with a reasonable probability, cumulative emissions cannot exceed the carbon budget. At that point, emissions must not exceed net zero.

As a matter of physics, the additional emissions that will come from Huntly for the extra four years will result in higher and more dangerous eventual global warming. Meridian Energy's actions have facilitated these additional emissions.

I find Meridian’s actions to be completely contrary to the IPCC's finite carbon budget conception of mitigation and with Meridian’s previous statements on renewable electricity. Those statements now appear very shallow and insincerely held to say the least.

Therefore, it gives me some satisfaction to inform you I am moving my electricity account to a 100% renewable electricity generator who has carbon neutral certification and who is not a party of the Huntly contract. It is my sincere wish that as many customers as possible who are concerned about climate change also leave Meridian.

Yours sincerely

Helter smelter deja vu Tiwai Point smelter uncertainty stalls renewables for more Huntly coal

I look at how New Zealand Aluminium Smelter Limited is behind the Meridian/Genesis deal keeping the Huntly Thermal Power Station burning coal as the threat of closing the Tiwai Point smelter is stalling the construction of consented renewable energy projects. NB This post also features on Hot Topic.

My last post at Hot Topic was about energy companies Meridian and Genesis doing a deal to keep the Huntly Thermal Power Station open (and burning coal) for an extra four years.

My post really just noted how backwards the decision was in terms of reducing emissions of greenhouse gases. And that the expected shut-down of Huntly represented the only predicted drop in energy emissions New Zealand had advised to the UNFCCC. And that reduction has just gone up in smoke.

However, New Zealand Aluminium Smelters Limited and the Tiwai Point smelter have a malignant background role in the Huntly deal.

Meridian Energy said the deal was necessary to provide security of energy supply if the hydro lakes are low. That is only the case if the next 'cab off the rank' of renewable energy capacity is not built to replace Huntly. The generators don't want to build any new renewable capacity if the smelter closes and Meridian then releases cheaper Lake Manapouri hydro electricity onto the grid.

Hence helter smelter deja vu all over again.

The last time I blogged about the smelter was in late 2012, when the Government was rolling out the partial privatisation and float of Meridian Energy. New Zealand Aluminium Smelters Limited chose that moment to threaten to close the 'unprofitable' smelter and to demand cheaper electricity from Meridian.

For a re-cap of the issue, see this summary by Bryce Edwards as of April 2013. The conclusion was in August 2013 with a new (secret) power deal with Meridian with the Government putting in a $30 million subsidy on the promise of no plant closure before the end of 2017.

In terms of climate change policy, Gareth Renowden pointed out that the closure of the smelter would be a good thing.

Electricity prices would fall as Meridian's cheaper Manapouri hydro power would enter the wholesale electricity market. The most expensive generation, from coal and gas thermal plants (such as Huntly) would be forced out of the market by price. Electricity security would be better, as Lake Manapouri's storage would be available as a buffer for droughts instead of being committed to the smelter.

Cheaper power, less emissions, more renewables, more security. That sounds like the right strategy on a planet with a finite carbon budget consistent with no more than two degrees celsius of warming. What's not to like?

Now fast forward to April 2015. Meridian has been partially floated. New Zealand Aluminium Smelters Limited is yet again stating that its electricity transmission costs are too high and linking that to the smelter's future.

Board Chair Brian Cooper said

"No decision had been made about the future of the smelter, and we are doing everything we can to secure a long-term commercially competitive electricity price for the smelter."

So back to square one. New Zealand Aluminium Smelters saying yet again "Nice smelter, you got there. Shame if something happens to it". So who do they expect to give them a handout this time? Transpower, actually. The opportunity being the Electricity Authority's review of transmission costs, in which a draft proposal was expected to give New Zealand Aluminium Smelters a windfall of fifty million dollars.

I suppose I should not be surprised by this sort of business behaviour. However, I am more interested in the electricity demand implications of a smelter closure.

Belinda Storey of Pure Advantage says that the threats to close the smelter have made future predictions of electricity demand uncertain. And therefore

"Electricity companies have delayed investments in wind, solar, and geothermal energy while the Tiwai negotiations hold to ransom the forecasting of future demand."

In November 2015, Meridian CEO Mark Binns confirmed that new electricity investments had been stalled by the possibility of the smelter closing

"because nobody wants to build a new plant if Tiwai Point can go on 12 months notice".

In December 2015, Binns confirmed to Fairfax's Tom Pullar-Strecker that a smelter shut-down would release about 1.15GW of electricity, which would drop wholesale electricity prices and that none of the generators wanted to build the power station that would stop first when electricity demand dropped below supply. Binns even said

"No-one wants to spend a lot of money and have a stranded asset".

So, in 2016, in New Zealand's electricity market, renewable electricity projects will be stranded assets. Pretty much because of New Zealand Aluminium Smelter Limited's preferred mode of corporate behaviour.

The only thing more bizarre are the completely contradictory media releases from Energy Minister Simon Bridges.

In August 2015, Bridges was celebrating the 2018 Huntly closure as 'creating renewable opportunities'. In April 2016, Bridges commended the reversal of the Huntly closure as a 'transition' 'down the path of greater renewable generation'.

Is there no use of fossil fuels that Bridges won't describe as 'transitional'? Is there any other explanation for Bridges' contradictory statements than the assumption that he is a complete political weather vane when it comes to policy?

Conclusion

From that last no doubt factual comment of Mark Binns, we enter a "Bizarro World" of contradiction and ridiculousness. In the rest of the world, Nicholas Stern and Mark Carney and Carbon Tracker have laid out the case that coal, oil and gas reserves are stranded assets. But in New Zealand, it is new renewable electricity generation that will be stranded assets.

All because of consistently unethical behaviour by one trans-national company. And the Minister of Energy views the situation as within his very elastic definition of 'transition' and is happy to leave direction of the market to the partially privatised generating industry. Never mind carbon budgets and the Paris Agreement.

The Huntly power station decision - projected energy emission reductions to 2020 up in coal smoke

The decision to keep the Huntly coal thermal power station open for another four years is not only contrary to all New Zealand's commitments and climate targets, it also sends the Ministry for the Environment's projections of stabilising energy emissions to 2020 up in a cloud of coal smoke. NB this post is also features on Hot Topic.

We seem to have had an extra dose of announcements and activities about climate change in an action-packed month of April.

We have had our Minister, Paula Bennett, signing the UN Paris Agreement. The Morgan Foundation's "Climate Cheats" report made a big splash. That lead to Jack Tame's grilling interview of Paula Bennett. Then the Royal Society of New Zealand released two major reports on climate change; one on impacts and another on policy responses. The business-backed Pure Advantage group released a report on enhancing forestry sequestration.

So what did the New Zealand energy industry do to elbow it's way into the climate change spotlight? How do you beat signing the Paris Agreement or compete with climate fraud?

Well, you just say you are going to burn more coal!

On 28th April 2016, Genesis Energy and Meridian Energy announced they had reached an 'arrangement' that would keep the coal-burning Huntly thermal power station open for an extra four years. This deal postpones the expected shut down from the planned 2018 date to 2022.

Patrick Smellie notes two interesting details of the story. First, the irony that the "100% renewable" generator Meridian Energy has led the process of negotiating with Genesis. And second, that the public announcement of the shut-down by Genesis was just 'code' for negotiating a higher price from other generators.

The Green Party's Gareth Hughes points out that on the basis of Huntly's generation of 1,277 GWh of energy in 2015, the closing of Huntly would have lifted New Zealand's proportion of renewable electricity generation from 79.9 percent to 84.5 percent. So unsurprisingly the Meridian-Genesis deal is just 180 degrees in the wrong direction in terms of the 90 percent renewable target and the need to reduce greenhouse gas emissions.

Greenpeace has given us ten reasons to shut Huntly and have started an on-line petition to keep to the plan and shut Huntly.

But what effect will this have on the Ministry for the Environment's projections of energy emissions out to 2030? These are part of the December 2015 report "NZ’s Second Biennial Report under the UNFCCC". This chart shows projected "with measures" emissions and "without measures" (i.e. business as usual).

In the chart, the projected "with measure" emissions for each sector are the circles and lines. The projected 'business as usual'/'without measures' emissions are the lines between the data points marked by triangles on 2020 and 2030. That's because the without measures projections are for only two years! It is almost as if they are an after-thought.

The other thing to note is that for agriculture, transport and industry, there is no difference between "with measures" and "without" projections. This is of course because the Ministry is reflecting the Government's intention to exempt those three sectors of the economy from any climate change policy.

However, have a close look at the energy sector projections. There is some 'daylight' visible between the 'with' and 'without' projections. The "without" trends ever so slightly upward and the "with" trend is a plateauing. So something is expected to change the slight upward emissions trend to a plateau. The Biennial Report states on page 39;

"Energy emissions are expected to increase between 2013 and 2015, but then fall between 2015 and 2020. The remaining coal-fired power plant in New Zealand is expected to be decommissioned by 2018, reducing emissions from coal. Coal-fired electricity generation is expected to be replaced mainly by a combination of hydroelectricity, geothermal, wind, and gas-fired peaking plants in the modelled scenario".

In other words, the 'something' was the closing of Huntly. The Ministry for the Environment was relying on Genesis Energy to honour its public statement that it was closing Huntly. Which of course would then be attributed to the New Zealand emissions trading scheme. However it looks like the projections are now out-dated.

Conclusion

The 2030 emissions projections show that New Zealand's climate change policies are intentionally not affecting three out of five sectors of the economy. Now with two power generators reaching a private agreement to keep an non competitive asset, Huntly thermal power station, emitting for four extra years, the projected savings in energy emissions out to 2030 have gone up in a puff of coal smoke.