Big future for coal in Ministry energy plan

Press, 30 August 1980, Page 3

Big future for coal in Ministry energy plan

NZPA Wellington An unprecedented _ expansion in coal production is a main feature of the first Ministry of Energy energy plan'. The plan, tabled yesterday in Parliament, aims for a coordinated and integrated approach to all aspects of energy supply and demand. The 75-page highly technical document confirms that natural gas will be a very important energy resource over the 15 years covered by the plan. But beyond 1995, it sees coal growing in importance. It says the expansion in coal production, based mainly on the Waikato fields, will be hindered only by the time needed _to develop underground mining. Coal is seen as being important because, unlike natural gas, it will not be a transitory resource. While natural gas will be vital in liquid fuel production in the next decade, the report says the South Island lignite deposits may provide a more far-reaching basis for the indigenous production of liquid fuels. There is already active interest in the private, sector and from overseas .in the lignite, much, of which centres on new technologies, which have yet to be demonstrated on a commercial scale.

The plan also puts heavy emphasis on electricity and; says that although there is| surplus capacity now, thei combination of fuel restrictions and growth in energy! demand — estimated to increase 2.7 per cent a year over the next 15 years — will require new installations from the mid-1980s. . | Most of this capacity will! be hydro, continuing the trend towards renewable resources, supplemented by the maximum feasible coal production. The plan says it is of concern that greater than ex-i pected load growth may; create difficulties in retain-! ing adequate generating mar-1

gins, particularly during the. late 1980 s. The development of al mainly hydro-coal electricity! system will also create newl difficulties in overcoming i variability, in coal demandj arising trom wet and dry years. The plan attributes the! I average 2.7 per cent a year .growth in consumer energy demand largely to the devellopment of big export orijented projects and industrial land commercial growth. • It says energy use in the home should level off and rapid rises in oil process and conservation will restrain growth in the demand for transport fuels. Oil prices are expected to rise 3 per cent a year faster than other energy prices up to 1990. The market share for oil productions (including synthetic petrol) should fall from 60 per cent to 42 per cent by 1995. Gas will become, increasingly important, taking a big share of new demand growth and replacing up to 5 per; cent of the present oil demand.

Electricity’s market share! will continue to grow, but more slowly than in the past, although a significant increase in generation is expected. Coal will expand its share through increased exports and expansion of the steel industry. By 1990, natural gas and condensate are projected to provide more than 30 per ! cent of total primary energy input, primarily at ■ the exipense of imported oil. In the longer term, the trend away from gas to coal may also see a place • for biomass, the plan says. | In the field of energy conservation, the plan opts for ■ a move away from the emphasis on petrol saving to other transport fuels such as diesel and jet-fuel. It says expansion of the Marsden Point refinery will make petrol saving less significant. i The production of diesel [substitutes is singled out 'with a recommendation that

.developments overseas are (closely followed.I Commenting on the plan lyesterday, the Minister of I Energy (Mr Birch) said it I made it clear that the use of natural gas and oil to generate electricity must be restricted and that New Zea- . land must develop all the economically and environmentally acceptable hydroelectric'potential available. “The Government had aready recognised this inevitability when it decided that the electricity generation programme should be implemented as rapidly as possible to enable our hydro resources to make an earlier contribution, to national and regional development,” he said. ; Mr Birch said there was no question that the hydro electricity developments and electricity-based ventures in the South Island and the natural ventures in the North Island were going to provide New Zealand with its most dynamic period of expansion. | But only a small- percentage of New Zealand’s I energy resources would be

used for this purpose, he said, noting the plan’s statement that less than 10 per cent would be. directly exported as chemical methanol. Mr Birch said coal exports amounted to a small fraction of 1 per cent of coal reserves and, in the electricity field, the combined load of the two aluminium smelters would be less than 20 per cent of the generating capacity in place by 1990. The energy plan indicates that the cost of hydro-elec-tric power — 2,5 cents a unit upwards — will be higher than the 1.7 c to I.Bc to be paid by the Fletcher-Alusuisse-CSR consortium for its aluminium smelter. But Mr Birch said this was well understood in the context of the decisions to conduct the negotiations on the smelter. "The Government is satisfied that the price differential is more than justified by the national benefits these projects will generate and the cheaper costs of supplying direct to a major user operating under constant load.”