Tuesday, June 25, 2019

The renewables target

Back in April, the Independent Climate Change Commission leaked that it thought the government's 100% renewable energy target would be prohibitively expensive. Now they're leaking it again, suggesting that fully renewable electricity would actually cause emissions to increase:

The committee, headed by former Opus International chief executive Dr David Prentice, said the impact of higher prices would likely mean that New Zealand as a whole would generate more emissions as a result.

High electricity prices would slow the decarbonisation of the wider economy, making it more difficult for New Zealand to meet its target under the Paris Agreement to cut greenhouse emissions, the ICCC argues.

Instead of focusing on 100 per cent renewable electricity generation, the committee urged the Government consider New Zealand's energy use as a whole, with industrial heat and the transport sectors generating far more in terms of carbon emissions than electricity.


The report claims such an approach could avoid 6.4 million tonnes of carbon dioxide a year from transport and another 2.6 million tonnes from process heat.

Overall, the policy would cut net emissions by 5.4 million tonnes of carbon a year by 2035, compared to the scenario where the Government pushes for 100 per cent renewable electricity sources.

To which the obvious answer is taco girl: why not both? Renewable electricity and transport decarbonisation aren't exclusive policies, after all. Our government is capable of walking and chewing gum at the same time. Though it does also suggest that it might be worth having a primary energy target as well.

But I'm also rather suspicious of a chain of reasoning which says "we will have to build a massive amount of generation to ensure security of supply for the last couple of percent, so electricity will be expensive". But when you dig into it, that generation is all about covering for the possibility of the wind not blowing on a cold winter's night when demand is highest, and will sit idle almost all the time - meaning in fact supply will massively, massively outstrip demand. Absent anti-competitive behaviour from power companies, this should cause prices to fall. And on the gripping hand: we are going to need to build a massive amount of new generation anyway, to power all those electric cars (completely replacing petrol with electricity would mean increasing generation by ~25%). All of that generation should be renewable, and we might as well leverage this long-term need to crash prices in the short-term, driving electrification and pushing dirty fossil fuels to the absolute margins. As I noted last week, it is remarkably cheap to do so.

Ultimately, though, 99% renewable electricity is probably good enough for now. We should aim for 100%, try and drive the change, see where we get, and offset the rest. Because one thing we do know is that we won't get anywhere by not trying. Trusting "business as usual" (as the Climate Change Commission seems to think we should do) is how we got into this problem in the first place.