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Caution on Carbon Tax

A "carbon tax" will not only reduce carbon dioxide emissions, but will lead to lower energy and production costs through increases in efficiency within New Zealand as a whole, says Dr Ken Morison of the Chemical Engineering Group, a professional engineering body.

The group supports the idea of a carbon tax, but Morison says that its implementation will be critical to its success. It will be no use if an industrial user saves one kilogram of coal if ECNZ has to use two kilograms in inefficient thermal power stations to supply the same amount of energy. For informed debate much more technical information is required.

Any carbon tax must reflect the fact that about 28% of the nation's electricity is produced from coal and gas at efficiencies of about 30%, he says. Averaging the carbon tax over all electrical production including hydro generation would provide the wrong signals to energy consumers.

The pricing structure of electricity must change to enable high cost, low efficiency thermal power stations to be replaced by renewable energy supplies. Wind, solar and low impact hydro power would be economic if compared with the true commercial and environmental cost of thermal generation, according to Morison. At present New Zealand has a pricing system which averages the cost of thermal electricity generation with cheap hydro power, so new technologies cannot compete.