1. Part 1: Our Vision: Introduction
New Zealand, like the rest of the world, faces two major energy challenges. The first is to respond to the risks of climate change by reducing the greenhouse gases caused by the production and use of energy. The second is to deliver clean, secure, affordable energy while treating the environment responsibly.
The New Zealand Energy Strategy (NZES) sets out the government's vision of a sustainable, low emissions energy system and describes the actions that will be taken to make this vision a reality.
The draft version of this document was released for public consultation in December 2006. Over 330 organisations and individuals made submissions, which reflects the high level of public interest in the importance of the choices we make about our future energy path.
The NZES is in two parts. Part 1 sets out the government's vision for a sustainable energy system and the key actions we can take now to move us towards making New Zealand the world's first truly sustainable nation.
Part 2 gives details of the initiatives the government will take, both now and in the future. The relevant issues and the actions to be taken in each area are discussed under the chapter headings:
- Resilient, low carbon transport
- Security of electricity supply
- Low emissions power and heat
- Using energy more efficiently
- Sustainable energy technologies and innovation
- Affordability and wellbeing.
1.1 Engagement With Stakeholders
The feedback on the draft NZES was detailed, challenging and thought provoking.
Most submissions recognised that climate change was a major issue and that policies to mitigate its impact were of national importance. Some major energy users and other business interests believed the draft strategy was too weighted towards climate change, at the expense of security of supply and economic growth, and wanted to see a more detailed cost-benefit assessment of the proposals in the strategy.
Two common threads ran through comments on transport proposals – support for investment in public transport, and caution about rapidly increasing biofuels.
Energy companies and major electricity users believed security of electricity supply should be the strategy's prime objective. Some submitters thought substantial additional electricity generation could be achieved with renewables for little increase in price, while others thought this was too optimistic a view.
On low emissions power and heat, there was broad recognition of the need to introduce emissions pricing, preferably linked to international prices. The Resource Management Act (RMA) was seen by some as a barrier to new projects.
There was strong endorsement of the government's role in encouraging energy efficiency, but mixed views on the proposal to reduce the discount rate for evaluating energy efficiency actions from ten per cent to five per cent.
Some submitters called for more funding of research and development of sustainable technologies and innovations, while others cautioned against adopting new technologies prematurely.
Affordability and wellbeing received the least attention in the submissions.
Relevant material from the submissions has been incorporated into work programmes and taken into consideration. For a detailed summary of submissions, see the accompanying document Summary Report on Submissions on the Draft New Zealand Energy Strategy to 2050.
1.2 Links With Other Policies
Energy policy is linked to government policies on economic development; sustainability; climate change; carbon neutrality; transport; resource management; and research, science and technology.
The government has signalled its aspiration for New Zealand to be carbon neutral over time.1 Addressing climate change is central to the government's economic transformation agenda, which seeks to raise productivity and increase the value of our exports while improving our long-term environmental sustainability.
In 2003, the government introduced the Sustainable Development Programme of Action (SDPoA). It was the first step to taking a sustainable development approach to decision-making in four areas: water, energy, cities, and child and youth development. The main energy goal was to ensure energy services were delivered to all consumers in an efficient, fair, reliable and sustainable manner.
In 2004, the government released the report Sustainable Energy, which set out the long-term challenges of delivering secure, fair and efficiently priced and environmentally sustainable energy services. When stakeholders were consulted about the report, they urged the government to develop a clearer strategy for meeting its sustainable energy objectives.
The development of the NZES has been a whole-of-government process led by the Ministry of Economic Development.
The government's detailed policies and actions on energy efficiency and renewables are set out in the New Zealand Energy Efficiency and Conservation Strategy (NZEECS), led by the Energy Efficiency and Conservation Authority (EECA).
The transport energy and climate change objectives in the NZES will inform the update of the New Zealand Transport Strategy (NZTS).
In September 2007, the government released Framework for a New Zealand Emissions Trading Scheme. The government has decided in-principle that New Zealand will adopt an emissions trading scheme (ETS) to reduce emissions cost effectively, support global action on climate change, and set New Zealand on a path to sustainability. It is proposed that emissions trading will cover all greenhouse gases and sectors of the economy by 2013.
However, a price on emissions alone will not be enough. Further initiatives set out in the NZES and NZEECS will complement and support an ETS. These measures seek to achieve specific outcomes in the energy sector earlier than would occur under emissions pricing, or to address market failure or barriers to investment. These include:
- improved policy guidance and regulation
- financial incentives, including subsidies for solar water heating and home insulation
- addressing regulatory barriers and market failures
- improved standards and codes, including energy efficiency standards for new homes and household appliances
- public education and information.
The first commitment period of the Kyoto Protocol expires in 2012. Discussions between governments are focusing on forging a global agreement to reduce emissions post-2012. Future agreements are likely be more complex and to factor in differences between countries and sectors. New Zealand will continue to take part in global forums, and our position will be informed by our own circumstances, our engagement with stakeholders, and our desire to see an enduring and fair global solution.
1.3 Our Energy System
Our energy use is dominated by electricity and transport. We currently rely on primary energy from oil, water, natural gas, coal and geothermal energy. New Zealand's energy prices have historically been low by international standards, and there has been relatively little investment in energy efficiency for homes, shops, light industry and transport. The sectors in which we use energy are shown in Figure 1.1 below.
Figure 1.1: Total consumer energy by sector in 20062
Source: Ministry of Economic Development
In the transport sector, New Zealand has:
- a high level of car ownership
- a high proportion of used imported vehicles and a trend towards importing older, larger vehicles
- public transport use that is low, but increasing
- a limited rail network because of our geography and small population.
New Zealand's total greenhouse gas emissions are only about 0.3 per cent of global emissions, but we have the 12th highest per capita emissions in the world. If we do not change our energy policies, energy-related greenhouse gas emissions are projected to rise 39 per cent by 2030 – including a 40 per cent increase in emissions from transport. The government believes this would not only be environmentally irresponsible, but would put New Zealand exports at a disadvantage, increase our exposure to the cost of imported fossil fuels and threaten our reputation as a clean, green tourist destination.
Detailed information on New Zealand's energy supply and demand is available in the following reports:
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