Image: Tina Tiller
Image: Tina Tiller

PoliticsJuly 28, 2021

Our coal usage is going up and up. Here’s how much that matters

Image: Tina Tiller
Image: Tina Tiller

Coal-powered electricity generation is hitting record levels. Should we be worried? George Driver investigates.

Coal electricity generation is surging, with the country importing more than a million tonnes of Indonesian coal and burning it at record levels to keep the lights on, RNZ has reported. The National Party declared we were the only country in the world “transitioning out of gas and into coal”, while The Spinoff’s Bulletin said it “effectively represents a massive policy failure”.

The timing, coming just after the government announced a feebate scheme to encourage EVs, led some to claim the government was effectively encouraging people to ditch diesel utes in favour of coal-powered EVs. But how significant is the recent rise in coal power and what does it mean for our greenhouse emissions? And does it mean that EVs are now effectively running on coal?

Coal-fired generation has been increasing recently due to the hydro lakes being exceptionally low, but this has only made a small dent in the proportion of renewable electricity generated.

The latest figures show coal power generation increased more than 50% in the March quarter, producing 10% of the country’s electricity. That’s the highest level since June 2012 and more than double the average since 1977. That increase saw the proportion of renewable energy dip to 80% for the year to March – although this was still above the average of 77.7%. Coal generation has also been trending up since 2018 – albeit from near-record lows.

So what’s the cause?

Basically the last few years have been far drier than normal and the hydro lakes – which typically supply more than half of our power – have been low. Genesis said last winter was the driest on record and this winter is looking almost as bad, with lake levels a third below normal. When this happens, coal and gas step in to make up the shortfall. Usually gas – which produces about half the emissions of coal – would make up more of the shortfall, but MBIE says gas production has been down due to outages and maintenance on the country’s major gas fields.

Act and National have claimed the reduction in gas production has been the result of the government’s offshore oil and gas exploration ban. But experts say this isn’t the case. The parliamentary commissioner for the environment (PCE) investigated the impact of the government’s oil and gas exploration ban last year and said a recent increase in coal generation was “not because of the ban” and that existing gas reserves would be sufficient for decades, although costs might increase.

(As a side note, the Indonesian coal we import also doesn’t appear to have higher emissions than coal from other countries.)

How does New Zealand’s coal usage compare to other countries?

It’s important to put the recent increase in coal generation into perspective. Even with coal generation doubling, New Zealand has among the highest percentages of renewable electricity generation in the world.

According to figures from Oxford’s Our World in Data website, in 2019 renewables accounted for around 82% of New Zealand's total generation. That was the third highest proportion in the OECD – behind minnow Iceland (its population is smaller than Christchurch) and Norway – and the 26th highest in the world.

But when you compare New Zealand to our English-speaking peers, we are miles ahead. In Australia, only about 21% of electricity is renewable – 79% of its electricity comes from fossil fuels including 56% from coal. In the US, renewables also account for 20% of generation, with 19% from coal. In the UK, renewables account for about 41% of generation (although that’s up from about 10% in 2000); coal now makes up just over 1% of its total electricity generation, with the bulk coming from gas and nuclear. In Canada, renewables account for 68.5% of generation, with coal contributing 7%. Europe’s not much better, where just 36% of its electricity is renewable on average, while the world average is 29%.

But how will the increase in coal generation affect our greenhouse emissions?

Because our proportion of renewables is so high, electricity generation accounts for a very small proportion of our greenhouse emissions compared to other countries. The Ministry for the Environment says electricity accounts for about 5% of our emissions. In Australia, electricity accounts for a third of emissions and in the UK it’s about 21%.

Now, this isn’t to say our renewable generation is high because we’ve worked hard to reduce our emissions. New Zealand’s per capita emissions are still among the highest per capita in the OECD (mostly due to agriculture emissions). We’ve just been fortunate that a huge proportion of our electricity has traditionally come from relatively cheap hydropower.

But because electricity emissions are so low, reducing emissions in that sector may not necessarily be a top priority. In 2019, the Interim Climate Change Committee (ICCC) said the government was better off reducing transport emissions by encouraging EVs rather than reaching 100% renewable electricity, because that will be a more cost effective way to reduce emissions. It said transport accounted for 20% of the country’s greenhouse emissions (four times the level of electricity generation) and is also the fastest growing source of emissions. But it said the electrification of transport could reduce these emissions by 60% by 2035. So EVs powered by New Zealand’s already high rate of renewable electricity is one of the best ways to reduce our emissions.

All that being said, experts have since argued the government’s proposed pumped hydro scheme could enable us to reach 100% renewable electricity while remaining cost-effective.

But with electricity usage expected to surge as the country shifts to EVs and away from fossil fuels, will coal just keep making up the shortfall?

That seems unlikely. The proportion of renewable electricity in NZ has been relatively flat for decades, but that’s likely to change. That same ICCC report investigated the future of NZ’s electricity generation and found NZ is likely to reach 93% renewable electricity by 2035 based on business-as-usual. It said the reason is that renewables are cheaper now than fossil fuel generation. The government has also committed to reaching 100% renewable electricity by 2030, based on a massive investment in a pumped hydro scheme, which will be able to generate renewable electricity when the lakes are low.

This year, the Climate Change Commission’s report on reducing emissions also found renewables are likely to increase to 2024, purely based on projects that are already committed. There’s a huge amount of wind generation approved and consented and on hold until demand for electricity picks up. A 2019 MBIE report said the amount of wind farms consented or on hold would generate more electricity than coal and gas put together, but so far wind generation has remained relatively flat over the past decade.

Tiwai Point is also set to close in 2024 which will result in a flood of renewables into the market – it uses about 13% of NZ’s electricity, all from the Lake Manapouri hydro scheme. But the Climate Change Commission said if Tiwai’s closure was delayed it could result in more fossil fuel generation as companies may be reluctant to build renewables while there’s huge uncertainty on when the market could be flooded with Tiwai’s power.

In any case, it said a small amount of gas-powered generation would continue to kick in during times when the wind don’t blow, the sun don’t shine and the lakes are low – although it proposes phasing out coal power by 2025. Genesis – which owns the Huntly coal power station – has also already said it will halve its emissions by 2025 by burning less coal.

Massey University emeritus professor Ralph Sims has been an expert on sustainable energy for 50 years. He said the proportion of renewable energy has been relatively flat in New Zealand recently as demand for electricity has likewise remained flat, perhaps due to increasing efficiency.

But Sims said more could be done to encourage renewable generation to step in during the dry years. One option would be for Huntly to burn biomass fuel instead of coal. Basically, biofuels involve burning woodchip waste from forestry, which is considered carbon neutral because carbon is sequestered when the tree grows and is part of the natural carbon cycle, as opposed to fossil fuels which are adding new carbon to the atmosphere. In the UK, coal power stations are beginning to transition to biomass fuel, although some dispute whether it’s an improvement on coal.

Sims said New Zealand could also build gas power stations that only operate when the hydro lakes are low – but that would require government subsidies as it is probably not economic for power companies to have a power station sitting around unused.

So, to recap: New Zealand has among the most renewable electricity in the world and emissions from electricity are relatively low and set to decrease, even if the government does nothing – although it could probably give the market a nudge to speed things up. The current increase in coal usage appears to be mostly a weather-related blip.

In the meantime, I wouldn’t be too concerned that your new e-bike is powered by a little bit of coal. And if you’re looking to reduce your household emissions, an EV will probably do a lot more for the environment than a solar panel.

Follow The Spinoff’s politics podcast Gone By Lunchtime on Apple Podcasts, Spotify or your favourite podcast provider.

Mad Chapman, Editor
The Spinoff has covered the news that matters in 2021, most recently the delta outbreak. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

Get The Spinoff
in your inbox