Netherlands could fund NZ wind farm

By BRIAN FALLOW

Meridian Energy's planned wind farm at Te Apiti, in the Manawatu, will generate not only electricity but also carbon credits, which the company plans to sell to the Dutch.

The Kyoto Protocol allows one member country, in this case the Netherlands, to earn carbon credits by providing finance for some climate-friendly development in another Kyoto country, in this case New Zealand. The Dutch Government could then use those credits under Kyoto's accounting system towards covering any excess in the Netherlands' greenhouse gas emissions over their agreed target.

But first the parties need to satisfy the United Nations climate change authorities that without this additional source of funding the project would not occur - there are no brownie points to be had from subsidising something that would happen anyway.

And they have to quantify how much carbon dioxide the atmosphere will be spared by the wind farm project; that is what Meridian has to sell.

Meridian's proposal, thought to be the first New Zealand use of this provision of the Kyoto protocol, has been put up for public scrutiny and consultation by Dutch authorities.

Meridian says the currently accepted estimate of the development cost of a good wind site in New Zealand is 6.7c a kilowatt hour, but wholesale electricity prices are in the order of 5c/kWh. This indicates, the company says, that the project would not proceed without the Dutch funding or something similar.

The planned wind farm would have a capacity of somewhere between 82MW and 96MW and is scheduled to be operational by 2005.

During the Kyoto Protocol's first commitment period, 2008 to 2012, it would save just under 1 million tonnes of CO2 emissions, Meridian argues.

It arrives at this figure by first taking the existing mix of electricity generation in New Zealand and calculating how much carbon dioxide is emitted on average for every kilowatt hour generated. The ratio is low by international standards because most generation is from hydro dams or geothermal fields with no CO2 emissions.

But if you fast-forward to 2030 it would be a different story. With Maui gas almost exhausted and future gas supplies uncertain and electricity demand continuing to grow, the assumption is that the generation mix then would have to include coal-fired power stations and be significantly more carbon intensive.

By drawing a straight line between the status quo and that scenario, the likely emission factor in 2008-2012 can be worked out, and the CO2 discharges avoided by the wind farm can be calculated.

Meridian stresses it is early days in this process.

The financial terms of the deal are not clear.

For one thing carbon credits - essentially tradeable rights to emit greenhouse gases - are creatures of the Kyoto Protocol, which will not come into force unless and until Russia ratifies it.

Russia is also crucial to the value of the credits. Russian "hot air" will dominate the supply side of the international market in carbon credits.

"Hot air" is the carbon credits eastern European countries will have to sell.

Because 1990 is the baseline for Kyoto obligations and so many former Soviet smokestacks have gone cold since, Russia and the other successor countries have credits to sell for the resulting drop in their emissions.

Carboncredits.nl