11. Sustainable Energy 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. Sustainable energy is likely to be sourced from more diverse and distributed sources, including energy efficiency.
- In the short term, increasing the contribution of renewable energy and improving energy efficiency can significantly slow the increase in New Zealand's energy-related greenhouse gas emissions.
- Ongoing technological developments such as electric cars and CCS , behaviour change and infrastructure investment are fundamental to progressively decarbonising the energy system over the long term.
- No single technology will achieve New Zealand's energy objectives by itself. Using a range of technologies will maximise the benefits to New Zealand and minimise the risks from technologies that make less progress than expected.
- 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.
- Policy certainty, transparency, effective regulation and other incentives are important to support high levels of innovation and implementation.
| From vision to action |
Lead agency |
Timing |
| The government will continue to support initiatives to build capacity and link participants from the research community, industry, and central and local government to bring forward a low carbon and sustainable energy future. |
MED and others |
Ongoing |
| The government has introduced business tax credits for research and development expenditure. |
IRD |
2007 onwards |
| The government will continue to facilitate participation in international technology and collaborative research efforts in areas relevant to New Zealand. |
MED |
Ongoing |
| The government is establishing a contestable fund of $8 million over four years to bring forward deployment of marine generation devices in New Zealand. |
EECA |
Oct 2007 |
| The government is establishing a contestable fund of $12 million over three years to support new low carbon energy technologies. |
FRST |
Jul 2008 |
11.1 Our Direction
Technological innovation can boost productivity, improve our quality of life, create new industries and solve environmental problems. The government has a role to play in encouraging innovation and supporting private sector initiatives.
Moving to a secure zero or low carbon energy system will require major changes in the production, delivery and use of energy services such as electricity, heat and motive power. There are already many innovations to save energy, reduce emissions and delay the need for costly energy infrastructure investments, including hybrid cars, efficient diesel vehicles, efficient wood burners, efficient lights, smart meters and "green" buildings. Energy efficient technologies and practices available to businesses include motors, boilers and sophisticated energy management and control systems.
Some of these developments are already economic over their lifetime: in other words, the savings in energy costs more than cover the cost of purchase and installation. A key challenge is to encourage more energy consumers to adopt them. The NZEECS focuses on improving energy efficiency and increasing the use of renewable energy.
Over the coming decades, sustainable energy technologies from overseas and New Zealand will increase the number of options, and provide opportunities to commercialise climate-friendly technologies and practices.
In the short term, better material and waste recovery technologies, advanced materials, cleaner coal technologies and energy substitution technologies will help keep existing energy supplies affordable and available.
New technologies also increase the diversity and availability of low carbon stationary and transport energy. New renewables such as marine energy, offshore wind, deep geothermal, and fossil fuel power generation with CCS will help decarbonise global electricity supplies in the medium term. The use of biofuels and the evolution of vehicles – from petrol to diesel to hybrids to electric – have significant potential to substantially reduce 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. Ideally, we will reduce our need to use fuel by, for example, using passive solar design to heat buildings and by using advanced communications technology as a substitute for travelling to meetings. Innovative energy supply technologies may include improved battery technology, fuel cells and hydrogen.
Two key messages can be taken from global energy research and development.54
The first is that there are already low carbon technologies and practices that can make a difference over the next 10–50 years. International research focuses on nuclear energy, CCS , energy efficiency, renewable electricity generation from new sources, vehicle technologies, biofuels, clean fossil fuels and hydrogen.
The second message is that no single technology will make a sufficient difference on its own. Pursuing a range of technologies will increase the opportunities and reduce the risks and, potentially, the costs if one or more fails to make the expected progress.
New Zealand needs to keep up to date with international research into emerging technologies and practices, particularly in relation to vehicles, CCS and renewables. Our researchers must be able to engage with international work programmes, and we must prepare to adopt new technologies by doing the necessary policy, regulatory and legal groundwork.
However, New Zealand-based research is needed to harness our indigenous energy supply options and to identify appropriate energy demand technologies and practices, energy efficient buildings, urban design and sustainable transport systems.
The NZES, the NZEECS, climate change policies and the New Zealand Transport Strategy provide the high-level objectives around enhancing security of supply and mitigating the global and local environmental effects of energy production and use. A flexible approach is needed to meet these objectives, given that a wide range of potential technologies and practices is likely to emerge in future.
The NZES maps out an ambitious pathway for greenhouse gas emissions reductions. This is based on assumptions around the availability of technologies, capital turnover, behaviour change, an effective physical infrastructure and public willingness to drive the necessary changes. There are two significant milestones for accelerating clean energy and emissions reductions.
By 2025:
- the economic, environmental and social value of energy efficiency in homes, businesses, travel and trade will be widely accepted and incorporated into the daily lives of New Zealanders
- transport, particularly the light vehicle fleet, will meet a significant proportion of its demand from low carbon fuels, such as biofuels and renewable sources of electricity
- low cost renewable technologies (including wind, geothermal and possibly some marine) will help to achieve the renewable electricity target
- electricity and heat for industry will be produced from low carbon sources and near-zero process emissions, and CCS technologies will be used.
By 2050 and beyond:
- the switch to a low carbon New Zealand energy system will be largely complete. Demand will have significantly reduced, and the overall energy mix will include a large proportion of renewable electricity and biofuels, CCS and the use of alternative energy storage systems such as high performance batteries and hydrogen.
- In step with other countries, New Zealand is adopting a broad framework to encourage sustainable energy technology development and innovation. This includes:
- creating a market and economic incentives to increase the use of new technologies, including introducing carbon pricing to provide an incentive to adopt innovations and to use low carbon technologies
- ensuring regulatory and legislative frameworks are in place to support long-term investment, including removing barriers and maintaining regulatory arrangements to set up the infrastructure to accommodate new technology
- ensuring we have the necessary technical skills and capabilities to adopt and adapt technologies when they become available and economic
- introducing incentives and support, such as well targeted funding from public and private sources
- improving monitoring of technology, behavioural and commercial developments, as well as improving links to relevant international research and development
- assessing the opportunities for rapidly adopting key technologies and practices, and managing any associated challenges.
11.2 The Progress We've Made
11.2.1 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 needed to develop sustainable technologies and practices. The roadmap identified four broad roles for energy research in New Zealand.55
- New Zealand lead – for research that must be carried out in New Zealand to reflect our unique energy resources or energy uses.
- Fast adapter – to enable New Zealand to quickly adapt technologies and practices developed overseas.
- Emerging opportunities – to ensure we can identify and evaluate new energy opportunities identified overseas for possible future use in New Zealand.
- Niche/commercial opportunity – to recognise energy innovations that may provide commercial opportunities for New Zealand, regardless of whether they are used here.
11.2.2 Public Energy Research and Development
New Zealand's total public investment in energy research through Vote Research, Science and Technology is close to $18 million per annum.56 This is invested through the Foundation for Research, Science and Technology and is targeted at specific energy objectives. Additional research in universities is funded through Vote Education. This funding is not targeted to meet specific outcomes.
In 2007, the Foundation for Research, Science and Technology made three short-term linked investments to improve our understanding of future energy opportunities:
- the New Zealand Energyscape, led by the National Institute of Water and Atmospheric Research Limited (NIWA) ($1.3 million), assesses the range of indigenous energy resources and their potential contribution
- Bioenergy Options, led by Scion ($1.1 million), assesses the range of indigenous bioenergy options in a similar way to Energyscape
- Hydrogen Economy, led by CRL Energy ($0.5 million), identifies the role hydrogen could play in New Zealand's energy system.
A further investment in CCS opportunities has been part funded by industry representatives.
11.2.3 International Partnerships and Collaborative Research
The benefits of international research efforts to New Zealand include: cost efficiency; 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 are:
- IEA implementing agreements. These technology collaborative contracts 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.
- 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.
- International development of MEPS and product energy efficiency labelling systems. Mandatory energy efficiency standards list the technical requirements that certain products must meet, while technical standards and specifications underpin voluntary and mandatory labelling regimes. Almost all our standards are, or soon will be, joint standards with Australia.
11.3 Our Actions
New Zealand's international collaboration, research funding and the capabilities roadmap are all important steps towards developing sustainable technologies and practices. However, further measures are needed to help us create a low carbon energy future.
11.3.1 Enabling Zero and Low Carbon Technologies
An emissions trading scheme will help to create a market for emissions reductions and give an economic incentive for innovation.
Other important developments include some of the actions included in this strategy to encourage innovation (such as the expert group for new vehicle technologies) as well as setting a conducive policy framework and removing barriers to long-term investment in low carbon technologies.
11.3.2 Energy Innovation Priorities
Establishing research excellence in key areas will help New Zealand stay connected to international research efforts.
The Ministry of Research, Science and Technology is looking at transformational areas of research, science and technology (TRST) in which new investments can make substantial differences to economic, environmental or social outcomes for New Zealand. A TRST proposal for making renewable energy work for New Zealand is under development, with a focus on the piloting, demonstration and proving stages of new renewable energy technologies.
11.3.3 Increasing Capabilities and Improving Coordination
The transition to a sustainable energy future will take place over many years. New Zealand will need to build on the strengths of the energy research community and foster stronger links with representatives from energy companies, regulators, and central and local government.
National Energy Research Institute
A new research organisation has been set up to coordinate energy research and to examine ways to curb carbon emissions. The National Energy Research Institute (NERI), a network of universities and other research institutions, was established in July 2007 with the help of a $1.5 million grant from the Tertiary Education Commission. NERI's activities will include improving energy education, developing a database of energy researchers, setting up a digital database on energy topics and running master classes and conferences. NERI will also encourage a stronger emphasis on collaboration between research organisations, and support cross-disciplinary research between the energy industry, consumers, iwi and the government.
Dr Janet Stephenson and Professor Gerry Carrington.
Image courtesy of National Energy Research Institute.
ACTION: The government will continue to support initiatives to build research capacity and link participants from the research community, industry, and central and local government to bring forward a low carbon and sustainable energy future.
Box 11.1: Private-public Partnerships on Technologies
Carbon capture and storage is an emerging technology that has the potential to greatly reduce carbon dioxide emissions from burning fossil fuels such as coal and 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 at least ten to 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, scientific research within New Zealand will be essential, particularly in relation to potential reservoir sites in the New Zealand geological landscape.
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 CO2 Cooperative Research Centre initiative – CO2 CRC.
Further work will be convened across government to consider the regulatory, legal and policy considerations involved in introducing CCS technology to New Zealand.
11.3.4 Strengthening International Linkages
Technology agreements and partnerships are expected to become a prominent feature of international cooperative efforts on climate change mitigation and adaptation.
We will work with interested parties to determine whether joining additional IEA implementing agreements would offer tangible benefits for researchers, the private sector and New Zealanders generally. The Ocean Energy Systems Implementing Agreement is probably well aligned with government policy.
Other relevant international partnerships and agreements that New Zealand might find it useful to join are:
- IEA Demand-side Management Programme
- IEA Implementing Agreement on Electricity Networks, Research and Development
- Carbon Sequestration Leadership Forum.
ACTION: The government will continue to facilitate participation in international technology and behaviour change collaborative efforts that are relevant to the areas of innovation that are important to New Zealand.
11.3.5 Accelerating Innovation
In 2007, the government announced a 15 per cent tax credit for companies carrying out research and development, to encourage more investment in technology development by New Zealand firms, bringing New Zealand into line with Australia and other OECD countries. A research and development tax incentive was considered a more efficient mechanism than a grant system.
ACTION: The government has introduced business tax credits for research and development expenditure.
If we are to reduce greenhouse gas emissions, low carbon energy technologies (LCETs) will be a major part of our future energy supply. New Zealand private and public entities have limited means to fund pilots or demonstrations of new LCETs. The funding gap between research and commercial development (the "valley of death") is difficult to overcome and places emerging low carbon technology at risk.
Co-funding arrangements give the private sector – particularly smaller firms – a strong incentive to invest in sustainable energy innovations. Under the NZES, the government has agreed to establish two funds to assist private sector innovation.
The first is a fund to provide capital grants to developers who wish to install or deploy pre-commercial wave and tidal stream energy devices. New Zealand has a vast marine energy resource, and wave and tidal energy is less intermittent than wind.
ACTION: The government is establishing a contestable grant fund of $8 million over four years to bring forward the deployment of marine generation devices in New Zealand.57
Proposals for other LCETs, including second generation biofuels – bioethanol from cellulose and biodiesel from algae – are not progressing or are at risk of going overseas. A second fund will be available to assist other LCETs such as biofuels, biomass, hydrogen, deep geothermal, wind, hydro, CCS and other new technologies to the point of commercial investment in New Zealand. The initial focus will be on liquid biofuels to assist government decisions on biofuel sales obligation levels post-2012.
ACTION: The government is establishing a contestable fund of $12 million over three years from July 2008 to support new LCET opportunities.58
11.4 Into the Future
A viable energy innovation system is essential to bring innovations to the point of commercial use in New Zealand. This system includes:
- basic or underpinning energy research
- applied energy research
- the piloting, scale-up, demonstration and proving of energy technologies
- the commercial development or implementation of new technologies.
The government and the energy industry both have a role in this process. Public funding is needed to support research and development up to the stage where a new technology is ready to be demonstrated. Investment by the energy industry is required for commercial development and implementation. The government and industry will need to work together to ensure their investments are well coordinated.
Government incentives for innovation are included in energy policy, legislation and regulation. They may also involve targeted incentives for particular energy technologies, industry support and public education or uptake incentives.
Developing an innovative low carbon sustainable energy system will require much greater engagement between the energy research community, the energy industry and New Zealand energy users at all levels.
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