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Contact’s closure cuts carbon

Harbour sails 2
Jorge Waayman | Posted on Jun 21, 2022
  • Contact Energy has announced the retirement of a gas-fuelled power station
  • Contact’s direct carbon emissions expected to be reduced by 20% p.a.
  • Re-deployment opportunities will be available for affected workers to support a just transition
  • Generation shortfall expected to be met by new renewable energy, helping to achieve their climate strategy

With the proliferation of new climate change commitments made by governments and companies alike, increasing scrutiny is being placed on how these targets will be met. The scrutiny is warranted considering the track record of emissions performance in many cases has not been heading in the right direction. This emphasises the importance of having an actionable climate transition plan to outline the key strategic initiatives, and enablers involved in helping meet these targets. In New Zealand, this will be facilitated by the new climate disclosure legislation and associated reporting standards and, encouragingly, we’re already seeing examples from companies such as Contact Energy.

Contact Energy is one of the country’s largest generators and retailers of electricity, predominantly from renewable sources (hydro and geothermal) and, over the last year, generated 8.4TWh of electricity, supporting more than 550,000 customer connections. The company still utilises some generation from fossil fuel sources and, aware of their climate transition risks, has formed a de-carbonisation strategy to shift their generation mix to be more renewable over time. This has been evident from their setting of a science-based target to reduce emissions by 45% by 2026 and their progress to date with their new 152mw Tauhara geothermal plant under construction in Taupō.

The company has today announced a further initiative to accelerate this transition by closing their Te Rapa power station, a 44MW gas-fuelled co-generation plant. The plant provides steam and electricity to a dairy factory owned by Fonterra as well as supplying excess electricity back to the grid. Although the plant’s boiler will be sold and still used by Fonterra, the gas turbine used for generating electricity will be retired resulting in real world emissions reduction. This initiative is expected to reduce Contact’s long term direct emissions (scope 1 and 2) by 20% or 200,000 tonnes per annum. The subsequent shortfall in their generation capacity is planned to be replaced by new, renewable generation set to come online over the coming years.

One of the concerns resulting from the closure of fossil fuel-related assets is supporting a just or equitable transition, with employment ramifications for the people working at these locations. In this case, the company has noted that they have a team of 16 people working at Te Rapa who would be affected by the power station closure mid next year. Their CEO committed that everybody in that team would be looked after with opportunities to move to Fonterra’s team or be re-deployed elsewhere within Contact.

Harbour has been a long-term investor in Contact Energy, recognising the opportunity in renewable energy and their role in supporting the country’s de-carbonisation journey. We have regularly engaged with the company, expressing our advocacy for climate action and disclosure as well as helping inform their stakeholder materiality assessments. Harbour was supportive of the company’s expansion into more geothermal generation with the development of the Tauhara plant, providing a significant capital contribution as a cornerstone shareholder in the equity raise. We are similarly supportive of their announcement today and believe this is an excellent example of taking tangible action on climate change.



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