Tiwai certainty welcome, but concerns about $2 billion subsidy

A decade-long “will-they-won’t-they” game at the bottom of the South Island has come to an end, with the Tiwai Point aluminium smelter inking 20-year power deals with Meridian, Contact and Mercury.

 While its power supply is fully renewable (allowing it to sell its aluminium at a premium), the process by which alumina is smelted into aluminium does produce carbon emissions. In 2022, the smelter emitted 600,000 tonnes of carbon dioxide, close to 1 percent of the country’s total greenhouse gas emissions.

Like all large emitters which export products, the smelter receives a certain number of carbon credits for free, under a process known as industrial allocation. Large polluters get this free allocation as a result of their greenhouse gas emissions – Tiwai got 605,000 credits in 2022, for example. That’s slightly more than it actually emitted, due to a phenomenon called over-allocation that has since been corrected.

Climate Change Minister Simon Watts suggested no final decision had yet been made on the smelter’s allocation.

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