6. Sustainable Technologies and Innovation
Summary
- Affordable, energy-efficient, low emissions technologies will be critical to improving New Zealand's security of supply and reducing greenhouse gas emissions.
- In the short term, better recovery technologies, advanced materials, cleaner coal technologies and substitution technologies will allow us to make better use of existing energy sources.
- In the long term, technological developments will increase the diversity of fuel supplies and contribute to decarbonising the energy system.
- No single technology can make a sufficient difference to New Zealand's energy path - a portfolio of technologies will be needed to minimise the risks, in case one fails to make the expected progress.
- New Zealand needs to be well connected with international research efforts while carrying out its own research into potential solutions for its own unique mix of energy resources, energy infrastructure, cost structures and social values.
From Vision to Action
- Establish working groups made up of private and public sector representatives to provide strategic leadership in priority energy innovation areas such as geothermal, marine energy, biofuels and CCS.
- Strengthen capabilities, collaboration and networks (both domestic and international) around key sustainable energy themes such as energy demand management, renewable energy, energy system modelling and whole-of-system infrastructure.
- Consider options to create a dynamic environment for energy innovation in New Zealand such as R&D tax credits.
- Establish a contestable fund to support the deployment of marine-based electricity generation.
6.1 Our Present Direction
Technological innovation is an important element of a modern, dynamic economy. It can boost productivity, improve our quality of life, create new industries and solve environmental problems.
Moving to a secure low carbon energy system will require major changes in the way energy services such as light and motive power are delivered. The development and large-scale use of cost-effective, energy-efficient and low carbon technologies will be critical to improving New Zealand's security of supply and reducing its greenhouse gas emissions.
The transition towards a sustainable energy future will also offer opportunities in the commercialisation of the climate-friendly technologies and practices.
Existing technologies, particularly on the demand side, have significant potential to save energy, reduce emissions and delay the need for New Zealand to make energy investments. These technologies include smart meters, heat pumps, solar water heaters and "green" buildings.
Most of these technologies are already economic over their lifetime, that is, the savings in terms of energy costs from using these devices more than covers the purchase price and installation costs. The main challenge is not any significant technical or cost consideration, but to overcome barriers that prevent them being adopted by energy consumers.
Over the coming decades, emerging and new energy technologies will offer more options. In the short term, better recovery technologies, advanced materials, cleaner coal technologies and substitution technologies will keep existing energy supplies affordable and available.
New technologies will also increase the diversity and availability of low carbon stationary and transport energy. New renewables such as solar photovoltaics, marine energy and fossil-fuelled power generation with CCS are likely to decarbonise electricity supplies in the near to medium term. The uptake of biofuels and the evolution of vehicles - from petrol to diesel to hybrids to electric - will help mitigate transport-related emissions.
Over the longer term, there is likely to be an increasing number of cost-effective alternatives to the way energy services are provided. These may include improved battery technology, fuel cells and hydrogen.
The rate of technological development and the costs of bringing climate-friendly technologies onstream remains uncertain, yet two key messages can be taken from global energy research and development.37 First, there are already technologies that can make a difference over the next 10-50 years. Second, none of these technologies can make a sufficient difference on its own. Pursuing a portfolio of technologies will greatly reduce the risks and, potentially, the costs if one or more fails to make the expected progress.
6.1.1 New Zealand's Approach
New Zealand's energy innovation efforts need to be considered within the context of international energy innovation. We need to be flexible, yet stay focused on what we want to achieve over the long term.
As a technology taker, New Zealand needs to make the most of its engagement with the international community leading the development of innovative energy technologies and practices. We need to develop effective links so that we are well placed to rapidly adopt energy technologies for use in New Zealand.
New Zealand has a unique mix of energy resources, energy infrastructure, cost structures and social values, so international research programmes will not be able to give us all the answers we need. New Zealand-based research will be needed to provide us with improved energy supply options, energy demand technologies and practices, and more energy-efficient buildings, products and transport systems.
New energy technologies and practices have to compete with proven options, which benefit from economies of scale leading to lower costs. As a result, private sector investment in energy innovation is usually well below what would be justified by the interests of society as a whole. Sustainable energy technologies and practices usually need government support to drive their development and adoption.
Government support might include market measures to internalise environmental costs, regulations to mandate minimum standards, institutional support to provide information and fast-track applications, education to overcome existing market failure, and specific support for innovation activities such as demonstration and early deployment to bring down costs and determine feasibility and reliability.
6.2 The Progress We've Made
6.2.1 Energy Research Roadmap
In 2006, the Ministry of Research, Science and Technology prepared an energy research roadmap with stakeholders to identify the research capabilities New Zealand needs to develop sustainable technologies and practices. The roadmap38 broadly categorised New Zealand's research and development (R&D) efforts to support capabilities in:
- New Zealand-led research that must be undertaken in New Zealand because our energy resources, use or knowledge are unique to New Zealand (i.e. we cannot rely on international research). This includes research on:
- assessing New Zealand's own energy resources, such as wind, solar, geothermal, oil, gas, coal, land-based bioenergy, marine and hydro, as well as geological CO2 storage options;
- economic and whole-of-system energy modelling;
- measures to accelerate the uptake and behavioural change for efficiency and decouple the relationship between energy and economic growth.
- Fast adapter research to enable New Zealand to quickly adapt technologies and practices developed overseas, such as:
- bioenergy, including liquid transport fuels and stationary energy fuels;
- new energy sources and carrier technologies (marine energy technologies);
- smart integrated grids for distributed and variable energy sources.
- Research on the potential relevance to New Zealand of emerging opportunities that are contingent on the results of international research activities. Likely areas include:
- carbon capture and storage technologies;
- new energy sources and carrier technologies, such as hydrogen, fuel cells, energy storage systems, coal for hydrogen, and liquid fuels.
6.2.2 Public Funding for Energy Research and Development
In 2004/2005, the government invested approximately $15 million in energy research and development.39 In 2006, in recognition of energy security and climate change issues, the government committed additional funding of $11.7 million over four years for energy R&D. The additional research40 is to focus on:
- gaining a better understanding of our indigenous energy resources and opportunities, particularly renewable energy resources;
- enabling New Zealand to be in a better position to adopt new overseas technologies;
- developing new energy technologies;
- taking advantage of opportunities to use energy more efficiently in homes and businesses.
6.2.3 International Partnerships and Collaborative Research
The benefits of participating in international research include: fewer costs; less duplication of research; the ability to pool scientific and technical results; access to expertise and experience; the ability to forge links between researchers, industry and policy-makers; accelerated development and deployment of technologies; harmonised technical standards; and the opportunity to strengthen and demonstrate New Zealand capacities and skills.
New Zealand's most significant international links:
- The International Energy Agency's Implementing Agreements (IA). These are technology collaborative contracts that enable international experts to work collectively and share results. New Zealand is officially a member of seven IEA implementing agreements, which cover greenhouse gases, bioenergy, geothermal, solar heating and cooling, wind energy systems, hydrogen, and energy conservation in buildings and community systems.
- The International Partnership for the Hydrogen Economy (IPHE). Led by the United States, the IPHE has major international backing and covers the entire spectrum of hydrogen technologies.
- Renewable Energy and Energy Efficiency Partnership (REEEP). This is an international energy organisation focusing on facilitating energy efficiency and renewable energy projects in developing countries.
- APEC Energy Standards and Information Systems Project (APEC ESIS). This is a collaborative New Zealand-led project managed by a steering committee made up of energy experts and officials from Australia, Japan, New Zealand, Thailand and the United States. The primary objectives of APEC ESIS are: to provide up-to-date information about appliance and equipment energy standards and regulations; to provide links to experts and information related to standards and regulations being used by APEC and other economies; and to provide "communities of practice" where experts and officials can discuss efforts to harmonise the testing and labelling of appliances and equipment, and to develop minimum energy standards for them.
- Minimum Energy Performance Standards (MEPS). These are mandatory energy efficiency standards that list the technical requirements that certain products must meet. New Zealand works closely with Australia to ensure that product classes and their MEPS levels are the same; almost all our standards are, or soon will be, joint standards with Australia.
6.3 Our Choices
New Zealand's international collaboration, research funding and the capabilities roadmap are all important steps towards developing sustainable technologies and practices. However, further measures will be needed to create a dynamic environment for energy innovation.
Options include: providing stronger private and public leadership for priority technologies and areas of work; increasing capabilities and improving coordination and networks between relevant industry, researchers and policy-makers; and expanding support and funding for innovative activities and public/private opportunities.
6.3.1 Leadership on Innovation Priorities
The strategic priorities for sustainable energy are set out in the draft NZES, the replacement National Energy Efficiency and Conservation Strategy, climate change policy, and the New Zealand Transport Strategy. These statements of government policy provide the high-level objectives for innovation activities around enhancing security of supply, mitigating the global and local environmental effects of energy, and improving energy efficiency. The government recognises that a flexible and responsive approach is needed for delivering on these objectives, given there are likely to be a range of potential technologies and practices to emerge in future.
Establishing research excellence in some key areas is important for connecting to and reciprocating international research efforts. It will also help highlight potential advantages of having New Zealand as a partner for collaborative research agreements.
The energy innovation areas for action set out in Table 6.1 are consistent with the objectives above. This broad assessment undertaken as part of the development of this strategy is based on the level and relevance of international activities, New Zealand's strengths (both in terms of resource availability and technical capacity) and the potential contribution to reducing greenhouse gases and improving energy security.
Table 6.1: Sustainable Energy Innovation: Areas for Action
| |
Strategic fit |
Leverage from investment and likely value to New Zealand |
|
Actively monitor - focus on international collaboration and networks assessing relevance to New Zealand:
- Renewable technologies (focus on marine and photovoltaics)
- Energy efficiency (emerging technologies)
- Biofuels (second generation process)
- Sustainable utilisation of coal
- Carbon capture and storage (CCS) (technology)
- Fossil fuel conversion technologies (including coal to liquids)
- Energy carriers and storage systems - hydrogen, fuel cells etc.
|
High |
Low |
|
Areas for action in New Zealand - R&D, demonstration, market creation, build capacity, information provision, deployment measures:
- Sustainable transport (fuel, practices, technologies) - demonstration, market creation, deployment
- Geothermal (sustainable extraction, low temperature, deep resource assessment) - R&D, demonstration
- Biomass - R&D (resource assessment) and deployment
- Biofuels (from by-products) - market creation, deployment and build capacity
- Energy efficiency and demand management - deployment, R&D (behaviour), capacity
- Wind integration and managing intermittency - R&D
- Solar thermal waterheating - deployment and build capacity
- Energy system modeling - R&D
- Distributed generation (smart grids and on-site renewables) - deployment
- Marine energy - R&D, resource assessment
- CCS (geological storage potential) - R&D resource assessment
|
High |
High |
|
Watching brief:
|
Low |
Low |
|
Consider - promising areas for local action in New Zealand, potential for private/public partnership:
- Oil and gas (geology) - R&D
- Marine energy (technology) - demonstrations
- High efficiency conversion technology (fuel cell) - demonstration based on renewable fuels
|
Low |
High |
In Table 6.1, the areas for action are categorised according to:
- Areas for action in New Zealand: These areas fit well with the high-level objectives of this strategy. In addition, any investments or efforts that are undertaken in New Zealand are likely to produce a reasonable level of benefit. The types of action that could be undertaken in New Zealand include measures to support development or encourage greater deployment and uptake across the innovation chain such as public investment for R&D and demonstration, regulations for market creation, and incentives and information provision to encourage uptake.
- Areas to actively monitor: These are areas that could make a significant impact on achieving our sustainable energy objectives. However, resource constraints or limited technical capacity means New Zealand is not well placed to lead or likely to produce any significant advances from efforts undertaken here. Nonetheless, these are relevant technologies for us, and it is important that we are well linked to international efforts so that we can quickly respond and adapt when the technology is proven and economic.
- Areas to consider: These present good prospects for economic development and are likely to be driven by the private sector or at least have a significant private sector contribution in the form of a public/ private partnership.
- Watching brief: These either have little relevance to the New Zealand environment or there is limited opportunity at present for application here.
It is important to note that this broad strategic assessment is a snapshot in time. It is very likely that a similar exercise in future would give different priorities as technologies evolve.
6.3.1.1 Private and Public Sector Leadership
Working groups could be established based upon issues or themes. Potential participants might include energy researchers, representatives from energy companies, regulators, and central and local government. This approach pools diverse expertise needed to identify the most significant obstacles and what actions are needed to overcome them. One example of how this approach is being used is for carbon capture and storage (see box).
Example of process used for carbon capture
CCS is an emerging technology that has the potential to greatly reduce carbon dioxide emissions from burning fossil fuels and extracting natural gas.
The transportation and injection elements of CCS are not new, but it has not yet been demonstrated that carbon dioxide can be stored geologically over the long term. CCS is not expected to be adopted in commercial plants on a wide scale for 10-15 years.
If CCS is adopted here, New Zealand is likely to be a technology-taker, given the level of investigation and investment into the technology and process overseas. However, some scientific research within New Zealand will be necessary, particularly in relation to potential reservoir sites.
In response, a government and industry research steering group has been convened. It is made up of representatives from the Foundation for Research, Science and Technology, the Crown Minerals section of the Ministry of Economic Development, the Coal Association, Solid Energy, the Petroleum Exploration and Production Association of New Zealand, Genesis Energy and L&M Mining Group. Its aim is to increase New Zealand's technical capability and knowledge in CCS and to participate in knowledge-sharing with Australia's CO Cooperative Research Centre initiative.
Further work will be convened across government to consider the regulatory, legal and policy considerations involved in introducing CCS technology to New Zealand.
Action: Establish working groups made up of public and private sector representatives to provide strategic leadership in priority areas.
6.3.2 Increasing Capabilities and Improving Coordination
The transition to a sustainable energy future will take place over many years, and there is a need for capacity, knowledge and understanding of how this will be achieved in New Zealand. A number of energy researchers consider research efforts would benefit from greater coordination and focus. A centre for sustainable energy research has recently been proposed. Such a centre could be a source of improved information and leadership on sustainable energy systems.
A centre could focus on strengthening capacity and capability, improving networks and international linkages, as well as providing education. It could conduct technology and policy assessments, and maintain an energy research register covering all energy-related research and development projects.
A sustainable energy research and education centre would help to build the strengths of the energy research community by:
- increasing the number of researchers in the area of sustainable energy demand and supply, and raising the profile of the sustainable energy research community;
- establishing research clusters around important sustainable energy themes;
- developing connections between different strands of energy research;
- boosting renewable energy and energy efficiency education and training in both academic and trade institutions and integrating this with policy programmes.
Action: The government will consider the cost of establishing a sustainable energy research and education centre or other ways of linking institutions to provide leadership and improved information on sustainable energy systems.
6.3.3 Strengthening International Linkages
New Zealand's ability to adopt technologies developed overseas will depend on our keeping abreast of international developments, ensuring our researchers are able to engage with international work programmes, and doing the necessary groundwork - policy, regulatory and legal - to prepare for using emerging technologies.
There are a number of international partnerships or agreements that are of relevance to New Zealand and the innovation priorities outlined above and which may be advantageous to join. They are:
- Carbon Sequestration Leadership Forum;
- IEA Demand-side Management Programme;
- IEA Ocean Energy Systems Implementing Agreement;
- IEA Implementing Agreement on Electricity Networks, Research and Development.
Action: The government will increase participation in international technology collaboration that is relevant to the areas of innovation that are important to New Zealand.
6.3.4 Accelerating Innovation
Options for encouraging a more dynamic environment for private sector energy innovation include targeted tax credits for R&D activities.41 Co-funding arrangements would also give the private sector a strong incentive to consider the future markets for energy innovations, and would help smaller firms that might otherwise struggle for funding.
Action: The government will consider the outcomes of the Business Tax Review before assessing whether to pursue further options to support greater private sector energy research and innovation.
6.4 Into the Future
A developing technology of significant potential for New Zealand is marine power - the generation of electricity from waves or tidal currents. Various prototypes have been developed overseas. New Zealand has a vast marine energy resource if it can be tapped, and wave and tidal energy have the advantage of being less intermittent than wind.
The government has announced the establishment of a contestable fund to bring forward the deployment of marine power in New Zealand. Priority is likely to be given to small-scale deployment near islands or coastal communities, which currently rely upon expensive, diesel-fuelled electricity generation.
Action: The government will further consider the criteria and arrangements for the contestable fund for marine energy.
6.5 Have Your Say
This chapter outlines the issues around energy innovation. The government welcomes feedback on questions raised in this discussion, such as:
On private and public sector leadership:
How could private/public working groups best be structured to provide ongoing sustainable energy leadership and direction?
Are there any particular areas of work the taskforce needs to address?
On increasing capabilities and improving coordination:
How can capabilities and coordination be improved?
What would encourage non-government partners to contribute to research activities led by government?
On strengthening international linkages:
What skills and resources would be needed to forge improved international research links that would enable new energy technologies to be rapidly introduced into New Zealand?
On expanding support for innovative activities:
Are there are other important areas the government needs to look at to provide a strong operating environment for energy innovation in New Zealand?
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