US Emissions Reduction Petrol Retailing in Auckland
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EnergyWatch The Journal of the Sustainable Energy Forum Inc “Facilitating the use of energy for economic, environmental and social sustainability” Issue 53, June 2009 Published by The Sustainable Energy Forum Incorporated, PO Box 11-152, Wellington Email: [email protected] Editor: John Blakeley Web: www.sef.org.nz www.energywatch.org.nz ISSN: 1173 5449 EDITORIAL Is Emissions Trading the Answer? Before attempting to reply to this, it is first necessary to clarify “the answer to what question’?” If the issue is primarily how will the NZ Government raise additional revenue to cover the cost of purchasing emissions credits, which may be necessary to cover its obligations under the Kyoto Protocol, then the Emissions Trading Scheme (ETS) may provide the answer. However the latest information from the Ministry for the Environment (report released on 15 April) now suggests that NZ might actually Energy Watch Editor John Blakeley have a surplus of $241 million under the The reason for this is that the amount of increase Kyoto Protocol expiring on 31 December 2012, in the price of everyday necessities for most rather than having a large liability. But some New Zealanders, like motor fuel and electricity, people are dubious about the veracity of that which would be necessary to substantially change estimate, which is still subject to a high degree people’s consumption behaviour, would be many of variability. times more than the likely price increases under the present ETS (based partly on what is politically In any event, the surplus will only be a very acceptable, and partly on the likely international temporary situation, with the strong likelihood trading price for emissions credits). of large liabilities at a later date if a follow-up international agreement similar to the Kyoto Your editor recently (30 April) had the privilege Protocol is actually reached for the post-2012 period of presenting his submission on the ETS Review (which is a very open question at this stage). by video conference to the Parliamentary Select Committee undertaking this task (see But if the issue is mainly whether or not the ETS oral presentation on pages 8-11 of this issue of will materially assist NZ in reducing the rate EnergyWatch). of growth in its gross greenhouse gas emissions since 1990, then in my view the answer is a One of the main points in my submission was definite “NO”. that if the Government thinks that it can rely Energy Watch 53 1 June 2009 is to meet its international obligations to reduce Contents its gross greenhouse gas emissions by 2012. Editorial ............................................................1 Is Emissions Trading the Answer? I was not sure though during my presentation ETS Will Not Reduce Electricity Consumption? that all the members of the Select Committee see the need for complementary measures as well, SEF Feedback .................................................5 in addition to the ETS, but rather that at least Letter to the Editor some of those members see the ETS on its own Indications of Government Resources Policies to be the answer to reducing NZ’s greenhouse Response Peak Everything? gas emissions. I was asked one specific question about why Oral Presentation ETS Select Committee ..8 I thought that the ETS would not be effective Written Notes Transcript in reducing greenhouse gas emissions in the transport sector, when observations at the time Electricity Matters........................................12 suggested that the oil price “spike” in mid-last Electricity Commission Approves NAaN Project year led to an increased patronage of public NZ’s Maximum Electricity Output transport and less congestion on the motorways Contact Slows New Electricity Generation and main highways of our cities at peak times. Wolak Report Finally Released I couldn’t fully answer the question at the time, TrustPower to Ignore Brownlee Edict? but said that I believed that the petrol rise at that What Happens Next with Wolak? time was much greater than that which will be Alternatives to the Market? caused by introduction of the transport sector to Cardy Wearer Replies the ETS (from the beginning of 2011). I have since looked into that matter in some detail and Climate Change/Global Warming ..............19 AA Surveys its Members on the ETS report as follows: Long-Term Future Looks Bleak? (a) Comparison of Fuel Price Increases. Post-Kyoto Climate Change Agreement is Difficult Climate Change Threatens Asia’s Growth? Figure 1 shows the variation with time since US Climate Bill Progresses the beginning of 2004 in the price of 95 octane US Emissions Reduction petrol retailing in Auckland. The price “spike” Preparing NZ for Climate Change in mid 2008 is clearly visible. Fuels ................................................................23 My understanding is that the rise in fuel prices Has Oil Already Peaked? which occurred as a result of the oil price “spike” Oil Price Rising Again last year was very much greater than the price Offshore Oil Fields Help Govt Accounts rise which would be caused by the introduction Obama’s Toughest Challenge? of the ETS, and hence much more likely to lead Budget Boost for Biodiesel to a change in human behaviour. Biofuels Subsidy to Foreign Farmers When the ETS was first announced in September Vehicles ..........................................................28 2007, the then Climate Change Minister, Hon. Hydrogen Versus Battery Electric Vehicles David Parker, said during the announcement that Obama Requires More Fuel-Efficient Cars at the time when the ETS was introduced into the World Uptake of Electric Vehicles transport sector (then planned for the beginning of 2009, but subsequently postponed till 2011), on the ETS to try and substantially trim NZ’s the increase in petrol price was estimated to be greenhouse gas emissions by 2012, then I about 4 cents per litre. However this was based believe that it will be making a very big mistake. on the Government’s then estimated cost of The ETS will need to be supplemented with a emissions credits of $15 per tonne of carbon number of other complementary measures if NZ dioxide equivalent, which should now be at Energy Watch 53 2 June 2009 least $25 per tonne, which would change that (b) Percentage of NZ Commuters Using estimate to 6.67 cents per litre of petrol. Public Transport I would also note that the percentage of I do not have the figures for regular (91 octane) commuters in New Zealand who use public petrol but in Auckland on 1 May 2009; super transport to get to work each day is very low. (95 octane) petrol was selling at 159.9 cents per On the last census day (7 March 2006), only litre. This had increased to 173.9 cents per litre 1% of employees travelled to work by train and by 7 June. So the additional price rise as a result 3% by bus (plus 1% by motorcycle and 1.5% of introducing the ETS as of 7 June would be by bicycle). This compares with 58.6% driving around 4.0%, ie only half of last month’s real themselves to work plus 4.6% as passengers price rise! in vehicles, a total of 63.2% using their own My records (in Figure 1) indicate that the price four-wheeled motor transport - see article in of 95 octane petrol peaked in Auckland at 223.9 EnergyWatch, Issue 43, page 14. cents per litre on 11 July 2008. So the increase Therefore about 16 TIMES as many people in petrol price on 11 July 2008 compared with drive to work each day using their own four- the price on 7 June 2009 was an additional 50 wheeled motor transport as the number using cents per litre, a 28.8% increase on the 7 June public transport (bus or train), so a significant price. Therefore the peak increase in price in percentage increase in public transport usage petrol in July 2008 in comparison with the 7 will lead to a relatively very minor decrease in June 2009 price was 7.2 TIMES the likely petrol the percentage of people getting to work in their price increase as a result of the ETS. own four-wheeled motor transport. Energy Watch 53 3 June 2009 For example, if the number of people using However the ETS may succeed in encouraging public transport (bus or train) to get to work more electricity generation from renewable each day was to increase from (say) 4% to 10% energy sources and less from thermal generation (a 150% increase and a significant challenge by burning fossil fuels, and especially penalising to achieve), then the number of people using coal- fired power generation. their own four-wheeled motor transport to get to work is only likely to drop from 63.2% to The ETS will also be a very useful revenue 57.2%, a decrease of only about 10% in four- generation source for the Government for the wheeled motor transport usage. purchase of any emissions credits needed to meet NZ’s international obligations under the I believe that this information will help to Kyoto Protocol for two main reasons. reinforce my contention that: 1. As Brian Fallow has recently pointed out • Petrol price rises of the extent likely to occur in the NZ Herald, the ETS can be seen as a as a result of the introduction of the ETS, are regressive tax. It will impose a carbon cost on likely to have very little impact on the percentage every litre of petrol and diesel sold from the of people using public transport to get to work start of 2011, and on every tonne of coal and each day. cubic metre of natural gas burned by electricity generators from the start of next year. • Even if these price rises did have an impact on public transport usage (which is only likely The Government on the other hand is only if the fuel price rise was at least several times liable for the increase in emissions from 1990 more than that planned for the ETS), then levels, not for every last tonne of greenhouse the decrease in four-wheeled motor transport gas emitted.