Genesis wary of greenwashing tag as it signs sustainability-linked loan

Genesis Energy's coal and gas-fired Huntly Power Station. Photo / NZ Herald

Genesis Energy - owner of the coal and gas-fired Huntly power station - has signed up for a $100 million sustainability-linked loan.

The loan from Westpac New Zealand means Genesis will face financial penalties if certain environmental and sustainability targets are not met.

Failure to meet key targets would mean a $100,000 a year increase in its interest bill on the loan.

Chief executive Marc England acknowleged there was scepticism around sustainability and "greenwashing", when companies convey a false impression about their environmental credentials.

"To any sceptics out there I would say, watch our actions and our outcomes," he told the Herald.

Genesis was part of the Electricity Corp of NZ before the state-owned enterprise was split up into three separate companies in 1999.

The company, which is just over half-owned by the Government, last year made a commitment to remove at least 1.2m tonnes of annual carbon emissions over the next five years.

"We believe as a company that we have not greenwashed anything that we have done over the last few years," England told the Herald.

"It's all been genuine."

The company says it has already removed 1.8 million tonnes of CO2 from its portfolio over the last 10 years.

Genesis is also involved in several renewable energy projects.

The company has entered a power purchase agreement for output from Mercury's Waipipi wind farm, and has signed a similar deal for power that would be generated from Mercury's proposed wind farm at Kaiwaikawe.

In geothermal, Contact has agreed to supply Genesis with renewable electricity for 15 years from its station being developed at Tauhara, due for completion in 2023.

The company is also planning a solar power project.

England said he was sensitive to greenwashing claims.

As it stands, Huntly provides crucial backup for the national grid when the hydro lake levels are low.

In addition to Huntly, Genesis also has a 46 per cent interest in the Kupe Joint Venture, which owns the Kupe Oil and Gas Field of the Taranaki coast.

Huntly is the only power station that has a plant capable of generating electricity from coal.

England said Genesis "cannot change who we are".

"We inherited what we are. We did not inherit 100 per cent renewables.

"We inherited a portfolio that includes New Zealand's most important thermal plant that will provide backup for the renewables system.

"But we can change how to act with it, and we are working hard to displace baseload thermal at Huntly," he said.

"We are not trying to claim that we are heroes here, but this is an important first step."

The $100m loan financially incentivises Genesis to meet sustainability targets, which include reductions across all scopes of emissions, ramping up renewable energy generation, and a future of work programme.

The companuy's announcement coincides with the United Nations Climate Change Conference - COP26 - in Glasgow.

Genesis has annual targets to encourage it to deliver on our commitment to sign contracts for 2,650 GWh of new renewable energy generation to be built by December 2030.

Westpac has made a commitment to facilitate $10 billion in sustainable finance by 2025.

Last month, Westpac and state-owned farm owner Pāmu, also known as Landcorp, signed a sustainability-linked loan agreement.