Carbon credits to cost $900k

Higher emissions from the Redruth landfill, in part due to material removed after December’s Rangitata River flood, mean the Timaru District Council will pay the Government more than $900,000 in carbon credits for the 2019 calendar year.

At Tuesday’s extraordinary council meeting, councillors approved the purchase of 36,539 New Zealand units, under the Emissions Trading Scheme (ETS), at a price of up to $25 per unit (using the fixed price option) – a total cost of up to $913,475.

Carbon credits are traded between participants in the ETS, which includes the solid waste industry. An emission unit can either represent one metric tonne of carbon dioxide, or the equivalent of any other greenhouse gas. The council needs to purchase units to pay for the emissions from Timaru’s Redruth landfill.

In recent years, the credits have cost the council about $600,000 to $700,000, but had increased this year due to higher emissions, a report presented to councillors says.

Council group manager for commercial and strategy Donna Cross told The Timaru Herald the volume of material being sent to landfill had also increased due to events such as December’s Rangitata River flood.

This had led to a ‘‘higher than normal’’ rise in emissions from the landfill.

‘‘It’s worth noting that the cost of carbon credits are an unavoidable cost for council, ratepayers and users of our landfill,’’ Cross said.

The money will be met from the council’s waste minimisation reserves, which has a balance of approximately $1.9m, with the projected actual at year-end balance $2.4m.

‘‘The matter of carbon liability affects all of council’s ratepayers who receive kerbside rubbish collection and all users of its landfill and waste transfer stations,’’ the report says.

‘‘It’s to be noted that council is constantly exploring ways to minimise emissions and emission liability associated with its landfill.

The report also notes the council’s existing carbon policy is ‘‘very comprehensive’’ and in a better state of maturity than many.

‘‘It covers most of the areas

that a risk management framework would be expected to include.

‘‘However, there are some conflicting and ambiguous provisions within the policy that affect its application, and some other material changes that are recommended moving forward.’’

The report notes that although the fixed price for carbon is $25 per unit, it would increase to $35 over the next year.

There was also a possibility that over time, it could increase to $50 per unit and potentially as high as $200.

The report says because of this ‘‘what we collect in rates and user fees may not be sufficient to meet the cost of our liability’’.

Meanwhile, the council also holds 16,081 units through its forestry, but has not proposed to use these to offset emissions.

At the meeting, councillors Stu Piddington and Allan Booth asked whether the council should look at increasing its forestry reserves over time.

‘‘You would need to look at around 17,000ha to get the right cover, you would need to create an industry, but it all depends on whether we have the land and if it was suitable,’’ Booth said.

‘‘It’s worth noting that the cost of carbon credits are an unavoidable cost.’’ Donna Cross

Council group manager for commercial and strategy