Waste, fuel switches will also qualify for carbon credits

4.00pm

Waste management schemes and big companies which switch away from fossil fuels to renewable energy are likely to earn cash from the Kyoto Protocol's provision for international trade in "carbon credits".

Energy Minister Pete Hodgson, who is convening the Government's climate change planning, told an Energy Federation conference in Wellington today that he had set aside "carbon credits" equivalent to emissions of four million tonnes of carbon dioxide.

If the international price for carbon credits was around $10/tonne, those credits would be worth $40 million, and he was looking for proposals from a wide range of businesses, and other organisations to make use of the money. He said the $10/tonne figure was "conservative".

Earlier calculations based on $20/tonne have calculated New Zealand could, overall, gain credits worth over $1 billion in the first Kyoto "commitment round" from 2008 to 2010, but such estimates have included a lot of guesswork because no international pricing for carbon credits has yet been set.

New Zealand is expected to have a small surplus of about 55 million tonnes of greenhouse gas "savings" after accounting for its emissions in the first commitment period.

The Government last week called for proposals from businesses, organisations and individuals for projects that will reduce greenhouse gas emissions, with the best "bids" to receive their own allocations of carbon credits, to trade as they wish.

Today, Mr Hodgson said the approach being taken by New Zealand was innovative.

It was an example of how the protocol was creating new business opportunities.

"It puts a price on greenhouse gas emissions, reflecting their environmental cost, and in doing so creates new opportunities for trade and profit," he told the conference.

The minimum reduction in emissions which would qualify would be the equivalent of 10,000 tonnes of carbon dioxide over the Kyoto Protocol's first commitment period, 2008-2012.

Projects that would improve New Zealand's electricity supply security will be given priority.

The Government has already agreed to help the development of two wind farms -- Trustpower's 36 megawatt extension of its existing 32 megawatt capacity Tararua wind farm, and Meridian Energy's new 82-95 megawatt capacity wind farm at Te Apiti, in the Manawatu.

According to Mr Hodgson, the two wind farms could deliver emissions reductions equivalent to one million tonnes of carbon dioxide from 2008-2012.

The first annual tender round for other bidders is planned to take place during September and October, for a pool of four million units.

But the timing of an international trade in carbon credits, is dependent on Russia ratifying the Kyoto Protocol, so that a required threshold of 55 per cent of developed country carbon dioxide emissions is passed.

"The assumption has long been that Russia can be relied on to ratify, as it stands to benefit from the protocol by being a net seller of carbon credits -- like New Zealand," Mr Hodgson said today.

- NZPA