In which Solid Energy defends its lignite proposals before a Parliamentary select committee, defines sustainability loosely, and fails to define some other things at all, except the megabucks

I sat in on Parliament's financial review of Solid Energy yesterday, and heard CEO Dr Don Elder tell the committee that his company — whoops, our company — meets New Zealands, and the worlds, sustainability expectations.

Thats sustainability as redefined by Solid Energy.

Southland has, said Elder, world-scale quantity and quality of lignite. On today’s prices, let alone projected future prices, it would earn trillions and squillions of dollars, with which might be bought: hip operations, teachers, rural broadband rollouts galore. A pony from Santa for every child for Christmas. That kind of thing.

I didnt write the dollar-numbers down. I tried, but the CEO had the bit between his teeth, and he was galloping.

The other reason, actually, why I didnt write them down is that they're irrelevant. The definition of sustainability, on the other hand, was fascinating.

Solid Energy has pollution estimates for lignite, that they tried to keep secret on ‘commercial sensitivity’ grounds, then released to WWF when forced by the Ombudsman — also because by then anyway the Parliamentary Commissioner for the Environment (PCE) had published her own numbers, that tally with Solid Energys own.

I have a copy of the material released to WWF, dated February 8. It only confirms what we knew already — what the PCE, and others, have been saying — that lignite-to-diesel fuel proposals would be much more polluting than the already-polluting conventional diesel. If all diesel in New Zealand was made from lignite, it would double diesel fuel emissions. The PCE illustrated [figure 8.1] how much harder it would make it to deliver on our promises if just one lignite-to-diesel plant proceeded. (Two such plants are proposed, plus some other types of proposals.)

The current CTL column [writes Solid Energy, to WWF] sets out our assessment of emissions that reflect current, well proven technologies (1990/2000s) for a plant based in a first world country. This is our base life cycle assessment we are using for our investigations into a CTL plant in Southland.” It shows an emissions factor of 6.1kg CO2eq per litre, compared to crude-to-diesel's 3.2kg CO2eq per litre. The lowest of the numbers in the other columns is 4.3 around a 30% increase. This is based on demonstration technology in China, and an assumption that “50% of the CO2 generated as part of the process is sequestered”.

But the PCE said carbon capture and storage is "expensive and risky", a "major challenge", and it would be "irresponsible to make decisions now that rely on CCS becoming both practical and economic". One recent report from Canada has the ground “fizzing like soda pop”. In another OIA response dated February 8, to the Green Party, Solid Energy says that it has no reports or documents at all regarding the quantity of greenhouse gas emissions that it could potentially offset from bio-sequestration. That 50% assumption, then, is speculative, at best.

Dr Elder showed a powerpoint slide headed meeting New Zealands sustainability expectations”. It reproduced this business sustainability principles” page. It was his explanation of how Solid Energy is meeting global and local sustainability (my emphasis):

For our business to be sustainable in the long term we must carry out all our activities in ways that achieve our current business objectives without unreasonably compromising our ability to meet our future objectives.

We will therefore manage our business in accordance with sustainability principles that consider our specific expectations for value, our people and communities, health and safety, the environment and our reputation.

Here is the United Nations’ different definition of ‘sustainable development’:

Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

The UN definition is about the needs of future generations, not Solid Energy’s future objectives. It is about sustainability, not business sustainability. Here’s our own Resource Management Act definition.

Elder agreed that a solely business focus would not be defensible. That is why — he said, stepping adroitly sidewise — public support, communities, environment, reputation are all important. Solid Energy’s definition, he believes, is better and broader than the UN's.

It’s certainly different.

In addition, the company aims for a net positive effect on the New Zealand (my emphasis) environment, taking into account “all aspects of the environment”. It has met this every year, since 2003.

Green Party committee member Kennedy Graham thought that, given the SOEs other promises — sustainability, net positive environmental effect, all aspects of the environment — logically it must be necessary for Dr Elder to be able to assure the committee that lignite would show a net reduction in emissions. The PCE, by contrast, had concluded “large scale lignite use will have negative impacts of national significance”.

We’re all aware that 'net reduction in emissions' is only an accounting treatment, offered Elder, cannily — not the truth of what the environment sees. What weve made clear [he said], in looking at lignite development in Southland, is that the energy potential there is clear. Questions about carbon component or footprint, and exactly how one might deal with that, were issues yet to be resolved. It was a very important part of the projects evaluation. We dont have all those answers yet. These are projects in the pipeline, and issues under investigation. The argument on day one that the carbon emissions risk makes the projects unacceptable is an argument we simply dont accept.

Whereas Solid Energy is happy to rely on the PCE’s recognition of its ‘net positive’ environmental efforts ("praised by Parliamentary Commissioner for the Environment" read the proud legend, on that slide), when it came to her particular view on lignite emissions, he felt she had got it all wrong. He wanted to clarify for the committee her assumptions: she had been referring almost solely to greenhouse gas, not to the economics at all, which she lacked the information to address, nor the other facets of people, community, and so on.

Dr Graham also had a matter he wanted to clarify for the committee, on the PCE's behalf. "The implications, global and NZ national, of rising greenhouse gas emissions will engulf your 'broader' considerations."

And that was the end of it.



Comments (8)

by Claire Browning on February 18, 2011
Claire Browning

I didnt write the dollar-numbers down.

PS. Also, I made up the ponies-from-Santa part.

by Save Happy Valley on February 18, 2011
Save Happy Valley

Is Don Elder's big plan to retire in China, as a lignite salesmen? Does John Key want a cut...

"The Chinese were very intrigued with our new Prime Minister and his financial background," says Solid Energy's Don Elder, the sole Kiwi businessman to attend the Forum.

China's drive to buy controlling stakes in resource-rich companies has sparked controversy, particularly in Australia and the United States.

Key says he made the point that China was hugely under-represented as an investor in New Zealand...

Don Elder has also been spending time in India, helping climate minister Tim Groser work on a free trade deal, to the main customer of NZ coal, India.

A large Chinese resources player is scoping New Zealand for coal, lignite and ironsands mining projects at the same time as Australian companies take increasing interest in New Zealand in these areas.

'The Don' and Lignite Brownlee's plans don't stop at lignite...

'Blue'greens.. Green Growth..?

Non Green Growth is firmly in control.

by Richard Leckinger on February 18, 2011
Richard Leckinger

Oh, Claire. I am so dissapointed about the ponies! That would have clinched this lignite to debt scheme for me. The extra 10-20 million tonnes of CO2 would only add another $250-500 million dollars to the public liability. Meanwhile, Elder wants to partially privatise, effectively privatising the profit and socialising the debt. Never mind about the climate change implications...

I really wanted a pony!

by Claire Browning on February 18, 2011
Claire Browning
Rick - the way Dr Elder was talking yesterday, I am sure that if you asked him, he would make it happen.
by Quentin Duthie on February 18, 2011
Quentin Duthie

I was present at the Select Committee also. I thought it was interesting that Dr Elder said straight up that they had calculated the economics of the lignite proposals and it was a "no-brainer", but they hadn't worked out how to mitigate environmental impacts like emissions. I thought NZ had priced emissions so their impacts were internalised in an economic signal? Silly me.

I was also amused that Dr Elder mentioned NZ's "trillions" of dollars of underground resources there for the taking, and noted, as an aside, that almost all of it is outside of Schedule 4. Funny, but I had a vague memory that Solid Energy and Mr Brownlee recently felt the need to knock over a corner of Paparoa NP (in Schedule 4) to get at some coal? I must have been mistaken - silly me.

by on February 19, 2011

Quentin falls into Don Elder's carefully laid trap of calling the lignite fields "coal resources".  There is a big difference between real black coal and the brown mushy lignite that underlies parts of Southland.

The coal resources that Solid Energy wanted to mine from under Schedule 4 land on the West Coat is high quality black coal with good properties for steel making that can be sold on the international marlket at a high price.  It has a useful (net) energy content of about 30 GJ/tonne.

In contrast, the lignite resources in Southland are very low quality with a useful (net) energy content of around 10 GJ/tonne.  This lignite comprises as much water as burnable fuel; and that fuel component is already partially oxidised, reducing its usefullness. Lignite cannot be tranported anywhere because when it dries out it becomes pyrophric.  If Don Elder could put lignite on a boat and flog it he would. But he can't.  So in order to realise his vision of "monetising a resource" he has try to turn it into valuable diesel fuel with a process that has a carbon footprint 6-10 times more greenhouse unfriendly than oil refiinng.

One of the biggest pieces of misinformation that Don Elder dissemminates is his continual referring to lignite as coal.  These two NZ mineral deposits are as like as chalk and cheese.

by Claire Browning on February 19, 2011
Claire Browning

I was also amused that Dr Elder mentioned NZ's "trillions" of dollars of underground resources there for the taking, and noted, as an aside, that almost all of it is outside of Schedule 4.

Amused me, too. Elder's tone with that comment sounded a bit dry - it seemed an indication of how pissed they must have been at Gerry Brownlee. Or maybe just back-pedalling, having lost the argument. Anyway.

Quentin falls into Don Elder's carefully laid trap of calling the lignite fields "coal resources".  There is a big difference between real black coal and the brown mushy lignite that underlies parts of Southland.

Steve - as I read Quentin's comment, he doesn't fall into that trap, at all: he doesn't call lignite coal, he talks about Solid Energy's plans for some other coal. I reckon he knows the difference.

Thanks though, and yes - Straterra's Chris Baker does the same here, in his 'response' to Jeanette Fitzsimons, talking about "coal" in general, and how "steel cannot be made without coal". On my understanding, even if you dry lignite into 'briquettes' (energy-intensive), that's medium-grade at best - not coking coal. Nothing to do with steel-making. Total misinformation.

by Denis Tegg on February 19, 2011
Denis Tegg

Thanks Claire for reporting on the Select Committee hearing.

A while back I came up with a top 10 reasons why converting coal to lignite is insane (drawing heavily on the PCE report)

In the last few days The Post Carbon Institute has released "Powerful new evidence which demonstrates that coal is not cheaper than alternative fuels, not abundantly available, and is not now or in any likely future environmentally friendly. As two new reports detail, coal is expensive, scarce, and dirty in every conceivable way."

One study shows "the full lifecycle costs of extracting and burning coal are more expensive and damaging than previously known: an estimated $345 billion annually in health, environmental, and other costs in the United States alone."

PCI also report ..

"The promise of "clean coal" has been based not only on pie-in-the-sky capture technologies, but also on the long-term viability of storage techniques. Now, with evidence mounting that the world's largest carbon capture project in Weyburn, Saskatchewan is leaking..."

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