1. Introduction
1.1 Context
We face two major long-term energy challenges. The first is responding to climate change and tackling carbon emissions from our energy production and use. The second is delivering secure, clean energy at affordable prices to support economic development, while being environmentally responsible. Part 1 of Powering Our Future, sets out the government's proposed vision for New Zealand's energy future and the broad directions by which this could be achieved.
Part 2 of Powering Our Future, provides further detail on the proposed actions that the government could take to support its vision, both now and over time. In some areas the proposed action plan sets out recent government decisions. The actions and issues are discussed under six broad chapter headings:
- Resilient, low carbon transport
- Security of electricity supply
- Low emissions power and heat
- Using energy more efficiently
- Sustainable technologies and innovation
- Affordability and wellbeing
1.2 Linkages with Other Policies
Energy policy underpins government policies on economic development, climate change, transport, resource management and research and development. It also supports wider government objectives for sustainable development and economic transformation.
The development of the draft New Zealand Energy Strategy has been a whole-of-government process led by the Ministry of Economic Development. The government's policies and actions on energy efficiency and renewables are set out in the draft replacement National Energy Efficiency and Conservation Strategy (NEECS), called Making It Happen: Action Plan to Maximise Energy Efficiency and Renewable Energy in New Zealand,1 led by the Energy Efficiency and Conservation Authority. The proposed action plan in Part 2 briefly describes the initiatives proposed under the NEECS.
Government policies on climate change are also advancing, with a number of measures already announced and others under development. The measures outlined in Chapter 4 of the action plan contribute to the government's policy response on climate change. Two discussion documents have been released that provide further detail on climate change policy options, both in the long term in the Discussion Paper on Measures to Reduce Greenhouse Gas Emissions in New Zealand Post-20122 and in the short term in Transitional Measures: Options to Move towards a Low Carbon Stationary Energy Supply and Transition to Greenhouse Gas Pricing in the Future.3
1.3 Background
1.3.1 Our Energy System
This strategy focuses on the energy conditions that are in petrol prices and electricity prices following specific to New Zealand. It recognises, however, that depletion of cheap Maui gas, New Zealand prices our energy system is linked to the international energy remain low by international standard,4 as illustrated market and remains subject to global shifts and in the following graphs. advances in fuels and technology.
New Zealand energy use is dominated by electricity and transport fuels. Notwithstanding recent increases To date, there has been relatively low investment in energy efficiency for homes, shops, light industry and transport.
Figure 1.1: Petrol Prices in 2005 (Includes Applicable Country/Regional Taxes)
Figure 1.2: Electricity Prices in 2005 (Includes Applicable Country/Regional Taxes)
In the transport sector, New Zealand has:
- a high level of car ownership
- public transport use that is low, but increasing
- a limited rail network, because of our geography and small population.
Most of New Zealand's export production is in the primary sector. Increasing output and greater value-added processing in the primary sector is good for our economy, but uses more electricity and transport fuels.
If New Zealand does not change its energy policies, the publication New Zealand Energy Outlook to 2030 projects that:
- electricity demand would increase by 40% by 2030
- fossil fuels would continue to dominate domestic energy supplies, particularly for transport. Oil use would increase by 35% by 2030.
- New Zealand's energy prices would increase over the medium term, driven largely by increases in world oil prices for transport fuels and increases in gas prices and the cost of new generation for electricity
- energy-related greenhouse gas emissions would rise 30% by 2030, including a significant 35% increase in emissions from transport.
Discussions on New Zealand's future energy policies often lead to questions about energy security, climate change, peak oil and the effect of policy changes on energy prices. These issues deserve special mention and are discussed in more detail later in this document.
Detailed information on New Zealand's energy supply and demand is available in the following reports:
- New Zealand's Energy Outlook to 20305
- Emerging Supply-Side Energy Technologies6
- New Zealand Energy Data File7
- Greenhouse Gas Emissions 1990 to 20058
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