A fund to reduce private sector emissions from process heat will lead to 1.875 million fewer tonnes of greenhouse gases being emitted by 2035.

A $69 million Government fund to help the private sector reduce its reliance on fossil fuel-fired boilers is expected to have a greater impact than a $200 million public sector-oriented fund.

Newsroom reported in November that the $80 million allocated from the Government’s State Sector Decarbonisation (SSD) fund to help schools, hospitals and other government buildings move away from coal- and gas-fired boilers was projected to reduce emissions by just 261,740 tonnes over the next decade.

The focus is again on the dairy sector – this time the impact of high-temperature dairy processing. Is the dairy industry doing enough to reduce emissions? Click here to comment.

However, officials at the Ministry for Business, Innovation and Employment (MBIE) expect the Government Investing in Decarbonising Industry (GIDI) fund, which is aimed at process heat emissions from industry and business, will cut seven times as much greenhouse gases with just a $70 million budget.

Better returns for private sector fund

In response to a request under the Official Information Act, MBIE told Newsroom that the GIDI fund would reduce emissions by an estimated 1.875 million tonnes between 2022 and 2035. Averaged over the 14 year period, the GIDI fund is likely to reduce process heat emissions – which total up to around 8.3 million tonnes a year – by 1.6 percent.

That’s a much greater chunk of a difficult-to-decarbonise sector than the SSD fund has targeted so far. It also appears to be better bang for the Government’s buck. Both the SSD and the GIDI funds expect recipients to provide co-investment for the funded projects.

Parliament, for example, is being funded to the tune of $1.3 million from the SSD fund, plus an additional $960,000 from its own budget, to install solar panels and LED lighting. This project is expected to cut about 169 tonnes of emissions per year, or 1,690 over the next decade.

When the GIDI fund was announced, Jacinda Ardern said, “Reducing greenhouse gas emissions from process heat is win-win for our climate and our recovery”.

“The new fund will target New Zealand’s largest energy users to accelerate their uptake of electrification and other technologies that will dramatically lower emissions from this sector, and create clean energy jobs,” Energy Minister Megan Woods said at the time.

SSD criticised

However, climate activists criticised it as “small potatoes” out of the billions of dollars in the Covid-19 Response and Recovery Fund.

“We welcome it, but it’s very incremental at a time that we need to be transformational,” Greenpeace New Zealand climate and energy campaigner Amanda Larsson said.

The $80 million spent so far to reduce public sector process heat emissions represents just 0.03 percent of the country’s emissions and 0.31 percent of process heat emissions, at an abatement cost of $3077 per tonne of emissions saved. A spokesperson from Woods’ office contested this portrayal in November, saying that the abatement cost should be calculated over the expected lifespan of the new electric or biomass boilers.

“The lifetimes of projects will vary, but the most significant (eg large boilers) will likely be in place for 15 to 20 years or more. This means the total lifetime emissions savings of the projects allocated funding will be much higher than the annual figure,” the spokesperson said at the time.

“As these projects progress, regular reporting on the programme will begin to capture this information more accurately.”

On an average project lifetime of 20 years, the abatement cost would come down to $250 a tonne, the spokesperson said.

However, they also noted that– with the exception of school boilers – the conversions and replacements were only part-funded by the State Sector Decarbonisation Programme. The remainder comes from the partner agencies, leading to a higher overall abatement figure.

Bigger gains possible from dairy

Ministry for the Environment report in January 2020 found wide-ranging opportunities for abatement of process heat at a much lower cost than the State Sector Decarbonisation Programme’s. There were also significantly more emissions available to be abated than the 26,000 tonnes.

Dairy processing, for example, could reduce close to half a million tonnes at a negative cost – processors would save money. Another 615,000 tonnes could be abated through swapping fossil fuel boilers to biomass ones at a cost of up to $110 per tonne or to electric boilers at a cost of $250 a tonne.

The analysis also found plenty of opportunities for cheap abatement of emissions from residential and commercial space and water heating. Just about every LPG-powered space or water heater in the country could be replaced at a negative abatement cost, for example. Even existing gas space heaters in commercial buildings could be electrified for about $355 a tonne, reducing emissions by 300,000 tonnes.

“What we are expecting to see from the Ardern government very soon is a much more ambitious decarbonisation plan that looks across sectors,” Larsson said.

“26,000 tonnes doesn’t sound impressive in the context of the scale of our annual emissions. I think it just goes to show that these kinds of initiatives, while they’re good steps in the right direction, aren’t incredibly impressive announcements on their own.”

Marc Daalder is a senior political reporter based in Wellington who covers climate change, health, energy and violent extremism. Twitter/Bluesky: @marcdaalder

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