Gasless greenhouse credits

By ELLEN READ

A Warkworth capsicum business, Southern Paprika, will get a share of the Government's carbon credits when it builds a bio-energy plant to heat its glasshouses.

Using waste wood to generate heat will enable the company to cut its gas supply and reduce greenhouse emissions.

The proposed bio-energy plant is a combustion and boiler system using woody biomass (sawdust shavings, waste wood and bark) to generate heat that will be stored in water tanks until needed.

Energy Minister Pete Hodgson, who visited the farm this week, said Southern Paprika showed how businesses could use climate change policies to improve their energy efficiency and competitiveness.

"Energy accounts for up to 20 per cent of operating costs for a heated greenhouse business," he said.

"Southern Paprika's bio-energy plant makes good business sense by reducing fuel costs.

"It will also avoid the extra greenhouse gas emissions that would be produced by burning fossil fuels."

The project is one of 15 awarded emission units in the first tender round of the Projects to Reduce Emissions programme.

Southern Paprika will receive up to 58,824 credits, or emission units, if its proposal proceeds as planned. A pool of four million units was tendered as part of this first round.

Hodgson said the programme was not just for big business and offered opportunities for companies to take up cleaner, more efficient energy technologies.

The credits will enable Southern Paprika to release one tonne of carbon dioxide (or equivalent greenhouse gas) into the atmosphere for each credit.

As it won't need to do this - because of the new biofuel boiler - it can sell the credits.

The first sale of carbon credits in New Zealand saw Meridian Energy's Te Apiti wind farm sell credits to the Netherlands Government for $10.50 each.

At that price - although expectations are that prices will rise if Kyoto is ratified - Southern Paprika could get $600,000, which it could use to offset the cost of the boiler.

"Gas is a finite reserve, so let's use wood waste that's renewable and use the gas we have more wisely," said Southern Paprika co-founder Hamish Alexander.

"Initially this is not going to save us very much [money] but with gas prices going up and carbon taxes coming in it's worth it," he said.

The boiler will initially supply 90 per cent of the farm's energy demand.

The boilers, designed 20 years ago but not widely used until now because of the cheap gas supply, are made under licence in Malaysia, but have the backing of New Zealand design and support teams.

Costing $1.7 million-$1.8 million, the Southern Paprika machine will be up and running by early 2006.

Alexander said that the carbon credits would not kick in until the project was working. If the Kyoto Protocol fell over then his contract with the Government would end.

"But long term, if it works out and we can maybe even start generating electricity [for our use or to feed back into the national grid], that would be fantastic," he said. Auckland company Living Energy will supply, install, operate and provide fuel for the boiler.

Managing director Rob Mallinson said the boiler was based on simple, robust technology and would use 15,000 to 20,000 tonnes of fuel a year.

The capsicum farming and exporting business was set up as a joint venture five years ago between growers Hamish and Robyn Alexander and Dutch marketing firm Levarht.

It produces green, yellow, red and orange capsicums, 80 per cent of which are exported to Japan and Australia.

The rest is sold on the domestic market, where Southern Paprika is ranked as the country's second-largest grower.

The Alexanders source their own seeds, contract a nursery to raise the seedlings, then plant, grow, harvest and pack the crop.

Living Energy

New Zealand Climate Change Office