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• 4. Results of Standard Runs

• Energy Modelling

• Emissions Projections

• Older Reports

• Interim Update
• Future CO2 Emissions

• 4.1 Results Comparison
• 4.2 Comparison with Previous Results
  • Starting Position Comparison - Year 2003
  • Year 2010
  • Year 2020
• 4.3 Three Scenarios - High, Most Likely (Including Price-Based Measures), and Low Emissions

4.1 Results Comparison

Table 3 contains the "Most Likely" scenario projections out to 2020 (December year ending), using the medium assumptions and including the effect of a carbon tax and carbon credits (price based measures). The effect of price-based measures was modelled using SADEM. As CP1 approaches and the measures take effect, the measures scenario now becomes the "most likely" scenario. The following price-based measures were modelled:

• Carbon charges at $15/tCO₂ from 1 April 2007. SADEM is a price-equilibrium model. This tax is modelled using SADEM as a price increase for the fuels concerned, and the effect of this on demand and fuel switching is the result.
• Carbon credits for new "renewables" electricity generation. The effect of this in SADEM is to lower the cost of entry (by up to 0.6c/kWh) of new "renewables" generation effectively moving it up the order at the expense of fossil fuelled generation.

Emissions are projected to increase by 10% (3.5 MtCO₂) in 2010 over 2003 levels. There are several contributors to this. Oil is up by 2.4 MtCO₂ mainly in the form of transport emissions. Electricity generation is up by 1.0 MtCO₂ mainly due to coal fired generation at Huntly. And fugitive emissions are up 0.6 MtCO₂ mainly due to venting of CO₂ from Kapuni which was previously sequestered in the production of methanol by Methanex. Correspondingly gas is down 1.0 MtCO₂ principally due to the closure of Methanex.

Overall emissions in 2010 are projected to be 50% above 1990 levels.

4.2 Comparison with Previous Results

In comparison the previous results provided to the CCO do not have these price-based measures (Table 4). This is explained in more detail as follows:

Starting Position Comparison - Year 2003

When comparing tables 3 and 4, overall, there is an increase in emissions that occurred in 2003 from 32.4 to 34.5 MtCO₂ (6.0%). This is due to the following:

1. The April 2004 run was based on Energy Outlook 2003 which used actuals to 2001 and projections thereafter. Hence 2003 was based on a projection not actuals. This has now been corrected for in the May05 runs where 2003 data now represent actuals. This accounts for the small difference seen for "Electricity Generation" (0.1 MtCO₂).
2. "Other Transformation" now contains an extra 0.4 MtCO₂. This derives primarily from gas and oil production losses from on-site flaring that were previously unaccounted for.
3. "Fugitive and Industrial Emissions" now contain urea production (0.4 MtCO₂) which was previously under gas. Any process that primarily exists to convert the fuel's chemistry into a different form other than combustion must be reported as an "Industrial Process Emission". Further reducing gas was some over reporting of emissions for the Forestry and Metals sectors.
4. Oil shows a significant increase (1.1 MtCO₂). This is due to the underlying diesel model in the April 2004 run being significantly underestimated. Somewhat offsetting this was double reporting of domestic marine emissions in the fishing sector (0.2 MtCO₂).
5. Coal was 0.3 MtCO₂ higher due primarily to higher than expected gas and electricity prices for this year. Fuel switching was undertaken by industrial users where possible.

Year 2010

Overall there is a significant increase in emissions projected from 34.3 to 38.0 MtCO₂ (11%). This is due to the following:

1. "Electricity Generation" is 1.5 MtCO₂ more due to increasing prices in the gas sector making coal more favourable to burn at dual fuel stations (Huntly). This is partly offset by the effect of price-based measures.
2. Oil emissions are up 1.4 MtCO₂ due to the effect of increased diesel consumption.
3. Correspondingly gas is 1.0 MtCO₂ less, and coal is 0.3 MtCO₂ more. Most of the gas reduction is due to Methanex closing.
4. Fugitive and Industrial Process emissions are up 1.1 MtCO₂. This is accounted for by a number of factors including the venting of Kapuni CO₂ gas (previously sequestered by Methanex, 0.4 MtCO₂), transfer of Urea as above (0.4 MtCO₂), and an underestimate on the steel forecast emissions (0.3 MtCO₂).

Year 2020

Overall there is an increase in emissions projected from 43.2 to 43.9 MtCO₂ (2%). This is due to the following:

1. "Electricity Generation" is 0.4 MtCO₂ less. This gap has closed from that observed for 2010 (1.5 MtCO₂ more) due to a reduction in projected demand in the Industrial and Commercial sector.
2. From 2018 the Kapuni gas field runs out. Kapuni gas contains approximately 50% CO₂ and this is usually vented to the atmosphere prior to use. The decommissioning of Kapuni results in a substantial reduction in "Fugitive and Industrial Process" of 0.5 MtCO₂.
3. Overall projected "Electricity Generation" is showing less hydro potential in favour of wind and geothermal generation. This is largely due to Project Aqua not going ahead. The change from hydro to wind and geothermal for new generation has little effect on carbon emissions as neither technology is an emitter.
4. Switching between coal and gas for "Electricity Generation" is very sensitive to pricing and the factors underlying that. These factors include run out year (the year New Zealand depletes its gas resource, 2030 in the "Most Likely" case), starting price, new gas discovery rate, LNG (backstop) price, carbon tax, and changes in CCGT technical efficiencies. There is a great deal of uncertainty as to whether coal or gas will be used. The emission factors for coal and gas for electricity generation are significantly different by a factor of 2-3 times per GWh generated. Hence there is a lot of uncertainty regarding carbon emissions. For renewable generation there is less sensitivity in this switching as generally once the capital investment decision is made and the generation installed, its production is limited only by the availability of the resource.

Figure 10: Carbon Dioxide Emissions in 2020 (MtCO₂p.a.)

Figure 11: Carbon Dioxide Emissions - 2003-2020 (MtCO₂p.a.)

→ Full size version Figure 11 [6 KB GIF]

4.3 Three Scenarios - High, Most Likely (Including Price-Based Measures), and Low Emissions

Figure 12: High - Low Scenarios - 2003-2020

→ Full size version Figure 12 [8 KB GIF]

For the 3 scenarios there is an approximate +/- 10% spread for 2020 from the "Most Likely" scenario (40.0, 43.9, 48.7 MtCO₂).