Stop the lignite-mare

Lignite is at the New Zealand coal-face of the environmental crisis. It is well and truly on the agenda with top climate scientist James Hansen, currently touring NZ, urging us to keep the coal in the hole. State-owned Enterprise Solid Energy and the L&M Group are currently either planning or at the permitting stage (behind closed doors, no less) to mine lignite coal in Southland with a view to converting it to diesel, urea and heat. The Government needs to step in and stop it.

It is estimated New Zealand has about 6.2 billion tons of economically recoverable lignite. The trouble is, lignite is the most inefficient and among the worst polluting types of coal there is. Nonetheless, Solid Energy and the L&M Group are pushing their proposals to mine it, ignoring a critical report from the Parliamentary Commissioner for Environment that claims that the mining just isn’t worth it.

We are dismally failing our current climate targets and allowing lignite conversion to go ahead will signal to the world we ‘give up’ on emissions reductions and our valuable clean, green brand. At the 2009 Copenhagen Conference, New Zealand pledged to cut its emissions back to between 10% and 20% of our 1990 emissions yet if the proposed lignite mining goes ahead, our emissions look set to rise 30% above our 1990 levels. Lignite coal trashes our clean green brand and international climate treaty credibility.

It’s not just the climate that could end up the loser if these proposals go ahead it could also be the taxpayer. Under the National Government’s Emissions Trading Scheme, the plans could potentially cost the taxpayer up to $275 million a year, from carbon credit subsidies state-owned Solid Energy would receive. Over its lifetime, the cost of just one lignite-to-diesel plant is likely to be in the billions, clearly bad for the Government’s books and bad for ‘locking in’ polluting industries.

I sometimes wonder if Solid Energy is the only Government agency that understands peak oil and the increasing volatility and oil prices we are likely to see over the coming decades. Unlike the Government that has no plan, Solid Energy is going ahead with coal-based oil alternatives no doubt to take advantage of higher future energy prices. But instead of investing in renewable, sustainable energy alternatives that are greener, cheaper for taxpayer and will last us forever, we’re prepared instead to invest billions in sub-standard fossil fuels. With lignite mining, we’re just scraping the bottom of the barrel for anything we can find, and, consequentially, are coming up with the dregs. The lignite has environmental costs, fiscal costs, but also significant opportunity costs: the capital invested in these projects should be going to clean-tech, green-tech projects.

Coal is the fuel of the past, and lignite is the worst type of coal. Instead of hanging on to it and squeezing it dry to try and drip every cent from it, we should instead look to the future and spend our money on sustainability. Let the lignite be, it’s right now doing a good job propping up some fabulous farmland. Let it stay in the ground and let us invest in the future of energy and the future of the environment.

11 Comments Posted

  1. Carl – surely Solid Energy is owned by the State to make a profit for the State. If it has to be subsidised by the State (via the ETS) in order to make a profit, then it is a cost to the State rather than an asset.

    Rather than converting lignite to urea or diesel or burning it for heat, Solid Energy would be better off looking at using available biomass for the same purposes, such as wild pines.


  2. Dude. Garth….
    How about you rewrite this dreadful excuse for an article. And consider this point… Solid fuel have been charged with the limited mandate of making revenue now, using existing technology, and coming up with deals and projects to make that happen. They’re a large State orientated and pushed corporation whose sole purpose is to come up with plans like this!!
    Just like the government isn’t actually there to make things better, in reality they get paid to have meetings and pass laws, not come up with solutions because solutions are done by people and businesses doing work. Government just make new rules.

    So stop acting like solid fuel and the government are supposed to do anything else and ask why solid fuel still even exists! And why government is Not creating room for good technologies and business to grow ie profit, in nz. Instead of looking at taxing businesses and people into poverty. We need rich nzers to be able to buy or own nz assets, and to pay for nzers to develop better technology for nz. By pushing up company and labour costs nz independent businesses can’t afford to compete against the likes of solidfuel , and by crippling nz businesses and individual with emissions costs then that’s even less resources people have to come up with alternatives to the lignite fiasco . And an utter fiasco it is too.

  3. But Solid Energy doesn’t have shareholders as such – it is an SOE.

    I don’t have a problem with Solid Energy mining and selling high quality coal for the likes of steel production, but lignite is very low quality and doesn’t fetch a high price. If the full price for CO2 emissions is applied to lignite use in New Zealand, it wouldn’t be worth digging it out. It is only because the Nats are prepared to subsidise the CO2 costs via their ETS that allows this crazy scheme to appear cost-effective.


  4. Unfortunately, dbuckley is right – businesses are required to do the best for their shareholders, which is interpreted as making a financial profit. They only have to pay attention to social and environmental concerns to the extent the law requires. The law in this case should be requiring no mining of lignite because of environmental consequences.

  5. The pity is that Solid Energy is also getting known for pellet fuels, which are CO2 neutral. Why can’t they just concentrate on that side of the Solid Fuels business and move away from coal?

    Because diversifying within your sector is smart.

    (Please don’t reads this as me being for or against lignite extraction – these are just the facts without emotion)

    Mining product to sell can be a smart business, if one can get a good enough price on the extracted good. One only needs to look over the ditch to see the evidence of that; Australia does very well out of digging itself up and flogging it.

    More than that; lignite has the propensity to be exported, which generates foreign income, another smart thing to do.

    Solid Energy is already in the business of selling stuff that burns to release energy, so its a field they know a bit about, and in which they have some experience.

    Finally, companies are required, by law, to do the best job they can for their shareholders.

    So given all of this, why would Solid Energy not get into lignite?

    Also, Gareth notes “…ignoring a critical report from the Parliamentary Commissioner for Environment that claims that the mining just isn’t worth it.”

    The report is critical, and says lignite mining is environmentally bad, but the claim that “[it] just isn’t worth it” I find no foundation for; nowhere does it say that lignite mining is an economically poor activity. What it does note is that the ETS is busted, but that is hardly an earth shattering revelation, we’ve always known that to be the case.

  6. The pity is that Solid Energy is also getting known for pellet fuels, which are CO2 neutral. Why can’t they just concentrate on that side of the Solid Fuels business and move away from coal? Who knows – we might even see them producing transport fuels from waste biomass.


  7. Maybe there is a need to provide an incentive to nations to keep coal in the ground, the same as preserve forest sinks etc.

    PS You have to wonder at the expertise of the company for these projects, it looks like a company trying to sustain its existence rather than be phased down.

  8. ‘Lignitemare is the perfect description for what’s to come for us all if the mining of brown coal in Southland is allowed to proceed.
    Sorry Alwyn – it is a lignitemare!

  9. Stop!
    I loved your heading for the last post you did but this one is trying to hard.
    On the other hand if you dare to post on, say, the Green party wanting more pedestrian facilities, and label it “Left right on walkways” I shall scream.

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