This is huge.
The Government has done a deal with the owners of New Zealand Steel that will see the company replace its coal fired furnace with a renewable energy supplied electric arc furnace.
From Radio New Zealand:
NZ Steel’s Glenbrook plant will install an electric arc furnace – halving its coal use – in what the government is calling the country’s largest ever emissions reduction project.
Half of the coal being used at the site will be replaced with electricity to recycle scrap steel.
Prime Minister Chris Hipkins has announced plans for the project at a media briefing at the site in south Auckland this afternoon.
NZ Steel – which employs 4000 people in its New Zealand and Pacific operations – is the country’s only producer of flat rolled steel products for the building, construction, manufacturing and agricultural industries. It produces about 670,000 tonnes of steel each year for products that include roofing and structural beams.
Under the announcement today, the company will receive up to $140 million from the Government Investment in Decarbonising Industry (GIDI) Fund and it will foot the bill for the rest of the cost, which has not been specified.
The agreement has three components:
- Base build funding support up to $110m
- An extra $10m commissioning funding incentive paid if NZ Steel can get the furnace running by January 2027
- A further $20m of performance funding paid if NZ Steel can achieve a further 800,000 tonnes of emissions reductions by 31 December 2030 above the base amount committed to in the agreement
The government says the project means 800,000 tonnes of pollution can be removed from the atmosphere each year – the equivalent of taking 300,000 cars off the road. It will also achieve over 5 percent of all New Zealand’s required emissions reductions between 2026-2030 and and 3.4 percent within the third emissions budget (2031-2035).
The deal is the sort envisaged by the Emissions Trading Scheme. Set a price for Carbon, collect money from the large emitters and then use the funds to reduce emissions.
Expressions have been and will be expressed about this being corporate welfare but the bottom line is that this is a significant portion of the country’s greenhouse gas emissions.
And we need the steel. As Ad pointed out wind farms need mines, and steel.
The last two years have seen reductions in the country’s greenhouse gas emmisions.
Christopher Luxon clearly thinks he could have done a better deal. From Rachel Sadler at Stuff he is quoted as saying this:
“I thought that announcement was outrageous, actually, because it just says to me that this is a Government that’s got its priorities all wrong. Just this week, this Budget couldn’t find money to actually help support Kiwis going through a tough cost of living crisis. But all of a sudden they can find $140 million as a subsidy paid for by Kiwi taxpayers and give it to a large foreign, multinational, profitable company.”
It was money from the ETS and paid by polluting kiwi taxpayers. The money is from a contestable fund that has made a number of grants already.
But National clearly thinks that lazy rhetoric is a viable political option.
What I would like to know is what would they do? After all they do promise to a country where industrial processing plants are powered by clean electricity, not coal.
And the clock is ticking and the need to reduce emissions has never been clearer or more urgent. They owe it to the country to say exactly what they would do and what they would change.
Congratulations to the Government. By this one deal it has taken a significant step to its goal of reducing emissions by 50% by 2030.
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