Monthly update
Industry update: what we're seeing
New Zealand is not alone in wanting to reduce its emissions. Across the developed world, governments and businesses are adopting low-emissions alternatives to conventional products and services.
Low emissions alternatives might help reduce the amount of carbon society emits. But they cannot eliminate emissions entirely. There will always be some activities where emissions take place and where those emissions need to be offset.
In New Zealand, we have turned to forestry as a way to offset our emissions.
Forests included in the Emissions Trading Scheme (ETS) conjure up credits based upon how much carbon the trees will absorb.
But large-scale forestry has become a controversial subject, both in New Zealand and overseas. Conversion of what is often farmland into carbon forestry is often met with opposition from rural communities. Locals worry that the forests require fewer workers, and that without farming jobs the communities would cease to exist.
Forestry remains the only way New Zealand businesses can offset their emissions within the ETS.
In other countries such as Canada, Norway, and the USA, they are fortunate to have another option that does not disrupt rural communities. Both Australia and the UK also have projects underway.
Carbon capture, utilisation, and storage (CCUS) works by capturing carbon at source and sequestering it back into the ground or using it in other processes (such as preserving meat or carbonating drinks). In many cases, carbon is placed back in existing geological formations such as oil and natural gas wells.
The Intergovernmental Panel on Climate Change (IPCC) calls use of these technologies "unavoidable" if countries want to achieve net zero emissions.
Throughout the world, countries are pressing ahead with these technologies which reduce emissions. But there is no regulatory framework in New Zealand that allows us to use them here.
We are working closely with our members and officials to see what can be done to enable the use of CCUS in New Zealand. It is important to have a diverse mix of options we can use to help us achieve net zero. And we
cannot be left in the dust while the rest of the world pushes ahead.
We warmly welcome initial signals that the Gas Industry Company is exploring these issues as part of the Gas Transition Plan, and we will work closely with them to support this.
The time for CCUS has come.
Government's fuel announcements
The Government has announced significant changes to fuel market policy that will affect all transport fuel users.
The press release from Minister of Energy and Resources Hon Dr Megan Woods outlined the three main changes:
- deferring the Government's biofuel mandate until 2024;
- introducing onshore stockpiling requirements for fuel retailers and establishing a fuel stockpile for Government; and
- providing the Commerce Commission with the power to set wholesale fuel prices if they believe prices are too high.
We welcomed the announcement that the biofuels mandate would be delayed. Adding a biofuel component to transport fuels will raise consumer prices by 6 - 10 cents per litre. Deferring the introduction of this requirement is the right thing to do as Kiwis face increasing costs of living pressures.
The Government's moves to increase stockpiling requirements and establish its own stockholding are understandable in that they seek to ensure our fuel security, but we feel they are disproportionate. Since the closure of the Marsden Point refinery, all transport fuels are imported from major refineries across the world. This has increased our fuel security, as we are no longer reliant on one major supplier. These measures will impose more cost and complexity on fuel suppliers, which will inevitably pass through to consumers.
We are very concerned by the Commerce Commission being given the power to set wholesale fuel prices. Price controls do not work. They did not work in the 1970s, and they will not work now. The best way for consumers to receive fair prices and to have a resilient supply of product is through competition among retailers. The measure is intended as a backstop, but its mere presence sends a chilling signal to investors in all sectors.
You can read more about our perspectives on these issues here.
Our commentary and analysis was picked up by many media organisations, including Newshub, Stuff, Radio New Zealand, Energy News, and The Spinoff.
New Plymouth panel event
Last week we hosted a fantastic panel event in New Plymouth to discuss the skills challenges facing the energy industry.
Panellists talked about the importance of attracting, retaining, and developing skilled individuals to power the energy sector now and into the future.
Turnout was strong, with around 50 people packing into State Bistro to hear from our esteemed panel that comprised:
- Glen Bennett (MP for New Plymouth)
- Arun Chaudhari (Taranaki Chamber of Commerce)
- Sheree Long (Energy Skills Aotearoa)
- Warwick Quinn (Te Pūkenga)
We were extremely fortunate to have the panel event MCed by recently re-elected Mayor of New Plymouth Neil Holdom.
Attendees heard about the extremely tight labour market and the competitive environment to attract new graduates and specialist skills.
Solutions put forward by the panellists included immigration reform, industry investment into education via curriculum development, local initiatives to upskill people and increase diversity, and increasing knowledge of the energy sector in classrooms.
As New Zealand's energy mix expands, there will be a increased demand for skilled individuals to keep the lights on. Our panel event was a great way to promote our work in this area and speak to the findings of our recent report, Building Energy's Talent Pipeline (see more below).
Thank you to all of those who attended this informative and entertaining event.
Building Energy's Talent Pipeline
Our latest report shows that the country must take steps to attract, retain, and upskill the individuals that will drive the energy sector of tomorrow.
Building Energy's Talent Pipeline sets out an industry skills action plan for Taranaki and the wider energy sector, and recognises the changes underway in the energy sector in response to climate change.
Our report shows that with effective planning and implementation the sector will continue to deliver the energy we need today, while preparing for the new energy mix that we will use in the future.
Energy Strategy Terms of Reference
The Government has announced the New Zealand Energy Strategy Terms of Reference.
Guiding principles of the energy trilemma are present in MBIE's Terms of Reference, in addition to a fourth - that New Zealand's energy system supports economic development and productivity growth aligned with the transition.
MBIE will undertake engagement with relevant stakeholders from early to mid-2023, before undertaking public consultation later that year.
The Energy Strategy is expected to be finalised and published in late 2024.
We look forward to working closely with MBIE officials to ensure the perspectives of the energy sector are understood and incorporated.
New report: The Future is Electric
We welcomed the release of the 'The Future is Electric' report, commissioned by New Zealand’s leading electricity generation companies, as a thoughtful contribution to the energy policy discussion.
The report adds to a growing chorus of voices across the sector calling for a stable, predictable, market-led transition to a low-emissions economy.
The Future is Electric's preferred pathway shows the significant national benefits that accrue if we drive the transition through smart investment in a mix of demand and supply side solutions.
It also echoes the findings of our own 'Fuelling the Energy Transition' report, which showed a sustained role for fast-start gas peaking generation through the coming decades.
Alison Andrew event
On Tuesday 11 October we held our latest Meet the Chief Executive event with Transpower's Chief Executive Alison Andrew.
Alison addressed a crowd of also 60 guests at PwC's Wellington office. She spoke about the challenges and opportunities of increasing electrification, the importance of a broad energy mix, and how Transpower is ensuring our national grid is fix for the future.
Alison talked candidly about the need for increased peaking capacity and why we need to recognise the role of gas in fast-start peakers in our current hydro-based system.
Alison's address, which was open to the media, was covered by both Energy News and the National Business Review.
New report: World Energy Outlook 2022
The International Energy Agency released their World Energy Outlook 2022 report in late October.
It is the latest in a long list of reports that show there is an important role for natural gas to play through and beyond New Zealand's and the world's transition to lower emissions energy.
The report outlines that even as demand for natural gas decreases over time, it will continue to play a critical role in energy security by providing gas-fired power for peak electricity needs. The IEA warns that premature retirement of this infrastructure could have negative consequences for energy security.
We received a lot of media interest about what the report's findings will mean for New Zealand's energy security.
John was interviewed by Dita De Boni for The National Business Review ($), and for Radio New Zealand and Newstalk ZB. BusinessDesk ($) also used our commentary in one of their articles.
Special briefing on sustainable fuels policy
On Wednesday 26 October we were fortunate to host a special briefing event with ExxonMobil's Global Fuels Policy Executive, Derek Wheeler.
Derek spoke to a crowd of over 50 people on global trends with biofuels and the types of policy settings that enabled their uptake.
We were grateful to hear from an international senior executive for such an in-depth and enlightening discussion about a topical issue.
A big thank you to our members Mobil and Russell McVeagh for helping us organise this unique event.
