The ideology wars begin

In the green corner we have the zero carbon team; in the black corner we have the regional development team; in the red corner is the ban oil and gas crowd and in the blue corner are some squabbling wimps.

There is a promising new technology that appears to be able to convert natural gas to electricity with reasonably good efficiency and have only CO2 and water as the ’emissions’.? The CO2 can be compressed and fed back into the underground strata to assist in further extraction of the oil and gas there.

The zero carbon corner should love it, but they are still waiting for Greenpeace to tell them what to think about it.? However, the ban oil and gas gang have already thrown a spanner into the machinery.? A newspaper looks at the issues.? Quote.

Regional Economic Development Minister Shane Jones wants it.

But his senior colleague, Environment and Economic Development Minister David Parker, won’t take a briefing on it.

Energy Minister Megan Woods, who has talked up the potential for hydrogen to replace oil and gas as a major industry, has been briefed on the 8 Rivers hydrogen plant proposal but won’t comment on it.

Climate Change Minister James Shaw is also keen on hydrogen as a transport fuel for heavy trucking, for electricity production and as a potential clean energy export opportunity.

Finance Minister Grant Robertson is keeping an open mind. If it comes to fruition, 8 Rivers would be the biggest industrial development in New Zealand since the Think Big era, but this time the Government wouldn’t be paying for it.

Prime Minister Jacinda Ardern is another fan of New Zealand’s “green” hydrogen opportunity and is aware of the proposal, which seeks an initial $10 million to $20m loan from the Provincial Growth Fund (PGF) to help pay for a $50m feasibility study.

If that proved positive, the project’s backers would seek up to $2 billion in private capital to build a zero-carbon emissions plant in Taranaki that would produce industrial quantities of hydrogen, urea for local agricultural use and export, and electricity, along with a swag of other chemicals.

But there’s a snag. The 8 Rivers technology uses natural gas ? which the Government has burnt huge political capital on putting a premature end to with its unanticipated decision in April to stop issuing future offshore oil and gas exploration permits. End quote.

Always look before you leap …? Quote.

The 8 Rivers plant uses a new technology, called the Allam Cycle, that is attracting serious global capital and appears to have cracked the riddle of affordable carbon capture and storage, but its reliance on a fossil fuel feedstock is making the proposal politically super-sensitive.

Before Jones blurted out its existence in a television interview last weekend, almost no one in New Zealand had heard of 8 Rivers.

At the core of that sensitivity is the need for PGF funding. While David Parker is characterising it as a subsidy grab from a multi-national for a feasibility study, it seems 8 Rivers wants the Government funds for quite another reason: political insurance.

It believes in the project but fears a wasted effort if the Government were to make another unexpected regulatory swerve.

If there’s PGF funding in the mix, they reason, there would be a critical minimum of Government support that would justify investment in exploring the project further.

More than a dozen sources involved in, briefed on, or aware of the project all indicate that key ministers are struggling with the politics of the project, despite its ability to fit the Government’s rhetoric about assisting a “just transition to a low-carbon economy”.

Since Woods is not a PGF funding decision-maker, she is unable to comment, says her office.

As Jones reportedly put it: “We made Megan walk the plank (on the offshore oil and gas exploration ban), and now we can’t get her back on the ship.”

But at the Asia-Pacific Energy Leaders Summit in Wellington, she said hydrogen was “an emerging energy source that we see huge potential in for New Zealand”.

“Green hydrogen could play an important role in New Zealand’s energy future by supporting electricity generation during dry weather”, enabling “the conversion of New Zealand’s heavy vehicle fleet”, as well as potential applications in rail, shipping and as an export.

The 8 Rivers project promises all of those outcomes, and a solution to the farming sector’s demand for urea, more and more of which is being imported.

That’s particularly since existing producer Ballance appears to have abandoned its own plans to build a billion-dollar urea manufacturing plant because of the oil and gas exploration ban.

However, 8 Rivers must first convince politicians that its Allam Cycle technology is in fact “green” technology. […] End quote.

But while it seems a great idea to produce ‘clean, green’ electricity, those in Wellington seem to want to use that electricity to produce hydrogen as a transport fuel.? This is where it begins to look like a daft idea.? Quote.

A big part of the problem is that ministers would rather see renewable energy as the source for “green hydrogen”.

“Due to our abundant renewable energy, New Zealand can produce some of the cleanest green hydrogen in the world, and receive a premium for it in international markets. That’s a strategic advantage our Government wants to make the most of,” Woods told the Asia-Pacific energy leaders.

However, the electrolysis process for producing hydrogen using renewable energy is anything up to six times more expensive than producing it from natural gas. […]

Climate change lobby group Climate Justice Taranaki climbed into the project on Tuesday, with a statement saying Jones was trying to “wrap a turd in glitter”.

It didn’t believe CCS could be made to work or be commercially viable and said: “This second round of unsustainable Think Big technology is not proven and even if it was it will be ridiculously expensive and still require fracked gas that is estimated to run out in 10 years’ time. Who in their right mind would invest in such a project?” […] End quote.

See an informative article here on the Allam Cycle.

But why waste all this lovely green electricity on producing hydrogen that has to be trucked around the country and then used inefficiently as a fuel?? We already have a well-established petroleum infrastructure.