An environmental lobby group says the coal company Solid Energy will be entitled to about a billion dollars in taxpayer carbon credits if it goes ahead and builds a lignite-to-urea fertiliser plant in Southland.
The Sustainability Council says the plant would be second only to the coal-fired Huntly power station in terms of carbon emissions in this country.
Executive director Simon Terry says millions more in carbon credits will also be dished out to farmers for the urea they then use from the plant.
The true cost of the subsidies will depend, he says, on the level of assistance available to the plant under the Government's new Emissions Trading Scheme, which is currently before Parliament.
Aim: to convert 2m tonnes of lignite a year
Solid Energy and the Ravensdown fertiliser company are investigating the economic feasibility of building a plant capable of converting up to two million tonnes of lignite per year into fertiliser.
If the study is favourable, the plant could be built in eastern Southland within five years. Solid Energy expects it to generate 500 jobs a year, and says it will comply with all emission requirements.