New Zealand govt. withdraws $60 million subsidy from Tiwai Point aluminium smelter

The New Zealand government has withdrawn a composite subsidy worth about $60 million, from the Rio Tinto majority-owned Tiwai Point aluminium smelter in Southland.

A freshly released cabinet paper has unveiled that James Shaw, the Minister of Climate Change had demanded the government to accept this measure late in 2021.

The subsidy phrased that the New Zealand government provides 934,400 free units per year under the Emissions Trading Scheme (ETS) to the aluminium smelter as part of an electricity allocation drive.

Now the companies have to capitulate a fixed number of these units, presently priced at $75 based on their emissions, with each unit roughly translating to a tonne of carbon dioxide.

However, some large emitters and large power users possess some free units allocated each year to cushion this whirl and to apprehend that they may be contending with the organisation in other countries that counter any carbon penalties.

The minister asserted that these free units no more made sense for Tiwai smelter as it had settled a new and cheaper deal for its energy supply in January 2021.

Therefore, it has been stated this electricity supply comes majorly emissions-free, as it is coming from the Manapouri Dam right beside Tiwai aluminium smelter, the price was not particularly escalated by a higher ETS price.

Although, NZAS contradicted with the minister on this matter and with an independent analysis commissioned by Shaw to look at the appropriate price.

Chris Blenkiron, the CEO of New Zealand Aluminium Smelter (NZAS) said, “The smelter accepted the Government’s decision but noted that Tiwai produced some of the lowest-carbon aluminium in the world.”

“The recent decision to set the electricity allocation factor under the New Zealand Emissions Trading scheme for NZAS’s current electricity agreement to zero is one we accept.”

“However, we note that aluminium production accounts for less than 1 per cent of New Zealand’s total carbon emissions, while aluminium continues to play a critical and growing role in a world economy focused on decarbonisation.”

“At NZAS we are proud to produce some of the lowest carbon aluminium in the world while many of our international competitors producing high carbon metal are not facing a price on carbon”, the CEO added.