Tuesday, December 12, 2006

A closer look: the New Zealand Energy Strategy

I spent most of yesterday digesting the draft New Zealand Energy Strategy [PDF]. On a closer reading, my initial reaction may have been a little harsh. Overall, the strategy is excellent, but the lack of a firm policy for putting a price on emissions is more than a little disappointing.

The goal of the energy strategy is "a reliable and resilient system delivering New Zealand sustainable, low emissions energy". It aims to achieve this by laying out broad policy the government will follow in the energy sector. Obviously, its success or failure depends on whether that policy is implemented and funded by future governments.

The accompanying action plan is divided into seven sections:

  • Low-carbon transport: A key goal is to reduce greenhouse gas emissions from transport, while allowing an increase in demand. This seems contradictory, but it can be done by both higher efficiency vehicles and switching fuel types, to diesel and (most importantly) biofuels. There's also an emphasis on increased public transport funding, but it comes far behind fuel switching in terms of emissions reductions; instead its more of an investment in the future and ensuring that cities such as Auckland have the basic infrastructure expected of them.
  • Security of supply: This is mostly about ensuring that there is adequate dry-year backup and tinkering with the market structure. The good news is that investment in new generation is more than keeping pace with demand growth; the better news is that two-thirds of all new generation (and pretty much everything after 2007) is renewable. Interestingly, the table of new projects does not include the coal-fired Marsden B plant - does the government know something we don't?
  • Low emissions power and heat: otherwise known as "tackling climate change". There's a clear vision here for a move to a more sustainable energy system, with greater use of renewables and reduced use of fossil fuels (at least until carbon capture and storage is invented, however far away that might be). And there's no question that vision is achievable - we have more than enough potential for cheap renewables to see us through to 2030 (and much longer, if we can make a swift move to wave power), and wind and geothermal are already cheaper than coal and gas - something which will only be reinforced by the internalisation of carbon costs. But there's no concrete policy to make this happen; instead, the government lays out some principles to guide policy development (which basically amount to "policy should move us gradually towards a carbon market without putting electricity prices through the roof"), but punts the entire question to another round of consultation. This is more than a little frustrating. As I've noted previously, we have been circling around these issues for the last ten years. There are no new options in the accompanying Transitional Measures discussion paper [PDF]; every single one of them has been considered before (and often more than once). The problem is not in deciding what the best policy is - we know the answer to that question (short answer: carbon taxes or emissions trading, either works perfectly well, and if they're not politically achievable, regulations, renewable obligations and feed-in tariffs work well enough) - the problem is biting the bullet and actually implementing one. CP1 starts in a little over twelve months; this is not something we have time to piss about on.

    That said, it looks as if the government is moving to a narrow cap and trade regime for the electricity sector over CP1, and it seems to favour auctions over grandparenting. But there's no mention of sinking caps or other measures which would ensure a gradual shift towards carbon neutrality (in electricity generation) over the long-term. It's a glaring failure of vision at the heart of the policy, and one they should correct before finalising it.

  • Energy efficiency: This is being handled through the development of a replacement National Energy Efficiency and Conservation Strategy (the previous version of which promised too much and delivered too little, partly due to systematic government underfunding, and partly due to EECA following the government's lead in circling endlessly around known problems rather than actually doing anything about them). But there's also talk of further information and promotion campaigns. The big change, however, is a significant reduction in the discount rate used for energy efficiency projects, which will result in more getting government funding.
  • Sustainable technology: Basically a research roadmap, laying out what avenues we should be pursuing domestically, what we should be keeping a close eye on overseas (CCS), and what we should ignore (nuclear). The headline policy is $8 million over four years for research into marine energy, which has significant potential in New Zealand. That should be enough to map the resource and run some trial projects; hopefully it will be enough to ensure early uptake as the technology matures. And if the government retains a projects mechanism (one option they are considering to reduce greenhouse gas emissions) we may be able to use it to kick-start wave power in the same way that it has already kick-started wind.
  • Affordability: Not much here, given that we have a market-based system where prices are set by market forces rather than centrally by the government. The key measure here is targeting energy efficiency programmes at low-income households, achieving both energy savings and reducing the impact of increases in electricity prices.

So overall a solid document, if frustrating on the climate change front. And while National is (predictably) criticising it as more hot air, its worth noting that their "plan" for the energy sector is to leave everything for the market to work out - which isn't much of a plan at all.

You can submit on this thing, and I suggest that everyone who wants to see a greener future does. I will be stressing the need for steady increases in the biofuels obligation, and a "sinking cap" on electricity sector greenhouse gas emissions. Submissions are due by 30th March.

Hardcopies of the Energy Strategy can be requested here.


Thanks for the review. I wonder about the emphasis on biofuels. It has been a few years since I did some serious reading about them but I do wonder what their net carbon (and environmental) footprints are, particularly when one takes into account the inputs and land required to grow the crops and the nature of resulting emissions from growth, processing and final combustion.

Do biofuel use consideration include pine in my woodburner as well?

Posted by Anonymous : 12/12/2006 04:46:00 PM

Anon: There are worries in the US about the carbon footprint of corn-ethanol due to their energy-intensive farming methods, but these don't really apply in New Zealand where we will be making our biofuels out of waste products (and possibly trees).

Yes, burning wood for direct heating is considered to be biofuel, but obviously not transport biofuel.

Posted by Idiot/Savant : 12/12/2006 04:58:00 PM

Thanks for your comments I/S and the link to the
draft strategy. I will grab it and have read.

I have been concerned for some time about the attitude against Hydro generation which once installed is a very long term carbon free source of energy,the source that has largely got New Zealand to where it is today.

I am not suggesting that other renewables are not also important but a 2005 report for the Electricity commission lists over 30 possible Hydro schemes all over 20MW in the South Island. The only one currently being pursued is on the Wairau and that is being challenged by a huge number of objectors many from outside the region.

It is sad to me that a nation famous internationally for its engineering skills in this field over the years is no longer progressing in this field.

Posted by Anonymous : 12/12/2006 07:59:00 PM

Indeed - In NZ I would tend to say hydro-power is by a generally speaking the most environmentally friendly choice. why waste huge amounts of energy and effort setting up new technologies when you already have the best one well worked out?

I propose that, all things being equal, Hydro and nuclear power are considerably more environmentally friendly than methods like biofuel because biofuels basically create a good carbon sink, and then burn it.

Posted by Genius : 12/12/2006 09:24:00 PM


There are two problem with your "create a good carbon sink and then burn it" comment.

The big one is that people will pay to get biofuels, as they get a personal benefit from having their car work and their house warmed, and they won't pay to have carbon sunk for them.

The other one is that sinking carbon long-term is hard. What you gonna do with your biofuel if you don't burn it? Injecting stuff deep underground is expensive, requires energey, and unless done with great care it'll leak back up in a century or so which makes it not a long-term solution.

As for nuclear power - get real. I know a well-run reactor is not nearly as dangerous as people think. And there are places in the world where nuclear is the best option (possibly including Oz). But NZ has an abundance of better options with hydro, wind and wave power (as an aside, do you have any idea how much kinetic energy there is in the water flowing through Cook St? Do the maths on it, you'll be impressed).

Radioactive waste is really, really icky long-term. Watch and see the mess over the next decade as the nuclear reactors of the 60s and early 70s reach their end of life and require decommissioning.

Posted by Icehawk : 12/12/2006 11:34:00 PM

Anon: I agree, hydro is great - but rivers have value other than for electricity generation, and we have arguably used too many of them already. Ultimately the question of which is more important is for local communities to sort out, under the RMA. And if people elsewhere want the power, they can dam their own damn river.

(There's also no point in building more dams in the South Island because a) that's not where the demand is; and b) the Cook Strait cable is already close to capacity. Instead, we need new generation in the north, and ideally north of Auckland. Fortunately the latest "deal" on who pays for the cable - the south - is discouraging construction down there).

Genius: the good thing about biofuels is that your carbon sink grows back, so there's no net effect on atmospheric carbon. However, its been suggested that biofuels could be used for long-term sequestration, either by linking them to CCS technology when it becomes available, or by gasification, partial carbonisation and burial of the charcoal (which also enriches the soil). The latter can be done now, with available technology, and will allow us to start sucking carbon out of the atmosphere rather than emitting it - which is a long-term solution to the problem.

Icehawk: Watch and see the mess over the next decade as the nuclear reactors of the 60s and early 70s reach their end of life and require decommissioning.

Yeah - and where they're run by private companies, watch those companies fold, declare strategic bankruptcy, and dump their costs on the taxpayer.

Posted by Idiot/Savant : 12/13/2006 12:57:00 AM


It's not an energy policy it's just the climate policy in drag. I still can't see why the rest of the economy pays but farmers get off scot free. They'll probably even get paid to convert pasture to forests. If anyone should pay a carbon tax it is them.

On biofuels your comment on sources means the Govt won't be reaching its implied ambitious targets on biofuels. If you are making them out of waste products you quickly hit a limit - ie amount of waste. And the current 2,25% target is already there if not beyond it.

If you want to get an idea of how 'ambtious' the govt wants to get on biofuels, go to the diagram on page 21 and see the massive decrease in CO2 expected from them - then compare that to the IEA's predictions on biofuels volumes over the same period. There is a bit of a mismatch and I suspect a very large lot of wishful thinking by officials - no actual analysis anywhere. Matched I suspect by Holden driving Parker and his electric car dreams.

I also point out that some of the keen and well funded local biofuel people are talking about growing corn in NZ to meet demand and replacing 100% of petrol. Not sure what we do in winter when corn isn't growing...

Jim Watson talks up his salix, but that is unproven and years and years away if he can make it work economically. It's nice in theory.

Does anyone else see the irony of promoting biodiesel from tallow when the source is all those methane belching cattle that is 50% of our GHG emissions? Won't that just encourage more cattle to be grown by improving cattle economics, and increase emissions?

The other limit is energy content, bifuels aren't as good as petrol - particularly ethanol - and they have to be gathered so once you have to transport them any distance you basically are using more fuel to transport them than you get out of them. This creates scale/cost issues.

And of course the big missing item is 'cost' - the govt doesn't like to talk about that and plays it down by mumbling that low blend ratios mean minimal impact and consumers won;t notice the difference. of course they won;t as commodity markets equalise in cost. But they will if someone offers 'neat' petrol instead. Consumers will vote with their feet. No doubt that practice will be banned. Can't have consumers getting a choice now.

Posted by Anonymous : 12/13/2006 02:42:00 PM

I always thought that they should build a tidal power barrage across the mouth of the Manakau. Its only 1800m wide, and with a tidal variation of about 4m over almost 400 square kilometres squirting that amount of energy in and out of turbines 4 times a day would have to produce at least 1500MW. And if you built more than one barrage you could double or triple that. Ships could use a lock, but It would be tough to be a local fish. But that hasn't ever bothered anyone in the past. It would look really cool from an airliner descending into Auckland as well, personally, I quite like all the mega-building stuff on Discovery.

Posted by Anonymous : 12/13/2006 03:11:00 PM

Re the tidal energy,

there are issues with Manukau as it is home for Northern Hector's Dolphin which are very rare.

Tidal has also not been done yet. I'm not sure if we should be spending a lot dabbling in such things. Monitoring and collaborating yes.

Insider (who did the post on biofuel above as well)

Posted by Anonymous : 12/13/2006 03:36:00 PM

land is a limited resurce.
if you set up bio fuel for example sugar production you must displace somthing. On a global scale I presume food production and forests (since you would displace stuff from productive growing areas) how could you get around that?

that will force food prices up and biofuel prices and people will destroy forests and so forth all sorts of side effects that good hydro plants would NOT cause.

The bio fuel works like a carbon tradingscheme so yes it is better than burning oil but it still takes a lot of land and you'll have to pay that cost somehow.

I/S has some good mitigation there with the sequestering of some carbon and so forth

>[re nuclear] But NZ has an abundance of better options

yes - and yet we keep using inferior ones! possibly because RMA's prevent us building dams?

>Radioactive waste is really, really icky long-term.

it only harms a certain space where you leave it - that is nothing compared to causing a global imbalance. Nuclear plants shouldhave to 'pay' for insurance on their removal of course so they get 'priced' properly.

>Re the tidal energy,

I can imagine a few thousand years in the future people hating us for causing the moon to crash into the earth. I hae no idea how long that would take - but the energy has to come from somwhere eh?

Posted by Genius : 12/14/2006 07:47:00 AM