Solid Energy digs itself further down the pit

Papers released under the Official Information Act show State-owned mining company Solid Energy plans to open some new coal mines. Is this the way forward for energy in New Zealand? Is this how  Solid Energy plans to dig itself out of the pit it is in – spend more money developing coal mines?

The company itself estimates the coal price needs to be around US$118-$140/tonne to mine economically. The Steel Index shows the benchmark Australian export price for hard coking coal is around $US$101/tonne at present, and even premium coal, which is unlikely to be found in a new mine, is still under that viable price.

Solid Energy has had to be bailed out and is now in the hands of its bankers due to over-reaching ambitions and poor oversight by its board.

State-Owned Enterprises Minister Tony Ryall agrees the over-riding factor for all Solid Energy operations, is the international price of coal. These plans look like throwing good money after bad.

Viable or not, this is about old thinking versus new thinking, supported by the Green Party. Coal is the world’s dirtiest fossil fuel. The last thing the environment needs is to burn more coal to put more carbon into the atmosphere.

Our future is not in coal. The International Energy Commission recommends every country leaves two thirds of fossil fuels in the ground.

 We should be investing in new technologies, not dirty old ones with dubious returns. Green energy investment is one of the fasting growing sectors in the world, but it seems Solid Energy and its backers can’t see the wood for the trees.

Solid Energy will be looking to Fonterra as a potential major customer for these new mines. But using coal as the energy for processing milk, badly taints Fonterra’s milk and brand to say nothing of the nation’s green, clean image.

The Greens will push to have all New Zealand’s power generated by renewable energy. We will support biofuels so that large energy users like Fonterra can use sustainable, local resources such as woodchip-fuelled biofuel.

12 thoughts on “Solid Energy digs itself further down the pit

  1. In targeted locations with a specific resource, biofuel can be good, but if it uses valuable farmland or native forest, it is not. Most organic waste products revitalise the soil, but if used as fuel, will not fulfill this function.

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  2. Have to agree. Biofuels work in pretty specific situations where not much other choice is possible. Look at the NORMAL carbon cycle which moves things from growth to death to fertilizer to growth and then pull apart the cycle by burning it rather than allowing it to become fertilizer.

    Biofuels are more dangerous to our environment than is apparent. OTOH, there is ample renewable energy available in this country to do what is necessary to produce milk powder. It is simply not as CHEAP as using the coal.

    Someplace along the line that market failure has to be addressed, and it WILL be addressed and when it is Fonterra will have a massive stranded asset in its investment in coal fired processes.

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  3. I think that biofuels will be essential in the future, but not for this type of stationary application. Carbon is needed for Aluminium smelting, releasing CO2, so the only way we can make Aluminium which is CO2 neutral is to use renewable Carbon, i.e. a form of biofuel. Iron smelting also uses Carbon, but there are alternative methods. And we will need biofuels for much of our transport needs such as aircraft and ships.

    Drying applications can use solar energy, or geothermal resources directly if available, or electricity which can be generated from a lot of renewable resources which are simply unsuitable for direct transport use, such as wave energy. Since drying usually takes low grade heat, it can use the heat generated by another process such as electrolysis of water (to form hydrogen). One man’s waste is another man’s resource…

    Trevor.

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  4. To become dependent on expecting to increase biofuels is wrong, especially when valuable farmland/ forest is being used for it. There is only one solution facing opulent countries – stop the opulence and start appreciating the simpler, but infinitely more rewarding, things in life

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  5. The trick with biofuels is to make them from waste or from crops grown for the purpose on land unsuitable for conventional farming. Any waste biomass is fair game, but the first question is whether the biomass is actually waste rather than fertiliser.

    Biomass can be turned into a number of different fuels depending on what is needed and the form of the biomass. These fuels include methane (natural gas, CNG, LNG), heavier hydrocarbons, and alcohols. Carbon (i.e. charcoal) can also be produced and is an input to some smelting operations. Many of the reactions that generate biofuels also generate CO2 which can be captured and reacted with hydrogen to form more biofuels such as methane.

    What these processes are not good at is generating useful amounts of energy. Instead, they can benefit from an injection of energy to increase the yield of fuels suitable for transport and portable operation.

    Trevor.

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  6. This looks like one of those occaisions where the Gummint is doing some “under the covers” joined up thinking.

    Solid Energy is a problem child. They can either be thrown to the wolves, in which case there is noone left to clean up after them, and a load more people join the dole queue. Or…

    Fonterra burns coal. Coal is (environmental concerns apart) the most cost effective fuel for their needs.

    So, Fonterra are told (on the quiet, naturally) to buy local coal. Or exchange one-for-one with foreign coal. Fonterra gets the coal it needs at the world price, workers get to keep their jobs, Solid Energy continues to operate, and the cost to the taxpayer to keep Solid Energy solvent is less than the cost of them going to the wall.

    It is truly unfortunate that when the government does do joined up thinking, it does it in the daftest places. If only they applied the same thinking to health care, home insulation etc. They can do it, they are just not very public about it…

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  7. marginal lands need to be left in their natural cover.

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  8. “marginal lands need to be left in their natural cover.”

    Why?

    And why can’t that natural cover be harvested sustainably?

    Trevor.

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  9. why can’t that natural cover be harvested sustainably? Trevor29, how many billion of us are on the planet? How many, of other flora/ fauna species/ ecological niches, especially mammalian, that do not serve man economically? Never mind, why the hell are other ecological niches existing if they can’t be in the service of humans

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  10. @mok.monster – do you have any useful ideas, or are your only offerings complaints about what humans have done to the planet and demands that the general population will reject immediately?

    For example, anyone living in countries that get snow or frosts would regard keeping warm as a reasonable request rather than opulence, so how do you suggest they keep warm? Do you regard an air ambulance as opulent? If not, how do you suggest it be fuelled?

    Trevor.

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  11. Goodbye Trevor29, no time for your dysfunctional arguments

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  12. “mok.monster – do you have any useful ideas?”

    So that would be a “No” then.

    Trevor.

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