Coal price increase prompts dire warning

The price of coal jumped this week after recommendations to the Government for reducing emissions were released, prompting dire warnings people will go cold and hungry.

The Climate Change Commission has given the first of what will be annual advice on the emissions trading scheme (ETS).

It urged the Government to let the price of carbon increase substantially and quickly.

That means the rising price of a trailer load of coal would increase even more.

Birchfield Coal Mines chief executive Phil McKinnel said for every tonne of Giles Creek coal that was combusted, it attracted an ETS obligation of 1.7 NZ units (NZU).

At today’s unit price of $81.50 it would mean $138.55 would be required to meet the ETS obligation.

"Yesterday’s NZU price was $72.90 which equated to $123.93 a tonne.

"In the event the NZU price rose to $171, this would see the ETS obligation rise to $290.70 for 1 tonne of coal," he said.

Yesterday morning, the price of units (carbon credits) jumped $8 on the back of the announcement.

Mr McKinnel said Covid showed a significant number of critical industries — dairy factories, horticulturist, food processors, hospitals, schools and community facilities — relied on coal.

Without a reliable and economically viable alternative to coal, there were likely to be ongoing business casualties.

The Government gave funding to convert or remove coal boilers, but not for ongoing operational costs.

"Anecdotally, we are seeing hospitals and schools struggling with heating demands and energy costs, with the price of diesel and electricity and difficulty in sourcing biofuels," Mr McKinnel said.

The Huntly Power Station closing could cause a significant increase in electricity prices.

Straterra chief executive Josie Vidal said the Government seemed tone deaf on the real pain caused by the rapid cost of living increases.

The $8 rise in the price of carbon units yesterday meant immediate cost increases across the board for all New Zealanders because the ETS affected the prices for petrol, diesel and coal.

"While we understand the Government’s desire to reduce reliance on fossil fuels, the reality is people will go cold and hungry, and hospitals and schools will be put under further strain, if coal production is reduced or priced off the market before there are affordable, accessible, readily available alternatives.

"People must be part of this equation.

"The people who keep getting hit hardest are those who can least afford it."

West Coasters heating their homes with coal could expect to pay big increases for their coal, and a whole lot of other things as well.

After yesterday’s announcement, the cost of domestic coal immediately increased from about $123 to $138 a tonne.

"We question if this is the right time to add another burden — how to pay the power bill."

Mining is responsible for less than 0.4% of New Zealand’s emissions, and coal burning represents about 4% of the country’s total emissions.

Massey University professor Robert McLachlan said Fonterra’s milk powder plants were currently scheduled to continue burning coal until 2037.

The Climate Change Commission acknowledged lower income households would be hit harder, and those who could not switch from coal heating would face more price increases. — Greymouth Star

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