KEY POINTS:
Energy Minister David Parker has delivered a blunt message to the coal industry: get real.
The minister said although world-scale deposits of the low-quality coal had the potential to make the country self-sufficient in terms of transport fuel for several hundred years, "a dose of reality was required".
Southland has an estimated seven billion tonnes of recoverable deposits and coal miner Solid Energy is in the early stages of investigating gasification methods that could one day turn out 40,000 to 50,000 barrels of diesel a day. Hydrogen could also be produced to use in transport.
"Gasification of coal to create a synthetic gas for use in a variety of end products is a proven technology," Mr Parker told energy industry chiefs at the national power conference in Auckland yesterday.
However, he said work on capturing and underground storage of the carbon dioxide byproduct was in its infancy and the Government did not regard funding that work as a priority.
"Southland lignite is a proven, accessible resource, and may be one of the most-competitively priced energy resources in the world. But there are significant environmental challenges to overcome.
Carbon capture and storage (CCS) technology was as yet neither economically nor technically proven at scale.
"There is a degree of wishful thinking and exaggeration around how close clean-coal technology really is. If the Government was to apply the same brave assumptions to new technology renewables as are relied upon by some coal proponents, we would be pilloried. A dose of reality is required."
He cited an editorial in New Scientist that said Britain, the European Union and the United States have all recently shied away from the investment needed to prove and scale up CCS technology.
That irritated Solid Energy chief executive Don Elder, who challenged him on that point. Mr Elder on Tuesday outlined progress in Australia on carbon storage where 100,000 tonnes of CO2 will be injected underground in April in Victoria.
In questions, Mr Elder said to his knowledge Mr Parker had not consulted anyone among "a room full of chief executives and international experts".
Mr Parker said officials had consulted widely and there was nothing in Government policy stopping the development of lignite resources in Southland. "For it to be economic, carbon capture and storage would have to be part of it. The carbon might otherwise kill the project, that is my advice from my officials who did meet those who did spend many millions of dollars on analysis of that resource. I think some of the rhetoric around carbon capture and storage is exaggerated."
Speaking later, Mr Parker said even the US had stepped away from making investment on carbon storage.
Although there was some Crown agency work on underground storage here "in terms of developing this technology, you're talking billions of dollars and that would not be in New Zealand's interests".
Mr Parker said there was considerable industry support for the goal of 90 per cent renewable energy by 2025.
