Backers of a claimed "clean energy" plant for Taranaki using natural gas to make electricity, hydrogen and fertiliser have broken cover after months of preparation to support an application for a Provincial Growth Fund loan of up to $20 million to test its feasibility.
"Using proven technology, the Taranaki facility provides for an end-to-end process that fully aligns with New Zealand's 2050 zero-carbon target while still meeting the immediate and ongoing needs of primary industry," said Pouakai NZ in a statement. "The production process does not generate any atmospheric emissions of greenhouse gases" because it injects carbon dioxide into depleted underground oil and gas fields.
Chaired by former New Zealand Post chief executive Brian Roche, Pouakai is 100 per cent-owned by 8 Rivers, a US-based company that has been running a 50 megawatt gas-fired power station using a new Allam Cycle process since mid-year. The plant is both more efficient than existing gas-fired electricity generation technology and claims to have solved the challenge of affordable carbon capture and storage.
Results from the US$400 million reference plant have attracted new investment in recent weeks from two major US energy companies, Occidental Petroleum and Exelon, which are seeking low-carbon and non-nuclear technologies to produce electricity in the future.
Pouakai says a key feature of the proposal is that it will "help to underpin and accelerate a rapid decarbonisation of New Zealand's power generation sector" and "will enable more rapid penetration of renewables into the generation mix while providing grid stability and dry-year back-up as New Zealand approaches its target of a fully decarbonised grid by 2035." It has lodged an application seeking support from the Provincial Growth Fund.
The government has set a target of net zero carbon emissions from the electricity sector by 2035 "in a normal hydrological year". That leaves open the need for some fossil fuel-fired generation to ensure security of electricity supply when hydro lake levels are low and wind farms are not able to fully take up the slack.
In a commentary on the proposal sent to BusinessDesk, New Plymouth mayor Neil Holdom said the 8 Rivers proposal "has created a significant dilemma for our coalition government".
"The Allam Cycle technology is working. It is competitive with existing gas-fired generation and it ticks all the boxes in terms of emissions outputs and our national sovereignty," said Holdom.
"But it will flush out the ideological battles going on in Wellington. Is the policy about getting New Zealand to net carbon zero by 2050 or is it about ending the oil and gas industry in New Zealand?" he said, referring to the government's decision in April to ban further granting of offshore oil and gas exploration permits.
"On a scientific basis, if the goal is to remove 60 million tonnes of carbon per annum from New Zealand's emissions to achieve net carbon zero by 2050, then technologies like 8 Rivers' Allam Cycle should not just be acceptable, we should be actively encouraging their uptake," said Holdom.
A Greenpeace spokesman said the environmental lobbyist was still studying the proposal, but expressed scepticism about the economics of carbon capture and storage technology, which have proven elusive to date.
Pouakai acknowledged that "the regulation position around gas exploration in New Zealand is currently in flux" but the project had begun "prior to current regulatory changes and those changes have not impacted the decision to pursue it".
New Zealand was an "ideal location" for the technology based on its "highly-skilled workforce, strong rule of law, and good availability of natural resources".
The project represented an opportunity for the Taranaki region's transition away from its long-standing dependence on the oil and gas sector.
It would also produce the country's entire demand for urea, used as fertiliser in the agricultural sector, replacing "very high-carbon-intensity imported supply" and creating excess supply for export.
The plant would also produce hydrogen, with government ministers recently expressing enthusiasm for development of 'green hydrogen' as a transport fuel for the trucking and potentially the rail and shipping industries.
However, soundings by BusinessDesk suggest there is considerable friction between Regional Economic Development Minister Shane Jones and his New Zealand First party and both Labour and Green Party ministers who backed the offshore oil and gas exploration ban and are struggling to see hydrogen produced from a process using natural gas as 'green', notwithstanding Pouakai's claims the process will produce no carbon emissions.