1. Energy Today
Global Energy
Demand Is Increasing …
World energy consumption is growing by about 1.9 percent a year, on average. The fastest growth is in developing countries. These tend to have very low energy consumption per person but large and rapidly growing populations, requiring significantly more energy as their living standards improve. Consumption in Europe has declined slightly with the closure of energy intensive industries in former communist countries.
Figure 1: World Regional Energy Consumption 1980-2001
Source: International Energy Outlook 2004, US Energy Information Administration
… But Energy Efficiency Is Improving
While global energy demand is growing, technologies and systems to improve energy efficiency are also advancing.
While global energy demand is growing, technologies and systems to improve energy efficiency, conserve energy and manage energy demand are also advancing, accelerated in many countries by supportive government policies.
The efficiency of electricity generation using gas and coal, for example, has improved steadily and is expected to advance further. Most new combined cycle gas generation is now more than 50 percent efficient, compared to less than 30 percent in the 1970s. Continuing use of older plant means the global average is still between 30 and 35 percent.
Figure 2: Average World Power Generation Efficiency by Fuel 1971-2030
Source: World Energy Outlook 2002, International Energy Agency
Advances in transport include improvements in vehicle fuel efficiency through improved aerodynamics, lighter structural materials and more efficient conventional engines. Hybrid vehicles combining petrol, diesel or gas engines with electric motors have recently come into commercial production, offering significantly lower fuel consumption than most conventional petrol vehicles. Fuel-efficient compact conventional vehicles are also available.
Figure 3: Fleet Average Fuel Efficiency of Cars and Personal Light Trucks in Selected IEA Countries 1980-2000
Source: International Energy Agency
The energy efficiency of buildings is being improved with advances in design; new building materials; new means of space heating, ventilation and cooling; the incorporation of solar energy systems; and the use of automated control systems to manage energy consumption. There have also been steady advances in the energy efficiency of lighting and electrical appliances.
A wide range of renewable energy technologies is in use around the world and some are growing strongly.
… And Innovation Is Accelerating
Energy innovation is accelerating in response to consumer demand for cleaner, more convenient and more economic energy services, rising standards in environmental regulations, growing recognition of the risks of climate change; and concerns about the future of oil as an energy source.
This innovation includes the further development of renewable energy; new ways of finding and extracting oil and gas; technologies, systems and services for improving energy efficiency; new ways to manage electricity networks; energy-efficient urban design strategies; and new options for incorporating energy sources into buildings.
Potentially radical technologies include commercial hydrogen fuel cell vehicles, nuclear fusion and processes for capturing and storing emissions from fossil fuel combustion.
Renewable Energy Is Growing …
A wide range of renewable energy technologies is in use around the world, in various stages of development. Those showing strongest growth are wind power, geothermal, biofuels, photovoltaic, concentrated solar power and small hydro-power.
Figure 4: World Consumption of Renewable Electric Power 1980-2002
Source: International Energy Annual 2002, US Energy Information Administration
Hydro, geothermal and wind electricity generation are well developed renewable energy technologies. Increasingly limited opportunities for large hydro projects in developed countries are focusing more effort on small or micro hydro generation. Geothermal is considered renewable, although a geothermal field's pressure and energy output can reduce over time if fluid is drawn out faster than it is naturally replenished. Wind generation capacity is substantial in some European countries and the United States, with growing interest in offshore wind farm development as onshore sites become harder to find in densely populated areas.
Solar energy harnessed through small-scale photovoltaic cells, which produce electric current, is commercially viable for niche applications but not yet economic at larger scales. Solar energy technology for household solar water heating is well developed. Higher temperature solar thermal technologies, for use mainly in semi-arid regions, are under development but not yet economic on a large scale.
Bio-energy includes direct heat from burning plant material, gas captured from rotting landfill waste, and the use of animal fats and plant oils as fuels. Ethanol produced from biological material, such as crops or whey, has been blended with petrol in North America and Brazil for more than 20 years and is in common use in many other countries. Biodiesel production from crops or tallow is also common, on a small scale. Newer technologies, including gasification of biological material, are at an earlier stage of development.
Internationally there is some development of ocean energy, using tides, waves and currents to generate electricity from barrages (similar to dams) or undersea turbines. Barrage generation is viable at a narrow range of sites, but other technologies are some way from commercial use, with high costs and design challenges in coping with the harsh ocean environment.
… But the World Still Runs on Fossil Fuels
Oil, natural gas and coal make up two thirds of global energy consumption.
The world gets most of its commercial energy from fossil fuels, with oil the single most important source of energy worldwide. Oil, natural gas and coal make up two thirds of global energy consumption, with significant additional use of fossil fuels to generate electricity. About 65 percent of global electricity production in 2001 was from fossil fuels.
Figure 5: World Energy Consumption by Source 2002
Source: Key World Energy Statistics 2003, International Energy Agency
Although oil is the world's largest single source of energy overall, consumption patterns vary significantly between regions. The former Soviet Union nations draw more of their energy from natural gas than oil, and in the Asia Pacific region coal is the dominant fuel.
Nuclear power is growing in Asia, including Japan, South Korea, China, India and Taiwan, but has stagnated in Western countries because of concerns over safety, waste storage and expense. Sweden and the United Kingdom have begun reducing their use of nuclear power for these reasons. International Energy Agency (IEA) forecasts suggest nuclear energy is likely to supply a decreasing share of global energy, as other energy sources are expected to grow more rapidly.
… Supply Security Is a Growing Concern
The world oil market is volatile. Oil reserves are concentrated in the Middle East, where political tensions and instability cause uncertainty about supply security. The reliability of supplies from other major producers such as Nigeria and Venezuela can also be uncertain. Threats to supply produce large spikes in price.
Figure 6: World Crude Oil Prices 1945-2004
→ Full size version of Figure 6 available [30KB GIF]
Source: BP Statistical Review of World Energy 2004
Assessments vary, but global oil production appears likely to peak in the first half of this century. When production stops growing and begins to decline, prices are likely to rise substantially. Oil may not "run out", but the era of cheap oil will end.
Securing reliable supplies of gas and electricity is also an increasing concern internationally. Electricity supply difficulties in California, the East Coast of the United States, Japan, Italy, Australia and New Zealand have focused attention on the need for careful market design and regulation, addressing both demand and supply issues, to ensure adequate supply security and infrastructure investment. Similar issues apply to gas markets. Growing demand for gas has led to rising dependency on imports in many countries, with increasing pressure on distribution networks.
… And the Environment Is Under Pressure
Over the past decade climate change has emerged as the major global environmental impact of energy use.
Burning fossil fuels for energy produces gases, particularly carbon dioxide, that accumulate in the Earth's atmosphere and enhance its natural "greenhouse effect". This causes more of the Sun's radiated energy to be trapped within the atmosphere, which is expected over time to cause changes in global climate patterns. More than 80 percent of global greenhouse gas emissions caused by human activity are from fossil fuel use.
Figure 7: Carbon Dioxide Concentrations in the Earth's Atmosphere 1000-2100
→ Full size version of Figure 7 available [21KB GIF]
Source: Intergovernmental Panel on Climate Change
The likely effects of climate change include rising average temperatures, rising sea levels, more frequent extreme weather events and a change in rainfall patterns. There is a strong scientific consensus that by the end of this century, these changes will occur on a scale that will cause serious harm to ecosystems, industries, infrastructure, human health, biosecurity and economies worldwide. The United Nations' Intergovernmental Panel on Climate Change has estimated that a reduction in total global emissions of about 50 percent by the end of this century will be necessary to stabilise atmospheric greenhouse gas concentrations at twice pre-industrial levels, which would still be high enough to cause significant climate change.
Figure 8: Variations of the Earth's Surface Temperature 1000-2100
→ Full size version of Figure 8 available [30KB GIF]
Source: Intergovernmental Panel on Climate Change
The local environmental impacts of energy production, distribution and use can include air and water pollution, land contamination, radical alteration of the landscape, destruction of wildlife habitat, noise and visual intrusion. Community expectations that such impacts will be responsibly managed are increasing internationally.
Energy in New Zealand
Demand Is Increasing …
New Zealand's energy consumption is growing by about 2 percent a year. This is faster than the global average, but slower than Australia (about 2.5 percent) and the Asia-Pacific region as a whole (more than 4 percent). Demand growth is strongest in the industry and transport sectors.
Figure 9: New Zealand Energy Consumption by Sector 1980-2003
Source: New Zealand Energy Outlook to 2025, Ministry of Economic Development, October 2003.
… Yet Energy Efficiency Has Received Little Attention
Compared to many other developed countries, New Zealand has paid relatively little attention to the efficiency of its energy use until recent years. Our manufacturing is energy intensive, which means it uses high levels of energy per unit of production. This is partly due to a high level of raw material processing, but is also likely to reflect New Zealand's low energy costs, which provide a lower incentive for energy efficiency than the higher costs in many other manufacturing countries. Our transport energy intensity is also high, with a high level of vehicle ownership, high proportion of travel using private vehicles, and high use of road transport for both passengers and freight. Public transport use has increased, but transport overall still offers significant scope for energy efficiency improvements. New Zealand homes use relatively low levels of energy per person, largely because of the mild climate. However they are also inadequately heated by international standards, with generally poor insulation. The significant energy efficiency gains commonly identified by businesses and households that look for improvement provide a steady flow of evidence of the scope for increased efficiency overall.
… And Innovation Is Modest
New Zealand has some capacity for innovation in energy technologies and practices, but is a small contributor on a global scale. New Zealand is mostly a "technology taker", adopting and adapting innovations from elsewhere. In energy this process has not always been as rapid or effective as it could be, particularly concerning the uptake of innovations promoting the efficient use of energy.
Renewable Energy Use Is High and Growing …
The share of New Zealand's consumer energy coming from renewable sources - about a quarter - is more than the world average, mostly because of our high use of hydro power for electricity generation. Over the past 20 years New Zealand's use of renewable energy has grown, and this is expected to continue.
Figure 10: New Zealand Renewable Energy Consumption by Source 1980-2003
Source: New Zealand Energy Data File, Ministry of Economic Development, July 2004
Hydroelectricity is extensively developed in New Zealand, representing more than 60 percent of total installed generation capacity and providing 60 to 70 percent of annual electricity production. Hydro capacity is concentrated in the lower South Island, particularly in the Waitaki and Clutha river systems. The main North Island hydro stations are on the Waikato River and Taupo catchments, with Lake Taupo providing storage.
Geothermal energy resources are concentrated in the central North Island, where they have been used to generate electricity on a small scale for more than 40 years. Current geothermal generation capacity represents about 5 percent of total installed capacity and provides 6 to 7 percent of annual electricity production. There is also some direct use by industry.
Wind energy has been used very little in New Zealand and is just beginning to expand rapidly. Established wind farms represent less than 2 percent of total installed electricity generation capacity so far, and provide less than one percent of annual electricity production.
Solar energy is not yet extensively used in New Zealand. About 21,000 homes, or 1.8 percent, have solar water heating systems, and about 1700 new systems are sold each year. Altogether the energy these systems produce equates to about 50 gigawatt-hours of electricity, roughly the annual output of a small (10 megawatt) hydro station. Photovoltaic solar energy systems, which convert sunlight into electricity, are little used but can be economic for remote electricity uses. There is about 1.4 megawatts of installed photovoltaic capacity in New Zealand. Growth since 2000 has averaged about 20 percent a year, which compares to global growth of 25 to 30 percent a year.
Bio-energy in New Zealand includes use of biomass - usually wood - for home and industrial heat, and use of methane from decomposing landfill waste to generate electricity. Electricity generation capacity using biomass is small. There is about 45 megawatts of wood-fired capacity - mostly at one large co-generation plant - and about 25 megawatts of landfill gas generation capacity. New Zealand also produces about 11 million litres a year of ethanol, derived from whey, which can be blended with petrol. A small amount of biodiesel is produced from tallow.
Ocean power, including wave, current and tidal energy, is a potential future source of renewable energy for New Zealand if robust and cost-effective technologies are developed.
New Zealand, like the rest of the world, gets most of its commercial energy from fossil fuels.
… But New Zealand Runs on Fossil Fuels Too
New Zealand, like the rest of the world, gets most of its commercial energy from fossil fuels. Oil, natural gas and coal make up two thirds of the energy we consume, with additional use of fossil fuels to generate electricity.
Figure 11: New Zealand Energy Consumption by Source 2003
Source: New Zealand Energy Data File, Ministry of Economic Development, July 2004
New Zealand imports oil from the United Arab Emirates, Saudi Arabia, Oman, Malaysia, Australia, Brunei and Indonesia. About three quarters of the refined oil products on the New Zealand market are produced by the Marsden Point refinery from imported crude. The rest, including some petrol, are imported in refined form.
New Zealand produces oil from 11 Taranaki fields and exports more than 80 percent of it for refining elsewhere - mainly to Australia, Japan and Korea. The configuration of the Marsden Point refinery and the economics of the oil market mean that New Zealand crude is not optimal for refining here.
Natural gas, which is mostly methane, is used predominantly for electricity generation (44 percent in 2003) and methanol production (28 percent). Reticulated (piped) use accounts for about a quarter of total gas consumption. Reticulated use is dominated by industry (57 percent in 2003) and commercial use (27 percent), with the rest mostly used by households. Use of gas for transport is very small - less than 0.5 percent. Natural gas use has grown strongly since the substantial Maui field began producing in 1979, but has recently begun to decline as the field nears the end of its economic life.
New Zealand's use of coal is low compared to the world average, given the country's low level of heavy industry and low use of coal for electricity generation. Coal generation has provided less than 5 percent of annual electricity production. Almost half of New Zealand's coal production is exported. Coal use is dominated by electricity generation, steel production and other industry, with household and commercial use accounting for less than 10 percent of total consumption. Until recently coal consumption has been relatively static and mostly met from national production. Increasing use of coal for electricity generation at the Huntly power station is driving significant increases in central North Island production and imports.
New Zealand produces and uses a small but growing amount of liquefied petroleum gas (LPG), a mixture of propane and butane used for transport, commercial, industrial and household purposes.
… Supply Security Is a Growing Concern
New Zealand imports most of its oil and is vulnerable to global market conditions. We face the same risks of supply and price disruptions as the rest of the world, and the same longer-term challenge of finding an energy alternative to oil.
New Zealand's natural gas supply is declining with the depletion of the large Maui field, offshore from Taranaki. Maui has provided about 80 percent of New Zealand's gas for two decades. Current total known gas reserves are unlikely to meet demand in full beyond about 2012, although there are good prospects for new fields and exploration is increasing. There is continuing strong demand for gas for existing electricity generation and electricity companies have well-advanced plans to use gas for substantial new generation plant. Some are also investigating the feasibility of importing liquefied natural gas to supplement New Zealand gas supplies.
New Zealand has faced the risk of electricity shortages requiring urgent electricity conservation campaigns in 1992, 2001 and 2003. These have underlined the risk of supply disruption in dry periods that arises from high dependence on hydro generation. Meanwhile some plans for new generation plant to serve growing electricity demand have advanced hesitantly because of uncertainty about future gas supply. The national grid is due for a significant upgrade.
… And the Environment Is Under Pressure
Global climate change looms large as a long-term threat to New Zealand's economic, social and environmental interests. Without more effective international action to reduce greenhouse gas emissions, the likely effects of climate change in New Zealand include rising average temperatures, rising sea levels, more frequent extreme weather events and a change in rainfall patterns. An extremely hot year by current standards, for example, might be the norm by 2030, while a hot year in 2030 is likely to be hotter than any experienced in recent times. Projected temperatures for the 2080s are well outside anything experienced in New Zealand in the 20th century. Such climatic changes would harm native ecosystems, agriculture and horticulture, infrastructure, health and biosecurity, imposing significant economic costs and threatening people's safety. Globally the major greenhouse gas generated by human activity is carbon dioxide, from energy use. In New Zealand energy sector emissions are growing strongly, but the major greenhouse gas is methane, mostly from livestock farming.
New Zealanders enjoy and expect generally high environmental quality and are increasingly demanding that the local environmental impacts of energy production, distribution and use are constrained. These can include noise, visual intrusion, air pollution, and disruption to wildlife habitats and ecosystems. Recent proposals and issues attracting public concern have included large and small hydroelectric projects, wind farm proposals, a new coal mine, coal imports, diesel vehicle emissions and land subsidence attributed to geothermal energy use. In some cases, however, energy developments have attracted very little opposition and considerable support, notably some recent wind farm developments.
Back to Top