May update
Industry update: what we're seeing
It is said that imitation is the most sincere form of flattery.
As an advocacy organisation, imitation is also necessary to achieve any meaningful policy changes. Being a lone voice trying to advance a cause can very rarely achieve sought outcomes.
To bring about long-lasting change requires coalitions - multiple organisations working towards a common goal.
Over the past few weeks we have seen other important organisations join the chorus of voices taking up our call for more a policy shift in New Zealand's approach to energy policy.
These include the International Energy Agency and Climate Change Commission.
Both organisations:
- stated the importance of retaining natural gas generation as a reliable and affordable back-up for our electricity system; and
- highlighted the investment uncertainty introduced by the 100% renewable electricity target and the Lake Onslow proposal that is slowing new renewable generation build
We were also pleased to see the Commission and IEA make special mention of the possibilities for carbon capture, utilisation, and storage (CCUS) projects in New Zealand.
The support of both the IEA and Climate Change Commission in these areas highlights how our positioning and advocacy for orthodox energy policy has pushed these issues into the mainstream.
Regular readers of Energise Online will know that we have long called for enabling regulations that would allow the use of CCUS in New Zealand, which would align us with other countries such as Australia, UK, USA, Canada, and Norway.
Strength in numbers might be a key component of policy change, but it counts for little unless there is a solid base of evidence.
In our previous edition of of this newsletter, we highlighted a report from Castalia that showed how important natural gas will be for our low-emissions future.
Earlier this week we built upon that body of evidence with the release of a report from Energy Link, The Role of Gas in Electricity and Industry. The research makes the case for switching largely imported coal for New Zealand produced natural gas as a way to reduce emissions.
For a deeper dive on the Climate Change Commission's draft advice, the International Energy Agency's profile on New Zealand, and the latest Energy Link report, please read further down this email.
We are grateful to see that our advocacy for more a more sensible and balanced approach to energy policy is paying off.
All we need now is for policymakers to take notice.
Launch of Energy Link report
On 3 May we launched a new independent report by consultants Energy Link, titled The Role of Gas in Electricity and Industry.
The report shows how much we could reduce emissions if we used New Zealand produced natural gas instead of imported coal to back up our electricity system.
If we had used domestically produced natural gas as a back up for our electricity system between 2017 and 2021, instead of largely imported coal, New Zealand could have prevented 3.5 million tonnes of carbon emissions
As people switch to EVs and heat pumps, our demand for electricity will increase. We must ensure that our ability to back up our renewable electricity system increases too.
Findings of the report include:
- by 2038, New Zealand electricity demand could be between 46–54 TWh (compared to 43 TWh in 2021)
- New Zealand will need to build up to 320 MW of new gas-fired power stations by 2038 to back-up to our renewable electricity system
- if New Zealand had burned gas instead of coal to keep the lights on from 2017–2021, we would have avoided 3.5 million tonnes of emissions
- if coal was immediately replaced with natural gas in the electricity system, and half of the North Island’s coal-fired industrial process heat was converted to natural gas, New Zealand would avoid 1.77 million tonnes of emissions by 2030
Media coverage:
Energy News: Gas can displace coal-fired electricity before 2030 - Energy Link
Wairarapa Times-Age: Natural gas a way to cut emissions
BusinessDesk: Stop burning coal at Huntly and switch to gas now, says new energy study
Latest Climate Change Commission advice
The Climate Change Commission has released its draft advice to the Government to inform the strategic direction of the second Emissions Reduction Plan.
Consultation on this advice will last until 20 June.
We were surprised by the greater level of nuance from the Climate Change Commission in this version of their draft advice, and delighted to see the Commission reference some of our research when stating their recommendation for the government to explore carbon capture.
We were encouraged by the Commission's advice on the following, and believe these can be largely supported by the energy sector:
- the recognition that moving too quickly away from natural gas could imperil the energy transition;
- the importance of retaining natural gas generation as a reliable and affordable back-up for our electricity system;
- highlighting the investment uncertainty introduced by the 100% renewable electricity target and the Lake Onslow proposal that is slowing new renewable generation build; and
- the opportunity for carbon capture and storage to play a role - if an enabling regulatory regime is put in place.
However, there continued to be some recommendations that we fundamentally disagreed with.
The Commission continues to emphasise reducing gross emissions rather than net emissions and recommends exploring ways to separate incentives for forestry removals from incentives for gross emissions reductions. Given our national emissions targets are net, we believe policymakers should be agnostic because this maximises the opportunities to find least cost solutions through a mix of reductions and removals. This debate needs to be resolved – until then, it continues to generate significant uncertainty for ETS participants and the wider economy.
The other area of concern is their proposal to once again push for a ban on new gas connections. In our press release, we labelled this a "tone deaf" move, as it would restrict innovation on lower carbon gases, such as biogas and hydrogen.
Public policy panel recap
On 19 April we were proud to hold what was a new type of event for us. Unlike others, it was not about energy specifically, but instead about what constitutes good public policy.
In the next few months, we can expect political parties to put forward their policies ahead of the 14 October general election.
To better understand what good public policy looks like, how we can identify it, and what we should be looking out for, we assembled a panel of experts to hear their views.
Our panellists comprised:
- Josie Pagani (Consultant - Pagani Agency)
- Phil O'Reilly ONZM (Managing Director - Iron Duke Partners)
- Max Rashbrooke (Senior Associate - Institute for Governance and Policy Studies)
- Dr Oliver Hartwich (Executive Director - The New Zealand Initiative)
More than 60 people in attendance, which included a strong mix of new and familiar faces across business, the energy sector, NGOs and advocacy organisations.
A big thank you to our panellists for bringing their experience and insights to this event, particularly Max Rashbrooke who was a late replacement for Dr Bryce Edwards.
We would also like to thank our partners for this event, BRG, and also KPMG for kindly hosting this insightful discussion.
IEA report on New Zealand
The International Energy Agency recently launched the New Zealand 2023 Energy Policy Review, which is a deep dive into New Zealand's energy policy settings.
We were pleased to see the IEA highlight many of the issues we have been concerned about, including:
Of the 100% renewable electricity target, the IEA says:
New Zealand should weigh its aspiration to achieve 100% renewable electricity by 2030 against the potentially considerable costs associated with achieving the last 2-5% of the target.
On Lake Onslow, the IEA says:
Until a final investment decision is taken on the project in 2023-2024, the prospect of government intervention in the electricity market is creating short-term investment uncertainty, especially for new generation.
The IEA report also takes up the call for New Zealand to embrace carbon capture technologies:
As such, the government could investigate whether continued gas use for electricity generation, coupled with carbon capture, utilisation and storage, could be an option to provide flexibility to the grid when penetration of variable renewables becomes mainstream and to overcome the "dry year" problem when water inflows to hydropower stations are lower.
We have partnered with Freeman to deliver the next in-person Energy Resources Taranaki Forum later this month.
The focus of this day-long event is all about laying the groundwork to keep the energy transition moving.
Our programme includes informative sessions on the following topics:
- consenting in a post RMA New Zealand
- reducing emissions at an operator level
- reskilling for new energy
- energy policies
- environmental, social and governance
- a carbon economy
- methanol as a marine fuel
- the future of biogas
- supporting sector diversity
- critical path infrastructure
To learn more about this exciting event, the full programme, and speakers, please contact Freeman via events@freemanmedia.co.nz.
University of Canterbury STEM Careers Fair
On 3 May we attended the University of Canterbury's STEM Careers Fair to talk to students about the range of exciting roles available in the energy sector.
The University of Canterbury is well-known as a university of choice for students interested in pursuing a career in engineering. So this was a fantastic opportunity to engage with young learners and make the case for them to consider a career in energy.
Each year we attend career expos across the country to give visibility to the energy sector and promote pathways for graduates in our industry.
As part of our workforce development division, we offer marketing, recruitment and employment services to our member companies for both interns and graduates.
We have vast connections and networks across New Zealand with talented youth that are making decisions right now about which sector they wish to work in on graduation.
We enjoy our conversations with the students and the opportunity to educate them about the energy industry and the fantastic career opportunities our sector can offer to them.
Political panel: Save the date
Ahead of this year's election, we have partnered with several other energy organisations (ERANZ, MEUG, and Straterra) to ensure we have an opportunity to hear from each of the parties' energy spokespeople about their priorities for the energy sector.
We are pleased to confirm that the date for this event will be Wednesday 26 July in Wellington.
Our panel will include representatives from each of the parties currently in Parliament, including Hon Dr Megan Woods in her capacity as Labour Party energy spokesperson.
In the coming weeks we will be in touch with Energise Online subscribers to provide further details and a registration link.
In the meantime, please save the date!
Member profile: Govett Quilliam
Govett Quilliam is a law firm with a difference.
At Govett Quilliam, they believe the transition towards cleaner, more sustainable sources of energy is not only necessary, but also an opportunity for businesses to innovate and grow. Govett Quilliam’s team of highly skilled lawyers are dedicated to helping their clients capitalize on this opportunity and contribute to a better future for all.
Being based in Taranaki, home to some of New Zealand’s most successful energy operators, Govett Quilliam is well versed in all things energy, including regulatory compliance, consenting for onshore and offshore projects, project development and financing, property and project acquisitions and disposals, decommissioning and dispute resolution.
One of Govett Quilliam’s key strengths is its ability to provide bespoke and pragmatic legal solutions that are tailored to the unique needs of each client. The firm takes the time to understand its clients' businesses and goals, and works closely with them to develop legal strategies that are both effective and sustainable.
To get in touch with one of Govett Quilliam’s energy specialists, click HERE.
