Rotorua Air Quality Alternatives Analysis
1
Introduction
To achieve the reduction of emissions in Rotorua required to meet national standards by
the deadline of 2013, 15 actions have been identified in the draft Action Plan.
Although these actions are considered to be the best mix, there are alternative
approaches that may also achieve the reductions. This report analyses and discusses
three of the most realistic alternative approaches, and compares them with the proposed
package.
A comparison table of all the options discussed here is shown in 3: Summary of Options.
2
Proposed Alternatives
2.1
Alternative 1 – Widespread Conversion to Zero-Emission Heating Appliances
A simple solution is to provide a subsidy to the minimum number of houses required to
achieve the 60-tonne particulate reduction. If all houses that received a subsidy converted
to zero-emission appliances, the total number of houses requiring conversion is estimated
at 5100. The cost for each conversion is estimated to be $4000, with the total cost
depending on the level of subsidy required.
Subsidy
Level
50%
75%
100%
Reduction Achieved
60 tonnes
60 tonnes
60 tonnes
Cost/conversion
Net Cost
$/tonne
$2000
$3000
$4000
$10,200,000
$15,300,000
$20,400,000
$170,000/tonne
$255,000/tonne
$340,000/tonne
Although this solution works in theory, in reality it is not practical. It assumes that it would
be possible to find 5100 households that all want to convert to zero-emission appliances
(at the subsidy levels) which is unlikely, or that a strong regulatory approach is taken
(convert or stop using). Solid-fuel burning is easy and efficient for many households, who
would be unwilling to convert to electricity or gas which could increase their energy costs.
The “one size fits all” manner of this option assumes that all households will need the
same level of support. In reality, there would be households who could afford to pay more
towards a new appliance, and others who couldn’t afford to pay anything. With Rotorua
having a high deprivation index, many more households would require the 100% subsidy
option, quickly pushing the price up and making this alternative more inefficient than the
Action Plan package.
2.2
Alternative 2 – Widespread Conversion to Cleaner Heating Appliances
A more realistic scenario is that some households will decide to convert to zero-emission
appliances, and some to a more efficient solid-fuel burner. To achieve the 60-tonne
reduction with a mix of cleaner heating appliances being installed, a total of 7650 houses
would need to be converted – 3290 converting to woodburners, 1070 to pellet fires, and
3290 to zero-emission appliances. The cost of each conversion is estimated to be $4000.
Subsidy Level
50%
Reduction
Achieved
60 tonnes
Cost/conversion
Total Cost
$/tonne
$2000
$15,300,000
$255,000
75%
100%
60 tonnes
60 tonnes
$3000
$4000
$22,950,000
$30,600,000
$382,500
$510,000
This alternative is more realistic than Alternative 1 as it allows for individual preferences in
heating methods. However, because of the increased number of houses requiring
conversions, the cost also increases. Again, there would be some houses that could
afford to pay more, while others would need the 100% subsidy.
This alternative could be adapted (for example, a sliding scale of subsidy depending on
household income) and made more efficient with some funds becoming recoverable.
However, this type of subsidy/loan scheme is incorporated into the recommended
package.
2.3
Alternative 3 – Range of Actions
The third alternative is to use a similar combination of actions like those put in place by
Nelson City Council and Environment Canterbury. This combination includes full subsidies
for low-income households, loans on rates for middle-income households, subsidies for
landlords, and the phasing-out of old solid-fuel burners.
The reductions and costs of a similar selection of options being applied to Rotorua are
shown in the table below.
Option
Restrict
solid-fuel
burners in new houses
Restrict new solid-fuel
burners
in
existing
houses
Prohibit the backyard
burning of waste
Phase out the use of
open fires for heating in
homes after September
1, 2013
Phase out existing solidfuel burners 15 years or
older
Total Reduction
-0.5 tonnes
-4.6 tonnes
Included above
5 tonnes
Included above
7 tonnes
Included above
(25 tonnes)
Not included in total
as the reduction
achieved by this
action is included in
other options
Offer subsidy to low- 23 tonnes
income households
Apply for EECA funding
for Clean Heat
Offer a loan on rates to
middle-income
households
Apply for EECA funding
for EnergyWise Project
Offer
incentives
to
landlords
Promote
burning
dry
Total Cost
Recoverable Cost
$200,000
Included above
$10,000,000
2.7 tonnes
$555,536
13 tonnes
$7,700,000
$5,900,000
4 tonnes
$1,600,000
$1,600,000
21 tonnes
$4,700,000
wood 0.3 tonnes
$100,000
Promote
awareness
community 0.5 tonnes
$100,000
Summary Table
Total Reduction
71.4 tonnes
Total Cost
Total Recoverable
Net Cost
$24,955,536
$7,500,000 $17,455,536
$/tonne
$244,475
This combination of options has been selected by other councils to address the problems
within their regions, but it is not necessarily the ideal solution for Rotorua.
The main difference between this alternative and the recommended option below, is the
100% subsidy offered to low-income households. This significant subsidy pushes the
costs up very quickly, and is a non-recoverable as with the loans schemes. Already, those
councils who offer 100% subsidies are finding the scheme to be extremely expensive, and
have changed the qualification criteria in an effort to cut costs.
This alternative could be applied to Rotorua without the 100% subsidy option, which
increases its efficiency to $150,420/tonne, although cuts the overall reduction to 48.3
tonnes. With a minimum of a 60-tonne reduction required to meet the standard, the
reductions achieved by this combination of actions wouldn’t be sufficient.
Although this particular mix of actions is inappropriate for Rotorua, a similar theory has
been used to select the optimal mix as discussed below.
2.4
Recommended Option
The recommended option uses a combination of methods and actions to achieve the
minimum 60-tonne reduction, as shown below.
Option
Restrict solid-fuel burners in new
houses
Restrict new solid-fuel burners in
existing houses
Prohibit the backyard burning of
waste
Require burner upgrade at the
point of property sale
Phase out the use of open fires
for heating in homes after
September 1, 2013.
Apply for EECA funding for Clean
Heat
Offer a loan on rates to middleincome households
Offer a loan on property to
households
Apply for EECA funding for
EnergyWise Project
Provide a consultant for major
industry
Review resource consents for
Total Reduction
-0.5 tonnes
Total Cost
Recoverable Cost
$200,000
-4.6 tonnes
Included
above
Included
above
Included
above
Included
above
5 tonnes
28.2 tonnes
7 tonnes
2.7 tonnes
$555,536
13 tonnes
$7,700,000
$5,900,000
11 tonnes
$8,800,000
$6,800,000
4 tonnes
$1,600,000
$1,600,000
0
$10,000
0
$200,000
major industry
Promote dry wood burning
Promote community awareness
Summary Table
Total Reduction
66.6 tonnes
0.3 tonnes
0.5 tonnes
Total Cost
$19,265,536
$100,000
$100,000
Total Recoverable
$14,300,000
Net Cost
$4,965,536
$/tonne
$74,558
The actions that have been selected for inclusion in this recommended mix have all been
adapted from actions that other councils already have in place. There is an advantage to
this, as it is possible to tailor each option to ensure the best fit with the situation in
Rotorua.
This mix of actions is extremely efficient, achieving the required reductions for minimal
cost. It contains some simple mechanisms (such as the point of sale rule) that results in
large reductions. Although the initial financial outlay is significant, the majority of funds are
recoverable.
By comparison, the most efficient alternative is a 50% subsidy for 5100 houses to convert
to zero-emission appliances only. As discussed, this alterative is impractical and
inefficient, relying on every household wanting to convert to heat pumps or gas
appliances, and on them being able to pay half the conversion costs.
3
Summary of Options
Option
Alternative 1
50% subsidy
Alternative 1
75% subsidy
Alternative 1
100% subsidy
Alternative 2
50% subsidy
Alternative 2
75% subsidy
Alternative 2
100% subsidy
Alternative 3
Range of
Actions
Recommended
Option
Total
Reduction
60 tonnes
Total Cost
Total
Net Cost
Recoverable
$10,200,000
0
$10,200,000
$/tonne
$170,000
60 tonnes
$15,300,000
0
$15,300,000
$255,000
60 tonnes
$20,400,000
0
$20,400,000
$340,000
60 tonnes
$15,300,000
0
$15,300,000
$255,000
60 tonnes
$22,950,000
0
$22,950,000
$382,500
60 tonnes
$30,600,000
0
$30,600,000
$510,000
71.4 tonnes
$24,955,536
$7,500,000
$17,455,536
$244,475
66.5 tonnes
$19,510,000
$14,300,000
$5,210,000
$74,558