Electric trains

In 2016, Kiwirail decided shift to an all-diesel fleet. At the time, it made some pretty compelling arguments for the change:

• Running an electric bit in the middle of a diesel network meant shifting everything from one set of engines to another set of engines;
• Running two sets of maintenance yards is expensive;
• Shifting to an all-electric North Island system would cost at least a billion dollars for the trunk lines and would still need diesels on the feeder lines that didn't have the electric infrastructure, so you'd still have all of the engine-switching problems. And the Wellington power system is different from the Auckland system in ways that matter for setting this stuff up;
• The overall costing of diesel engines over the operational life was 20-30% lower than the cost of electric engines;
• Rail emissions are only 1% of all transport emissions, and transport is 17% of overall emissions. 
• So - things that make rail less attractive as compared to trucks can wind up doing more harm than good (my point rather than theirs)

This week, Labour decided that Kiwirail should keep its electric railway-within-a-railway, keep switching engines mid-course, and refurbish its old electric engines. Because climate change. A Massey prof said they should have gone further and electrified the whole system. 

All of this seems insane. If we care about climate change, as we should, the best way of dealing with it is by working through the ETS. If the costs of diesel went up because the carbon charge in the diesel went up enough, maybe switching to an all-electric fleet would make sense. But if it didn't, then the government playing at political football with a State-Owned Enterprise means we're paying over-the-odds in mitigating carbon emissions. 

Does it really seem likely that the government can do the most good in mitigating emissions by pouring this kind of cash into the electrification of the rail system rather than by buying up NZU on the ETS and retiring the credits?

Update: A reader runs a few back-of-the-envelope numbers on this, copied below. It gives a rough measure of the costs of abating carbon emissions by electrifying rail. Add some appropriate confidence intervals around it, but it's at least an order of magnitude more expensive than current carbon prices - you could abate emissions by about ten times as much by putting comparable resource into buying and retiring NZU in the ETS.

Here goes.

NZ Gross emissions: 78,700,000
Transport share of gross: 17.3%
Rail share of transport: 1%

Rail emissions then on the order of 136,151 tonne per annum.

Cost of diesel conversion: $1 billion, minimum
At 6% discount rate, annualised cost: $60,000,000
Cost per tonne emission reduction: $518/tonne.

(assumes 15% fossil fuel based electricity generation, but also assumes complete rail carbon abatement but for that 15% - which won't happen because the feeder lines still have to be diesel).